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The Impact of the Highly Improbable

random

Disclaimer:  The following are random musings from the black hole that is my mind.

It seems it’s in our nature to explain things, even though they are many times unexplainable.  It’s almost as though our minds our minds are machines that must create explanations to make sense of everything.

Blind to the random?

If we see or experience something every day, we believe it to be “the truth” or “the way”.   Take for example the years of a run up on real estate.  It was thought “that’s the way it “is”.  The dangerous thing of being blind to the impact of the random or unexpected is they typically result in debilitating shock.

Other examples include the attacks on the WTC or the farm animal that is nurtured and fed its entire life only to learn one (final) day it’s being raised as food.

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All you need is one

Since the random event often yields a devastating aftermath, it becomes clear that the things we don’t know are more important than what we do know.  So, we look to authority figures to provide explanations so we can begin to “solve” and therefore potentially prevent such random occurrences for occurring again.

… the things we don’t know are more important than what we do know …

Check facts, not intelligence

It seems the more convincing the delivery the more we accept the explanation as fact.  Should we dig a bit deeper to determine a potential motive in this explanation?  Perhaps one that is monetarily motivated (i.e. journalists or gurus) or for political positioning?

Do we worry too late?

Does this explain our inability to understand randomness?  We look to find patterns leading up to the random event so we can recognize them and anticipate them.  This can be seen in predicting market crashes based on those in the past, or most recently, in airport security breaches that led to a change in rules when flying (no visits to the bathroom and nothing on your lap during the last hour of flight).

Real estate laden with randomness

We’re looking to the data for answers.  All players in the value chain – buyers, sellers, agents, investors (owners of foreclosed properties) are looking to the data to tell us what to do.  While that’s smart, is it empirical?  It is, after all, historical data.  How does the random event of this economic catastrophe negate the patterns we see from the data?

Is real estate burdened by randomness?  If so, do buyers, sellers and agents suffer due to constantly second guessing their past actions in terms of what occurred, torturing themselves with questions: “If only I hadn’t bit off more than I could chew” or “If only I would have been prepared for the downturn”.

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Waiting for the Big One

Being a San Francisco native (and Bay Area inhabitant) I know it’s going to happen.  I don’t know the odds, and I shudder to think how we will be affected by it.

So, while I don’t know the odds, I do know the consequences and that relieves some of the uncertainty.  I can mitigate what’s known.  That I will need water, food, flashlight, etc.

Tell me below – Given that you can’t know the odds of a random event, but you can mitigate the consequences, what are you doing differently at this phase of your career?

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Written By

Brandie is an unapologetically candid marketing professional who was recently mentioned on BusinessWeek as a Top Young Female Entrepreneur. She recently co-founded consulting firm MarketingTBD. She's held senior level positions with GE and Fidelity, as well as with entrepreneurial start-ups. Raised by a real estate Broker, Brandie is passionate about real estate and is an avid investor. Follow her on Twitter.

10 Comments

10 Comments

  1. Ken Brand

    January 28, 2010 at 5:34 pm

    Juicy!!!! My random thoughts =

    We over estimate what we think we know and underestimate what we don’t know. Just remembering that alone keeps me from getting creamed more often. As you’ve shared, checking facts is smart.

    We all have blind spots, the problem is they’re called “blind spots” for a reason. A trusted friend, Sensi, lover or svengali can help with this.

    Then you always have your Black Swans, doesn’t matter how much you know or what you’ve experienced before or how well you’ve prepared, “Shit Happens.”

    And last, these days, I try to listen, observe and assimilate, don’t judge and jump too fast and consciously consider the what if’s in terms of action, reaction, impact, implications, and like I said, I ask myself if I am I over estimating what I think I know and underestimating what I don’t know.

    OK, one last-last thing, these days, I leave myself open minded to the idea that nobody really knows what will happen, what people will do or why….so I do my best and pull the trigger. If the gun blows up in my face, I’ll deal with it when it happens.

    Very interesting subject Brandie. Thanks.

  2. Benn Rosales

    January 29, 2010 at 10:41 am

    I can honestly say I won’t do ‘that’ again in hindsight, but I know damn good and well I probably will if it feels good or feels right, regardless if logic says I shouldn’t- equal to your living where the big one might be some day because someone said it should.

    I’m living this right now after my heart attack, all signs say I should not have had one, but it happened, I’m right there in the middle of I know I shouldn’t but I do, reading the data, researching the results, and all signs point to I was doing everything right but it still happened and it happened so much that it’s changed my life entirely as well as my families and our futures to more unknown and known certainties- I guess I’ll let you know how it turns out.

    As for real estate directly, so what, it’s a building, it’s savings, it’s a lot of tangible things, but it’s not so tangible that it exceeds what’s most important which is having lost what seems to be everything, you still have one another, those that you love and care about- you can always buy another building, file bankruptcy, or whatever brings closure and allows you to move on to better days, and probably worse days too, but so what, home is where you are, not the building.

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