What I Learned from Losing $200 Million - Issue 31: Stress - Nautilus - Deepstash
What I Learned from Losing $200 Million - Issue 31: Stress - Nautilus

What I Learned from Losing $200 Million - Issue 31: Stress - Nautilus

Curated from: nautil.us

Ideas, facts & insights covering these topics:

5 ideas

·

1.15K reads

3

Explore the World's Best Ideas

Join today and uncover 100+ curated journeys from 50+ topics. Unlock access to our mobile app with extensive features.

The illusion of control

Stress testing is a standard technique used to test how someone will perform in the "worst-case" scenario. The problem is that the "worst-case" scenario is subjective, causing an illusion of control.

  • It can make a person overconfident in themselves, believing that they have complete control.
  • Circumstances can make people feel like they're engaged in acts of skill rather than luck, which make them overestimate their prospects.

128

339 reads

Success and crisis

Success in “normal” circumstances does not mean that you will succeed in a crisis since, in a crisis, the rules change. However, it can make you feel confident and make you highly vulnerable to the next crisis.

85

241 reads

Drawing up your own tests

Your own incentives may support an illusion of control. If you draw up your own worst-case scenarios, you will always pass, but as a result, you will develop blind spots.

Encourage innovation in risk models to increase diversification and decrease risk.

78

199 reads

Stress tests

Stress tests

Stress tests cannot be improved. History is a much better predictor than a stress test. But even history requires a model to interpret it.

We always have a preconception of cause and effect, and therefore some prejudice for how to interpret the data. That does not mean that we should revert to inaction for fear of the worst possible result.

68

177 reads

Abandon the illusion of control

The illusion of control can be adaptive, in the sense that it encourages a focus on problem-solving behaviors as opposed to an emotional response.

Producing your best-informed guesswork prevents the anticipation in stress testing. However, there will always be some things you cannot completely control.

76

199 reads

IDEAS CURATED BY

jam_iee

Life is like facebook. People will like your problems & comment, but no one will solve them because everyone`s busy updating theirs.

James E.'s ideas are part of this journey:

Design Frameworks

Learn more about moneyandinvestments with this collection

How to beat procrastination

How to enhance your creative thinking

How to create a smooth transition in a new endeavor

Related collections

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Personalized microlearning

100+ Learning Journeys

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

Email

I agree to receive email updates