In 1931, Kurt Gödel shocked the mathematical world by proving that in any consistent formal system, "there will always be statements about natural numbers that are true, but that are unprovable within the system".

In short, no sufficiently complex logical system can simultaneously be both consistent and complete.

Financial models (like the Black-Scholes options pricing or DCF models) are enclosed logical systems.

Gödel reminds us that these models can never perfectly encapsulate the complexity of the market.

There will always be "unprovable" variables, irrational human behaviors, and tail-risks that exist outside the boundaries of your spreadsheet.

Like this mental model and want to learn more? 👇