A story about how a winning streak can fool and lead to a mispricing of risk.

Rare as apples 

When I was a young lad I remember holding an apple and wondering, in one of my more philosophical moments, how remote the chances were that I should be holding this particular apple.  It was a French apple and I began imagining all the apples in all the orchards in France.  This single apple was picked, packed and journeyed across the Channel.  It was then passed to one of many distributors and sold to one of a thousand shops selling a million apples.  What are the chances, I pondered, of seeing that apple on a tree in the orchard and then it landing in my hand days later.  I didn’t really know the chances of course, I just knew they were remote.  I also understood that since I had an apple in my hand, one apple from one orchard was always going to make that identical journey just as I had imagined it. 
Continued