re: Investors Betting on Market Crash

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How is that? The basis of statistics is just counting stuff.

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In short, the statistical models commonly used assume things are normally distributed in a bell curve fashion. These models place extraordinarily low probabilities on outcomes which the author alleges are far more probable than the Gaussian model suggests. He also points out that as humans we tend to look back and apply convenient explanations for phenomenon we didnt see coming like a financial collapse, global war, terrorist attack or otherwise. A byproduct of this is that after a major event we tend to focus narrowly on preventing events similar to it. For instance, after the 9/11 terrorist attacks we launched the TSA, sky Marshalls, and airplane door changes. The problem is that the odds of the initial attack were incalculably low and the odds of another attack like it are even lower. In doing so and focusing narrowly we make ourselves more susceptible to another yet different Black Swan type event.