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From Nick Paumgarten's Talk of the Town relating his night spent watching the election returns with finance types:
Another guest, a trader and market strategist who had voted for Ralph Nader, agreed about 2012, but according to a different logic. He expounded on a belief he held regarding the cycles of history and the markets. It was based, he said, on the formula for the circumference of a circle—the idea that 2πr might apply to the financial cycle—and, in combination with various Fibonacci fractal techniques, it had made him a lot of money. You could slice up history into what he called pi cycles, each lasting exactly three thousand one hundred and forty-one days, or 8.6 years. You could subdivide these, by the hours on a clock, say, or the signs of the zodiac, and detect mini-cycles of 8.6 months. He rattled off a series of inflectionary dates and occurrences: the Nikkei high, in late 1989; the ruble collapse, in mid-1998; the historically tight credit spreads in early 2007. By God, he was onto something. Another Tusker, please. In the background, the electoral map showed that at some point during this dissertation Obama had taken Pennsylvania and Ohio.This reminds me of a passage from Malcolm Gladwell's brilliant profile of Nassim Taleb:
For Taleb, then, the question why someone was a success in the financial marketplace was vexing. Taleb could do the arithmetic in his head. Suppose that there were ten thousand investment managers out there, which is not an outlandish number, and that every year half of them, entirely by chance, made money and half of them, entirely by chance, lost money. And suppose that every year the losers were tossed out, and the game replayed with those who remained. At the end of five years, there would be three hundred and thirteen people who had made money in every one of those years, and after ten years there would be nine people who had made money every single year in a row, all out of pure luck.It's always worth remembering that a certain percentage of very rich, very powerful, very successful people are in fact quite dumb, but happen to be very lucky.
