If I had to teach this in one paragraph, I would start here: base rates protect you from falling in love with a vivid but statistically weak story. Three quick checks before you act: 1. Name the mechanism in plain English: Narratives are powerful because they are memorable. Base rates are powerful because they stop you from overpaying for what is memorable. 2. Say why it matters for behavior or portfolio decisions: That matters in markets because rare success stories get far more airtime than ordinary failure paths. 3. Set the review question: If you had to teach this without jargon, what would you tell someone to monitor first? In real life: Before treating a turnaround as obvious, ask how often similar balance-sheet situations actually stabilize without dilution or restructuring. Common slip: The classic mistake is replacing sample-wide evidence with one persuasive anecdote. That is usually where the edge is: not in the vocabulary, but in the structure underneath it.