Friday, August 12, 2011

Market crash

 (sources herehere and here)

At the start of this week we had a farewell dinner with our house hosts Trudy and Ian. He is a financial adviser and we we were talking about communicating risk to his customers. I can see parallels between giving investment advice and being a forecaster. Good predictions of rivers can be like money in the bank to some users. But what happens when the market crashes?

At first I thought there must be that sinking feeling, an initial denial as to what's happening. There's that sense that there has to be an "undo" button, "please let this not be happening". Then there's the gut churning realization that the money is gone and not coming back. It seems unfair. I shouldn't be going through this.
Do we really deserve this?
 Ian may have seen it in a different way. Of course we deserve this. Everyone knew the risks, even the risk of extreme events. This should come as no surprise. Ian said he wasn't a financial adviser, he was a risk manager. What is the risk? What is your objective? How much risk are you willing to accept?
The stock market or river levels?
He said the worst part of his job is getting a call from his mother, asking how things are going (when everybody knows things aren't going well). My mother used to call me and ask if I was responsible for the flood in this region or that. Honestly, it wasn't my fault, this kind of thing just happens.

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