We’re all suckers. Everyone of us; marks, dupes, half-wits, morons, dumb-asses, you name it. Why, because the universe doesn’t actually work the way we think it does nor the way everyone told us, even in academia, it does. The real why is outliers; unpredictable and profound ways the future does not resemble the past. And sometimes you cannot avoid it. That’s why we’re all suckers.

Take the chicken for example. For 1,000 days the farmer brings it food; every day food, and even more food each day as it grows bigger. The chicken likes the farmer, he even tries to get at the front of the line when he comes out to feed the other chickens because then you get even more chicken feed. Then on day 1,001 the farmer comes out and chops off his head. The chicken is a sucker, a mark, a fool. Why? Obvious right. In hind sight, even though the farmer never came out with a cleaver to cut anyone else’s head off in the past 1,000 days, he shoulda known this could happen. Right. We’re that smart. Suckers.

In fact the chicken should have been trying to escape from the coop those 1,000 days instead of being at the front of the line so he could be the first sucker, every minute of those 1,000 days, escape, at least when he was fat and happy he should have been trying to get out of that coop and get away. He shoulda seen it comin’ just like we would have. Right? Serves him right, the sucker.

We would have known better. We would have taken a lesson from the past and applied it to life today and avoided being the sucker. Right. Suckers.

I’ll give one example: the real estate bubble that popped in 2008 and took the world economy into “The Great Recession.” Everyone lost their retirement savings, pension fund savings were depleted, even world governments (Iceland, Greece, Ireland, Portugal, Spain) went into the dumper. In hindsight we shoulda, woulda, coulda, avoided this. We shoulda known everyone wasn’t going to live in Las Vegas or Dublin eventually. We shoulda known those nebulous mortgage backed securities were potentially pretty shaky. Right. Suckers.

In fact, we had an advantage over the chicken, we actually had prior knowledge that this could happen. Remember the Internet bubble in 2000? Everyone’s gonna want to buy their dog food on-line eventually. Right. Look up “Tulip Mania” for an example a long, long time ago. Go ahead, Google it, this’ll still be here when you’re done. Alright, everyone (no one) back? Suckers.

Outliers, I finally get to my point. History, economics, politics, even science, just about everything is ultimately mainly because of the outlier (head chopping day), not the average (feeding day). Most of our hindsight is worthless. Those nice rising graphs about stock. Worthless, all stocks tend to rise in a rising market. Tomorrow is going to be just like yesterday. The graphs tell us so. Financial advisors tell us so, politicians tell us so, historians tell us so, and even some scientists (THEY should know better) tell us so. When they make their graphs they omit the outlier, (That was just one day. Look at the trend, that can’t happen again, it’s too far out of the norm. Something was wrong that day. And the real kicker: The numbers don’t support it!) we can safely ignore it. If anyone says any of these things to you, get as far away as possible from them. They’re suckers and they want to make you one. Blood sucking vampires and werewolves that will change you into one of them overnight. A sucker.

History is the facts conveniently packaged where the historian decides in hindsight what to include and what to ignore (If you don’t believe read the basis for the criticism of most history papers) and combines them into a linear narrative and almost always they will ignore the outlier when predicting the future from that past history. Life isn’t linear, it’s real bumpy and dominated by the outlier. Numbers that work in the idealized realms of science (sometimes, be careful) and mathematics don’t work in the squishier realms of the real world. Suckers.


Why is this relevant now? Simple: The Dow Jones Industrial Average, DJIA. Look at the graphs and then throw them away. Don’t be a sucker. But most of you will keep on being suckers, the sheep herded every day by the media, advisors, politicians, city councilmen, the doom sayers. You’re gonna keep your mutual fund in the stock market too long. But don’t worry because even if it crashes things will get better, they always do, and it can’t happen again anyway. It never did before, sucker.

If you have the slightest interest in this and how to potentially not be a sucker please read

    The Black Swan: The Impact of the Highly Improbable

by Nassim Nicholas Taleb. He conveys it so much better and in a more entertaining style. I never had an original idea in my life so that’s where it came from.