Risk, probability, wealth, qe and chaos theory
It seems to me that we should all invest in tracker funds- discuss.
Low level of risk, unless the stock market implodes, then all funds will perish anyway. Low fees.
I’m not saying I’m first on the boat on this one- BlackRock and Blackstone may have got there before me but if you’re working in any public institution with access to funds (pensions etc) wouldn’t the right decision be to stick the money in a tracker? Discuss again.
Anything else is exposing yourself to unnecessary risk.
Ah, risk , what is life without risk?
But how can we understand risk without understanding probability?
Will it rain tomorrow?
Great answer here with a reference to chaos theory
from https://www.rmets.org/metmatters/what-does-30-chance-rain-mean
“We all know that weather forecasting is not an exact science. Chaos theory was discovered by meteorologist Ed Lorenz in the 1950s, working on early attempts to model the weather using computers, before most people had even heard of computers! Lorenz discovered that if he stopped his computer model and restarted it with very slightly different numbers — he simply rounded off the numbers to three significant places to save typing in the full detail — he got completely different answers a few days into his forecast. Lorenz realised this meant that there would always be a limit to how far ahead we could forecast the weather, because however good our observing systems, we could never know all the exact details of the starting conditions.
Today’s forecast models run on immense supercomputers, exploiting billions of observations every day (mainly from satellites), give incredible detail in forecasts but are still constrained by chaos theory. For large-scale weather patterns the solutions typically start to diverge after a few days, but for fine local detail, including how much rainfall, they can diverge within a few hours into the forecast in some circumstances.”
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also explained here in Jurassic Park - butterfly in Peking, rains in Central Park- is this mansplaing?
more here https://www.ted.com/talks/andrew_maris_what_jurassic_park_gets_wrong_about_chaos_theory
So the threat of geoengineering is the threat of chaos theory- is it a risk worth running ?
Perhaps we should just pump carbon dioxide out of the air
https://www.bbc.com/future/article/20210310-the-trillion-dollar-plan-to-capture-co2
https://www.wri.org/insights/6-ways-remove-carbon-pollution-sky
or should we prevent it entering the atmosphere at its source ?
https://www.wri.org/insights/carbon-capture-technology
Sometimes, perhaps, a plaster is the approprite response to a problem but maybe global warming isn’t a cut finger- discuss?
Was QE a good thing?
https://www.ted.com/talks/michael_metcalfe_we_need_money_for_aid_so_let_s_print_it
Did it work?
“As former Fed Chairman Ben Bernanke quipped in 2012, “Well, the problem with QE is it works in practice, but it doesn’t work in theory.”
https://www.philadelphiafed.org/the-economy/monetary-policy/did-quantitative-easing-work
Does printing money “work”?
“With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse
Martin Wolf, chief economics commentator at the Financial Times, wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "an enormous part of what banks did in the early part of this decade—the off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itself—was to find a way round regulation."[360]
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