I'm not a fan of financial plans that use straight-line projections or Monte Carlo risk analysis to support ... then active management to outperform low-cost index funds will fail over time.

Also known as the Monte Carlo fallacy ... The gambler’s fallacy can also affect risk management decisions. Leaders may underestimate risks after a series of positive outcomes, assuming that ...

The model to make this prediction is called “stochastic” — a fancy way to describe what is a typical Monte Carlo simulation ... do not eliminate all risk, but they make the risk more manageable.