Experts in Insurance, Modern Finance, Political Science, Climatolgy etc. are all trying to do the impossible; predict the future. Perhaps its overconfidence bias at work. We can only infer so much from empirical data and then a black swan comes floating by, and more often then we think. Thats why insurance companies price their products with a huge margin of safety in their premiums as they prey on our anxieties. And thats why potfolio managers diversify.
Experts in Insurance, Modern Finance, Political Science, Climatolgy etc. are all trying to do the impossible; predict the future. Perhaps its overconfidence bias at work. We can only infer so much from empirical data and then a black swan comes floating by, and more often then we think. Thats why insurance companies price their products with a huge margin of safety in their premiums as they prey on our anxieties. And thats why potfolio managers diversify.