History is driven by a few unpredictable outliers that we explain confidently only after they happen.
The third property is what makes the first two permanent: because hindsight makes each event look foreseeable, we never update on the fact that we did not foresee it.
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Typed edges. Anything below the line was authored on the other note and derived here.
← requiresSome domains are bounded and some are scalable — using bell-curve intuitions in the second is the central error of modern risk management.
Outliers can only dominate where the quantity is scalable. In a bounded domain there are no black swans, only surprises of limited size.
← has exampleA tiny number of events produce most of the outcome — so most of what you do is supposed to not matter.Housel's investing tails are a concrete, bounded case of Taleb's general claim about history. Same distribution, gentler register.