Oxford, David Hume, Soros, Karl Popper, Black Swan, Iran and the Stock Market
Man anar bildning från Oxford.
We might be witnessing the revenge of David Hume in the Middle East. The ideas of Scotland’s great 18th century philosopher, and friend of the father of economics Adam Smith, are best remembered now for their bracing if extreme skepticism.
Hume summarized this most clearly as the “problem of induction.” In today’s terms, just because B has always followed A in the instances we have observed in the past does not prove that A caused B, or that A will always be followed by B.
In the language of modern economics, correlation does not mean causation.
George Soros’s approach to investing comes from the philosophy of science that he imbibed from Karl Popper, who held that an idea was useless if there was no way in which it might be shown to be false.
Nassim Taleb’s hugely influential concept of extreme but low-probability black swan events comes straight from a Hume thought experiment: Europeans thought all swans were white until they went to Australia and discovered that some were black.
Four trading days after news of the US and Israeli attacks on Iran, the death of Ayatollah Khamenei and the first Iranian reprisals, the S&P 500, which accounts for more than half of the entire global stock market, was down only 0.7%.
It actually registered two daily gains.
Shocks by definition are rare. Generally, the truly terrible outcomes can be avoided. To to stay calm now involves assuming that this will be one of those shocks that can be resolved.
That’s not a safe assumption. It’s only a good time to buy if the shock is resolved; if not, shareholders should run for the hills.
What happens next in Iran is unknowable.
John Authers March 6, 2026
Sth NY 6 mars
https://englundmacro.blogspot.com/2026/03/sth-ny-6-mars-hormuz-near-total-halt.html
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