Shortly before the crisis broke, Naseem Taleb came to the office to meet me and my colleagues. Hilarious character, and irreverent. He told us calculations were stupid and reminded us about ludic fallacies, narrative fallacies, and so on.<p>My colleagues still contrived to lose $250M over about 8 weeks, blowing up the firm and the investors. One investor lost his job immediately because of it. The money was lost in very obvious way, somewhat similar to what this guy was up to, a big options trade gone wrong, in a market that was not big enough for the biggest fish to escape.<p>What&#x27;s sad is people understand the basic statistical principles. You don&#x27;t know if the future will be like the past. Things move together in a crisis. The more independent tests you make, the more confident you can be in a result. (Ie if you can guess a daily coin flip right 55% of the time, that&#x27;s better that being able to guess an annual coin flip 80% of the time.) And so on. But somehow investors are almost blind to everything other than recent return.