I’ve been reading Nate Silver’s “The Signal and the Noise” recently, and pretty much every chapter seems to lend itself to a contingency matrix. Each chapter is focused around a different prediction issue, and Chapter 1 is around the housing bubble and the incorrect valuation of the CDO market.

I wasn’t going to get in to CDO ratings, but here’s the housing bubble:

SignalNoiseCh1

 

It should be noted that swapping the word “home” in the title for any other product describes pretty much every market bubble ever. Color scheme taken from the cover art of the hardcover version, or maybe the Simpsons.

 

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