Know the odds

Understanding how likely something is can help you make better choices

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Episode Transcript

Speaker 1 (00:03):
Welcome to Before Breakfast, a production of iHeartRadio. Good Morning,
This is Laura. Welcome to the Before Breakfast podcast. Today's
tip is to know the odds. Having a good sense
of how likely something is can help you make better

(00:25):
choices and might also be reassuring if you tend to
fixate on unlikely events. A few months ago, I flew
to Japan for spring break with my sixteen year old son.
We had a great time there, but of course we
had to get there. Flying always makes me nervous. In particular,

(00:48):
I am nervous about flights getting canceled or being horribly delayed.
But the good news is that I had been tracking
this particular flight for a while and I saw that
it almost most always left on time. There were only
a few times when it had been delayed, and canceling
was extremely unlikely. This was good to know. Now you

(01:12):
can always get unlucky. Longtime listeners might recall my attempts
to get to Edinburgh a few years ago when United
canceled two days worth of flights in a row. But
when you see the on time record for a flight
and it is good, you can feel better about your
upcoming travel. Knowing the odds can be helpful in all

(01:34):
sorts of circumstances. For instance, I know a lot of
my listeners save and invest for retirement. I find it
helpful to know that in the US market corrections of
ten percent are quite common. If that happens, it is
truly no big deal and nothing to panic over. Twenty

(01:57):
percent drops are less common, but also still not uncommon.
They happen one to two times every five years on average. Again,
no need to get upset about it. Drops of twenty
five percent or more are much less common. There have
only been a handful of drops of thirty percent or

(02:17):
more over the past several decades. Now, that doesn't mean
it won't happen and that the market won't be sideways
for a while. But when you know the odds, you
can see that the average dip of ten to twenty
percent doesn't turn into a full scale sell off. You
can sit tight and you don't need to think a

(02:37):
much about it. You might even find it helpful to
know weather percentages. If you are planning an outdoor wedding,
it's good to have a plan for rain, but you
can also take comfort if you are having the event
somewhere where it tends to only rain, let's say three
days a month during the month you are having the event. Yes,

(02:59):
make a backup plan, but the odds are good that
you won't have to use it. Knowing the odds can
be reassuring, but it can also help you make more
informed choices. If I'm trying to get to an event
and I'm looking at flights that leave close to the
same time, it's helpful to know. If one has an

(03:19):
on time percentage of ninety percent and the other is
more like seventy five percent, probably best to go with
the ninety percent one. There aren't always odds available, but
in many cases there are. Historic flight data is often
available if you search. One of the fascinating things about
modern life is that there are prediction markets, and you

(03:42):
can look at those. You can also seek out any
historical data you can find, or talk to people who've
done something recently. Anecdotes aren't data, of course, but sometimes
they are helpful. If your neighbor has had bad luck
with a certain car and then you look it up
and see that can numer reports reads it as likely
to have problems, well, that is good to know. Maybe

(04:05):
you can look into other brands and save yourself some trouble.
In the meantime, This is Laura. Thanks for listening, and
here's to making the most of our time. Thanks for

(04:25):
listening to Before Breakfast. If you've got questions, ideas, or feedback,
you can reach me at Laura at Laura vandercam dot com.
Before Breakfast is a production of iHeartMedia. For more podcasts
from iHeartMedia, please visit the iHeartRadio app, Apple Podcasts, or

(04:48):
wherever you listen to your favorite shows.