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The underestimation of potential losses from "summary" of The Big Short: Inside the Doomsday Machine (movie tie-in) by Michael Lewis
The underestimation of potential losses is a critical concept to understand in the world of finance. It refers to the tendency for individuals and institutions to miscalculate the risks associated with their investments. This miscalculation can have serious consequences, as it can lead to significant financial losses. One of the reasons why potential losses are often underestimated is due to a phenomenon known as "groupthink." This occurs when individuals within a group or organization are influenced by the opinions of others, even if those opinions are flawed. In the context of finance, this can lead to a false sense of security, as individuals may rely too heavily on the opinions of their peers rather than conducting ...
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