- Everything is [[root/src/4-numbers/principles/The World is Gaussian XOR Pareto|Gaussian XOR Pareto]], learn to tell the difference. - Every financial market ever studied -- stocks, bonds, commodities, foreign currencies, cryptocurrencies -- has proved to be fat-tailed. - In 1963, Benoit Mandelbrot found fat-tailed dynamics in [cotton prices dating back to 1812](https://web.williams.edu/Mathematics/sjmiller/public_html/341Fa09/econ/Mandelbroit_VariationCertainSpeculativePrices.pdf). - Fat-tailed systems defeat anyone who tries to highly optimize their behavior through _prediction_ of the fat-tailed system. - Suppose you have access to the most intelligent predictive model ever built. It tells you that it is N% confident that you will _not_ be in a car crash today. There is no value of N for which you should aim to save time by not wearing a seat belt. - Behaviors with the above seat-belt dynamics are those with a thin-tailed upside and a fat-tailed downside. Nassim-Taleb calls this "picking up pennies in front of a steam roller." - For thin-tailed situations, invest in intelligence. - For fat-tailed situations, too much intelligence is poison. - Learn to tell the difference between Gaussian and Pareto situations. - When it's Gaussian: predict. - When it's Pareto: behave.