Innumeracy

Understanding markets requires some appreciation of probability, but not as much as some would have you believe. In fact, I think knowing what you DON'T know, or eliminating numerical illusions, plays on what John Allen Paulos calls our "innumeracy," is more critical than sophisticated mathematical models with lots of Greek characters.
But even more basically, since so many of us are challenged to grasp the relative orders of magnitude of large numbers, we are groping somewhat blindly. For example, consider the following examples drawn from Paulos' book:
Universe size: Entire universe is supposed to be enclosed in a sphere with a diameter of 40 billion light years.
Most of us have little appreciation of the magnitudes of difference between large numbers. For example: It takes about 11.6 days for 1 million seconds to pass but 31.7 YEARS for 1 billion seconds to pass.
We also have no idea how un-random random events can be. For example, students asked to guess which of a series of coin flips was random and which created by a human being will invariably choose the series with the least number of runs of HHHH or TTTSs, yet long series of heads or tails occur frequently. It is this counterintuitive nature of randomness that has us searching for patterns where none exist.
As a more ridiculous example of this, listen to this explanation of why Kyle caused the 9-11 attacks using numerical theories:
http://www.southparkstudios.com/downloads/display_video.php?ep_number=1009&ep_name=Mystery%20of%20the%20Urinal%20Deuce&vid=http://images.southparkstudios.com/media/video/1009/1009_cartman_conspiracy.mov&vid_name=Cartmans%209/11%20PowerPoint.
Enjoy.