[Moodles]

Yeah it’s hard. There is about 200 years of stock market data so I would look at the biggest crashes to get a sense of what the biggest of them all could be. I guess that’s the German tank problem. It seems very unlikely we’ll get a crash relatively twice as bad as the Great Depression though

[sanderjd]

Why does that seem very unlikely? It seems to me that the right way to think about that is that the likelihood is simply unknowable either way.

[Moodles]

It seems very unlikely since there's 200 years of data to show that was the biggest crash ever. So a crash twice that size is very unlikely. You could do the math to calculate the exact probability given the sample size of stock market years.

[sanderjd]

But ... that 200 years of data has nothing to do with what is going to happen in the future...

[Moodles]

Not nothing.

[sanderjd]

I guess this always devolves into philosophy, but yes, the future is actually unknowable.

[Moodles]

Right, and at some point you have to choose to live your life assuming there isn't an undetectable asteroid about to wipe out all human civilization, even though you don't know the probability of it happening.