Ergodicity is the most important concept you’ve never heard of

Is ergodicity
really so important?

“[Ergodicity is] The Most Important Property to Understand in Probability, in Life, in Anything.” – Nassim Nicholas Taleb on ergodicity.

“I think the most under-rated idea is ergodicity.” – David Perell, author.

What is it useful for?

If you do not know about ergodicity, you might take wrong choices in life, in relationships, in sports, in investing, and in business.

For instance, one principle of ergodicity is that, in the presence of irreversibility, you might lose playing a game with average gains. For example, relationships deepen over time; however, if you break someone’s trust, he or she might not want to see you anymore, preventing you from having a chance to restore and deepen the relationship again.

Or, as another example, if you have $1000 invested in stocks and lose $700 during a market downturn, and then the stocks double in value, you only gain $300 rather than $1000. When you lost $700, you didn’t only lose them, but all the future gains they could have generated. Irreversible losses absorb future gains.

These are just a couple of ways in which ergodicity or lack thereof might impact your life.

In my book “Ergodicity: Definition, Examples, And Implications, As Simple As Possible” I describe a few more, and the 3 strategies to manage non-ergodicity. You can find it here.