I liked your analogy to matter, dark matter, etcetera. The topic reminds me of Secretary Rumsfeld during the Iraq War trying to characterize to reporters the fog of war through the use of knowns and unknowns. For me the big takeaway from The Big Short and a number of Michael Lewis' books is that human beings are not good at assessing risk. This is more due to the fundamental nature of how our minds work. Training can help but its just not how we are built. This seems to be the lesson of every asset bubble. Outside of finance it emerges only recently as humankind now pursues making things of inordinate complexity. Whenever that is done, it becomes natural to simplify (dumb down) what can go wrong into manageable bites. I enjoy your writing.
Yeah, the knowns, the known unknowns, and the unknown unknowns. I remember that Rumsfeld got mocked at the time for saying that, but it turned out to be astute, unlike most of his actions related to the Iraq War.
This essay I guess is about making sure you're comfortable with the known unknowns, and acknowledging that because of information asymmetry, you don't know all the unknowns, so those are your unknown unknowns (even if they're known to someone else). Glad you enjoyed it!
I liked your analogy to matter, dark matter, etcetera. The topic reminds me of Secretary Rumsfeld during the Iraq War trying to characterize to reporters the fog of war through the use of knowns and unknowns. For me the big takeaway from The Big Short and a number of Michael Lewis' books is that human beings are not good at assessing risk. This is more due to the fundamental nature of how our minds work. Training can help but its just not how we are built. This seems to be the lesson of every asset bubble. Outside of finance it emerges only recently as humankind now pursues making things of inordinate complexity. Whenever that is done, it becomes natural to simplify (dumb down) what can go wrong into manageable bites. I enjoy your writing.
Yeah, the knowns, the known unknowns, and the unknown unknowns. I remember that Rumsfeld got mocked at the time for saying that, but it turned out to be astute, unlike most of his actions related to the Iraq War.
This essay I guess is about making sure you're comfortable with the known unknowns, and acknowledging that because of information asymmetry, you don't know all the unknowns, so those are your unknown unknowns (even if they're known to someone else). Glad you enjoyed it!