Topic: How To Invest

What is Pat’s commentary for the week of June 16, 2020

Article Excerpt

Recently, I had the good fortune to get invited to an online talk by Nassim Taleb, a highly successful trader, accomplished mathematician, and author of the 2007 best-seller, The Black Swan. The Sunday Times, a top-rated U.K. newspaper, called the book “one of the 12 most influential books since World War II.” Mr. Taleb seems to agree with our view on randomness in short-term stock prices. “If you look at any price stock on any one day, it will be 1 part signal, 50 parts noise.” In other words, each day’s price is 98% random. In his book, Mr. Taleb says people today are skilled at averaging things out, but terrible at guessing at the frequency of the extreme outliers. They can easily recognize a relatively rare event, or “black swan.” They are poor at guessing if the odds against it are one in 10, one in 100 or even one in 1000. It’s a good idea to keep this in mind if…

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