![]() Might, we continue to see patterns where none exist, misunderstand the role of randomness, seek explanations for chance phenomena, and believe that we know more about the future than we do. ![]() Extrapolation is impossible or meaningless. Their behaviour over short timespans may have so little significance as to be nothing but noise. Life in general, and markets in particular, involve large random factors, have complicated stochastic structures, and regularly spring nasty surprises. Most things in life are not like steam engines, but people treat them as if they were. Even though you don't understand its workings, you can see it's a pretty simple machine, so you can trust it to behave in a simple way: you have confidence in your predictions based on a short sample of its behaviour. ![]() ![]() If you watch a steam engine, you may not know how it works but you can soon get a fairly good idea of its behaviour, and you can predict its future behaviour accurately. Fooled by randomness - The hidden role of chance in the markets and in life ![]()
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