The Limits of Statistics by Nassim Taleb

Edge: THE FOURTH QUADRANT: A MAP OF THE LIMITS OF STATISTICS By Nassim Nicholas Taleb: "Figure 2 The graph above shows the fate of close to 1000 financial institutions (includes busts such as FNMA, Bear Stearns, Northern Rock, Lehman Brothers, etc.). The banking system (betting AGAINST rare events) just lost > 1 Trillion dollars (so far) on a single error, more than was ever earned in the history of banking. Yet bankers kept their previous bonuses and it looks like citizens have to foot the bills. And one Professor Ben Bernanke pronounced right before the blowup that we live in an era of stability and 'great moderation' (he is now piloting a plane and we all are passengers on it)."

The link is to a great article about the limits of statistics as used by financial modeling people - who consistently underestimate the chances of a penny coming up heads 10 times in a row.
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