How to 'appropriately' predict an uncertain future
How to survive and ultimately win even when your predictions are wrong

If you lose money in a trade where you expected a profit with an 85% probability and a loss with a 15% probability, but something happened that you expected to happen with a 15% probability, is that a wrong decision?
Rather than regretting the failed outcome, it is probabilistic thinking to consistently maintain this perspective by concluding that "the outcome was bad, but the judgment was not wrong."

Even though the world is uncertain and difficult to predict, we cannot vaguely prepare for the future.
Probabilistic thinking is also about 'appropriately' predicting the future to cope with uncertainty.
Here, the purpose of prediction is not to predict the future, but to 'react flexibly to unexpected events and correct course when expectations go wrong.'
All predictions are hypotheses.
If it is logically valid, then the hypothesis is neither right nor wrong.
There are only high and low probabilities.

The key to probabilistic thinking is to prepare various response methods in advance (securing diversity), develop through repeated trial and error and modification (allowing and utilizing failure), and implement over a long period of time in a way that is likely to produce good results (long-term perspective).
This book offers insight into an uncertain world through probabilistic thinking, crossing fields such as markets, finance, history, physics, evolution, and behavioral economics.
From personal life to business management, we guide you on the path to sustainable success, not short-term success that depends on chance.

Probabilistic thinking is not a common term and has no clear definition.
There is a mindset required to sustain success in a complex world full of uncertainty.
It is about understanding the world probabilistically and not taking anything for granted.
The purpose of this book is to call this probabilistic thinking and to examine what it is.
--- p.20

In the world of sports, there are always winners and losers.
This is not to say that results and skills have no relation at all.
But skill doesn't necessarily lead to results.
In a tournament model, skill is represented as a probability.
This is natural, as there is no guarantee that a team with excellent skills will win.
In short, skill affects the outcome only through the filter of probability.
--- p.51


As we have seen, people mistake coincidence for necessity.
They feel that their everyday lives, made up of coincidences, are determined by fate, they believe in stock price predictions, they perceive heroes and ordinary people as different types of people, and they believe that winners are the strongest.
However, I do not intend to conclude that people are irrational and foolish beings.
However, this only means that we must recognize that it is such a being.
--- p.54~55


It was unpredictable that [the Meng army] would be caught up in political intrigue, be in danger of death, have furs demanded from a concubine, be pursued by a pursuer, and have the border gates closed.
The one who saved him from such a desperate crisis was a gourmet from the Gyeomyeonggudo clan that people laughed at behind his back.
This test illustrates that unexpected solutions can be helpful when solving unforeseen problems, and that it's important to always have a variety of solutions available, since such events cannot be foreseen.
In short, probabilistic thinking saved the blind from danger.
--- p.68~69


After giving it your all in the fog of battle, you finally achieve victory by relying on the power of chance, which leads to a more certain and less uncertain way of winning.
This is the way of thinking of a master.
On the contrary, the common general mistakenly believes that the victory he accidentally attained after fighting recklessly in the fog was achieved through his own efforts, and he continues to fight in the thick fog until one day he is defeated.
--- p.88

The success of the breast is due to diversity and trial and error, which are the core of probabilistic thinking.
The breasts were sometimes in desperate situations, but each time, the various talents he selected worked in various ways to save them.
The reason Liu Bang ultimately won against the formidable opponent Xiang Yu was because he exercised better government than Xiang Yu, employed superior strategies than Xiang Yu, and gave his generals more authority than Xiang Yu, allowing them to fight to their hearts' content.
Of course, this is not something that can be achieved by one person.
The selection came from Soha's talent, the strategy came from Zhang Liang's mind, and the successive victories of the special forces were achieved by Han Xin.
If you have only one of these elements, your chances of winning are not high.
When these various factors come together, your odds of winning increase dramatically.
(Omitted) Another element that cannot be left out when discussing breasts is trial and error.
The breasts were chosen without discrimination if they were talented and accepted diverse ideas.
Even if I had no achievements or was of low status, I didn't care at all.
Of course, there were many failures.
But the breasts did not blame the failure.
--- p.101~102


To say categorically that the stock market is not a random walk and to think that there is a sure way to make money is a way of thinking that is far removed from probabilistic thinking.
It takes considerable careful consideration to argue that factors other than chance play a role in stock movements and that profits can be made through effort or ability.
Of course, my conclusion is that it is possible.
However, given the magnitude of the influence of chance, any method of profiting from the stock market needs to be explained probabilistically.
There is no 100% sure method.
There is only one way to have a higher probability of winning.
--- p.137

One example is a transaction executed with the expectation that the expected value is high, with an 85% probability of a profit of △△ dollars and a 15% probability of a loss of □□ dollars.
I ended up losing money because something I had seen happen with a 15% chance.
Rubin later reflected on his decision and concluded, “The result was bad, but the decision itself was not wrong.”
This is the essence of probabilistic thinking.
Just because something you thought had a 15% chance actually happened doesn't mean your judgment was wrong.
An event that has a 15% chance of happening has a 15% chance of happening.
What would be wrong is if you judged something to have a 15% chance of happening when it should have had a 50% chance.
--- p.138

Ultimately, complexity does not alleviate the uncertainty that arises from unpredictability.
Rather, it seems to play a role in firmly rooting the effects of uncertainty in the world.
Above all, complex systems have the ability to greatly amplify the influence of chance.
So, if we ignore the effects of uncertainty in complex social phenomena, we fall into unexpected traps.
--- p.203

As we've seen, a world of uncertainty requires diversity, acceptance and utilization of failure, and a long-term perspective.
These three are the keywords of probabilistic thinking.
When these elements are in place, you can embrace diverse perspectives, sometimes experience small failures, and move forward little by little, leading to long-lasting success.
This is the 'progress by trial and error, without a plan' that we see in ancient Rome and the evolution of life, and it is the very essence of probabilistic thinking.
--- p.214~215

By the law of large numbers and the effects of time, truth becomes clearer over time, and the difference between the right way and the wrong way gradually increases.
Short-term results are often more influenced by chance than skill.
But long-term success cannot be achieved by chance alone.

--- p.245