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Stalking the Black Swan: Research and Decision Making in a World of Extreme Volatility resources

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introduction By ratiocination, I mean computation. —Th omas Hobbes, 1588– 1679 If I had to bet on the best long- term predictor of good judg- ment among [a group of po liti cal and economic forecasters], it would be their commitment— their soul- searching Socratic commitment— to thinking about how they think. —Philip Tetlock, Expert Po liti cal Judgment, 2005 Th e premise of this book is that the practice of fundamental research can help decision makers adapt to a world of “Black Swans,” the seemingly improbable but highly consequential surprises that turn our familiar ways of thinking upside down. Most commonly associated with the work of Benjamin Graham and David Dodd, fundamental research is the study of causal variables under- lying the per for mance of companies, industries, or economies, with the goal of predicting future developments. Th e research strategies in this book build upon that heritage, but they have been updated for the growing importance of computer technology, and they have a special focus on volatility. To be sure, fundamental research (with or without computers) will not provide a sure- fi re way to success. We are all destined to be surprised far more often than we would like. Nonetheless, this book shows how fundamental research can help us forecast some Black Swans, recognize the possibility of others just a little bit earlier, and when surprise is unavoidable, react more quickly and (one hopes) mitigate the losses (possibly catastrophic) that result from misjudgments dur- ing periods of extreme volatility.

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