farmdoc's blog post number 219

If you roll a die twice and get a six both times, what’s the chance of a six on the third roll? Assuming the die’s not loaded, it’s one in six. In other words, as they say in investment circles, past performance is no indication of future returns. It's quite simple and straight-forward, really. No worries. But you might worry if you were a passenger on a certain Qantas jumbo jet. You know, the one whose side was blown out last July by an exploding oxygen cylinder. The repairs, which cost A$10m, were completed 10 days ago. Three days later, when the same jet was being towed across the tarmac, it struck another Qantas jumbo, resulting in further damage. So now, if you have to fly from A to B and I give you the choice of flying in that twice-damaged plane or another, never-damaged one, with the same fare on each, which plane would you choose? And why? Okay, so what if the fare on the 2-time loser plane was half of the fare on the accident-free plane? Or a quarter? Or free? Interesting to ponder, eh. I’ve previously written that I think of myself as a sceptic, i.e. the antithesis of a superstitious man. But I don’t know what I’d choose in this case. Especially as it’s said that bad things come in threes.