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Published on Jul 10, 2009
http://ifarcs.com - http://ifa.com - http://indexfundsbook.com- This probability machine is often referred to as a Galton Board. We use it to explain the randomness of stock market returns. It produces a normal bell-shaped curve distribution from small balls dropping through strategically placed placed pins. This curve is very similar to monthly returns of the S&P 500 over 50 years. The Galton board, also known as a quincunx or bean machine, is a device for statistical experiments named after English scientist Sir Francis Galton. Francis Galton was a British meteorologist, biologist, and statistician, and the cousin of Charles Darwin. The pinball device with the triangular array of pegs was described in his book Natural Inheritance, published in 1889. He called the device a quincunx, but it is now known as the Galton board. This machine was built in 1981 at Princeton University. The machine was named Murphy due to all the difficulties that were experienced in the creation. Murphy's law is an old adage that broadly states: "Anything that can go wrong, will go wrong." See the story on the creation of Murphy here: http://www.cabinetmagazine.org/issues...