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Optimal Finance Daily - Financial Independence and Money Advice

2851: Why You Don’t Know the Price Until You Sell by Nick Maggiulli of Of Dollars and Data on Liquidity

Optimal Finance Daily - Financial Independence and Money Advice

Optimal Living Daily LLC

Investing, Self-improvement, Education, Business

4.51.3K Ratings

🗓️ 1 September 2024

⏱️ 11 minutes

🧾️ Download transcript

Summary

Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com. Episode 2851: Nick Maggiulli of OfDollarsAndData.com explains the unpredictable nature of asset pricing through the lens of Schrödinger's cat thought experiment. He emphasizes the importance of liquidity and emergency savings to avoid selling assets at a loss during economic downturns. Read along with the original article(s) here: https://ofdollarsanddata.com/why-you-dont-know-the-price-until-you-sell/ Quotes to ponder: "Only once you have opened the steel chamber could you determine whether the cat was living or deceased." "The cruel world of price discovery can befall anyone." "Cash during a panic is like having water in the desert." Episode references: Wealth, War, and Wisdom: https://www.amazon.com/Wealth-War-Wisdom-Barton-Biggs/dp/0470223073 When Genius Failed: https://www.amazon.com/When-Genius-Failed-Long-Term-Capital/dp/0375758259 Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0

This is optimal finance daily.

0:03.0

Why you don't know the price until you sell,

0:06.0

by Nick Majulley of of dollars and data.com.

0:10.0

And I'm your host and personal finance enthusiast Diana Merriam.

0:14.0

I'm going to jump right into today's post as we optimize your life.

0:20.0

Why you don't know the price until you sell by Nick Mad Julie of of dollars and data.com

0:30.7

It was 1935 and the Austrian physicist Erwin Schrodinger had a problem with Albert Einstein.

0:38.0

Einstein had just released a paper with two fellow scientists that discussed the concept of superposition, an idea

0:46.8

that seemed somewhat absurd to Schrodinger. Superposition implied that an atom or any quantum system was simultaneously in multiple states

0:58.4

until the point of observation. Once the system was observed, its true state would be revealed to the observer.

1:07.0

This implied that the act of observation changed how the universe behaved.

1:12.0

In order to convey his skeptical view on his changed how the universe behaved.

1:12.7

In order to convey his skeptical view on the matter,

1:16.1

Schrodinger devised a thought experiment.

1:19.4

Quote, one can even set up quite ridiculous cases. A cat is penned up in a steel chamber with a Geiger counter and a tiny bit of radioactive substance, so small that perhaps in the course of the hour one of the atoms

1:37.0

decays, but also with equal probability perhaps none of it decays. If it decays, the counter tube discharges and

1:46.8

releases a hammer that shatters a small flask of hydrocyanic acid. If one has left this entire system to itself for an hour, the

1:57.4

cat still lives if no atom has decayed. However, the first atomic decay would have poisoned it. The entire system would

2:06.4

express this by having in it both the living and dead cat." Shrodinger argued that since the atom's state of decay is unknown, the cat's state of

2:18.6

being alive or dead is also unknown.

2:22.4

Only once you've opened the steel chamber could you determine

2:25.6

whether the cat was living or deceased. You've probably heard of Shrodinger's cat

...

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