Nassim Nicholas Taleb - Fooled by Randomness

• Just because something hasn't happened in the past, doesn't mean it won't occur in the future.
• For this reason he buys options on unlikely events because their is no accurate model for determining its risk, so for the most part it will be underpriced
• Jamie Dimon of JPM said the crash was a 25 sigma event that means it shouldn't happen in millions of universes over billions of years.  Yet over the last 100 years, we have witnessed several of these 'unlikely' events.
• LTCM was based on this belief as well, took less than 5 years for a different model to break.  
• LTCM sold everything US and bought everything that yielded higher.
• CDS markets swamped the CDO markets leading to many financial institutions going bankrupt.
• Follow the debt to get the answer of who will get screwed.