If it was so obvious, no institution would rely on the model, nor would people rely on institutions that use the models.
Objectively there would be a perpetual hedge - and that is how it is from the perspective of a scientist - but from the perspective of practitioners of theory, the model presents an accurate enough picture that it possesses a degree of truth which is illusory. But even with some arbitrarily defined 99% success, you can never predict when the 1% failure will occur, and if we allow Mandelbrot's postulate
Now in things like celestial bodies and their trajectories - it's relegated to some distant inanity that extraordinarily curious people have derived, getting it wrong doesn't change the way the planets revolve around the sun.
In the facets of civilization which they can affect, such as economics, they become a serious hazard, because they can and do affect the way the planet moves. It's a pernicious effect, that were it so known and obvious, would be forcibly relegated to oblivion. When probability is measured in infinitesimal fractions of continuous time a 1% fail rate becomes very substantial, and especially when it isn't accounted for in every dimension, to give an example:
"The “spreads” between brokers’ bid and ask prices widened sharply—as much as 19 percent above the industry’s norms (that translates into an instantaneous windfall to any broker who called it right, and near-ruin to those who got it wrong). The turmoil spread around the globe: The Hong Kong index fell 14 percent, London 9 percent. In the final twenty-four minutes before the New York market closed at 3:30, prices plummeted at an average rate of 0.10 percent a minute, or 6 percent an hour, the SEC calculated. Put that into perspective: The value of American business was falling $100 million a second. The next morning, prices roared in the opposite direction even faster. But the fastest action of all concentrated into three isolated minutes in the whole twenty-four hours: between 3:12 and 3:14 p.m. New York time, and between 3:24 and 3:25 p.m. This was no mere financial storm. It was a hurricane."
-Mandelbrot, The (mis)Behavior of Markets
Your position is also highly reductionist, Taleb covers a lot of broad ground, including his own models, which are duly hedged from his perspective as a staunch empiricist.
If it was so obvious, no institution would rely on the model, nor would people rely on institutions that use the models.
Objectively there would be a perpetual hedge - and that is how it is from the perspective of a scientist - but from the perspective of practitioners of theory, the model presents an accurate enough picture that it possesses a degree of truth which is illusory. But even with some arbitrarily defined 99% success, you can never predict when the 1% failure will occur, and if we allow Mandelbrot's postulate
Now in things like celestial bodies and their trajectories - it's relegated to some distant inanity that extraordinarily curious people have derived, getting it wrong doesn't change the way the planets revolve around the sun.
In the facets of civilization which they can affect, such as economics, they become a serious hazard, because they can and do affect the way the planet moves. It's a pernicious effect, that were it so known and obvious, would be forcibly relegated to oblivion. When probability is measured in infinitesimal fractions of continuous time a 1% fail rate becomes very substantial, and especially when it isn't accounted for in every dimension, to give an example:
"The “spreads” between brokers’ bid and ask prices widened sharply—as much as 19 percent above the industry’s norms (that translates into an instantaneous windfall to any broker who called it right, and near-ruin to those who got it wrong). The turmoil spread around the globe: The Hong Kong index fell 14 percent, London 9 percent. In the final twenty-four minutes before the New York market closed at 3:30, prices plummeted at an average rate of 0.10 percent a minute, or 6 percent an hour, the SEC calculated. Put that into perspective: The value of American business was falling $100 million a second. The next morning, prices roared in the opposite direction even faster. But the fastest action of all concentrated into three isolated minutes in the whole twenty-four hours: between 3:12 and 3:14 p.m. New York time, and between 3:24 and 3:25 p.m. This was no mere financial storm. It was a hurricane."
-Mandelbrot, The (mis)Behavior of Markets
Your position is also highly reductionist, Taleb covers a lot of broad ground, including his own models, which are duly hedged from his perspective as a staunch empiricist.