Book recommended by Prof UD in Security Analysis & Portfolio Management class. And a must read for all Finance guys. Good read for Non-Fin guys too.
Some of the things worth mentioning:
1. How much would you pay for insuring yourself for $1 Million, if you die during the trip? And how much would you pay for insuring in the event of death from a terrorist attack?
In most cases, your answer to second choice would be more because our brain tends to go for superficial clues when it comes to risk and probability.
2. Survival of least fit: Carlos and John kept investing and earned profits in booming market. When market started falling down they started averaging down till the time they got wiped off.
So at the time they were at their peak, it was not because of survival of fittest but due to randomness. For evolution fitness means to one and only one time series and not average of all possible environments.
3. We take past data as homogeneous set, but what if the Urn which consisted of only Red/Black balls contains only Black balls now :)
4. Infinite monkeys sitting and one got the word 'ILLIAD' now would you bet on him writing 'Odyssey'.
5. Trading Rule: No amount of white swans can allow the interference that black swams are not there, but observation of single black swam is conclusive.
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