Malcolm Gladwell Article on Nassim Taleb (written in 2002)

[twacowfca]

I think this whole Taleb black swan is bogus when it comes to making money. or at least for individual investors. It is a great mathematical concept that has practical relevance in some fields like engineering, national security etc

 

Where are his last 20 years of returns? why is he not a billionaire yet? I can make a bet that he made more money off his books than his returns.

 

there is so much controversy over his returns

http://www.businessinsider.com/wait-before-you-invest-in-nassim-talebs-new-fund-2009-6

 

what he is trying to sell is this. An inverse correlated returns with the market. there are lots of suckers for this kind of fund.

 

 

The appeal of this type of fund is the same as the appeal of short funds: inverse correlation with the market -- not the prospect of good to great returns.  Taleb is smart despite his tendency to be disagreeable.  This type of fund will be a loser in benign, slowly rising markets.  It will do extremely well when markets become unstable and crash.

[woltac]

Nassim Taleb's investment strategy is not that interesting to me.  However, after reading his books it is much easier to totally disregard the "experts" and their financial predictions.  He reminds me that the next Black Swan is right around the corner.  If I am more prepared for the next calamity than I was for the last one, then the time it took to read the Black Swan and Fooled by Randomness was well worth it.

[vinod1]

Taleb seems to me like a man with a hammer syndrome... It has a lot of offer the investor but it is not the basis of an investment strategy.

 

To me the most important points are (1) Ignore standard risk models - anything that uses std dev, beta, etc. (2) Future is unpredictable and mostly develops in random ways, so be prepared to handle black swan type risks. (3) Be particularly skeptical of causality explanations.

 

Vinod

[twacowfca]

Taleb seems to me like a man with a hammer syndrome... It has a lot of offer the investor but it is not the basis of an investment strategy.

 

To me the most important points are (1) Ignore standard risk models - anything that uses std dev, beta, etc. (2) Future is unpredictable and mostly develops in random ways, so be prepared to handle black swan type risks. (3) Be particularly skeptical of causality explanations.

 

Vinod

 

Mostly agree, but the most important aspects of the future that can be disruptive most certainly do not develop in random ( stochastic ) ways.  These fractal patterns are typically hypernormal for fairly lengthy periods and then jump off the chart for briefer periods.  These regime changes cannot be predicted absolutely, but there are often warning signs, like earth movement before a volcano erupts, that indicate increased risk.