Attack of the 50 ft woman!
As you can see the average height of adult females is around 64 inches, or about 5'4". The laws of statistics tell us that 99.7 percent of women will be between 4'3" and 6'4". Well, what do you suppose the odds are of a woman being 20 feet tall? See if you can find it on the graph - that's about 243 inches. (50 ft didn't fit)
Why Volkswagen was the world's most valuable company: for a few minutes.
Here's how it all went crazy: Porsche called up the people who owed them options, and said "Gib mir meine Bestände!" ("Give me my stocks, now!" ) The option sellers had to rush out and buy 32% of all VW stock - oops! Only 5% of the stock was for sale. This is called a "short squeeze".
|Price history of Volkswagen shares (VOW). Hint: This is not a bell curve.|
Life in Mediocristan and Extremistan
The height of women, and the price of VW stock are examples of what economist Nassim Nicholas Taleb humorously refers to as Mediocristan and Extremistan. These two fictional countries represent the predictable world of things like height, and the insanely unpredictable world of stock prices.
Residents of Extremistan include Bill Gates and the price of VW stock on October 23, 2008, and most lottery grand prize winners. Bill Gates is has a net worth of $63 Billion, as compared to the mean U.S. net worth of $556,300*. If Bill Gates's height were proportional to his wealth, he would stand at a height of about 100 miles.
- Rare events are common, you just never know which event!
- Options trading is riskier than you may think
- The bell curve does not apply to everything
- Bill Gates is 100 miles tall, financially speaking