Video: Nassim Nicholas Taleb
Nassim Nicholas Taleb angry with economists. The interviewer was just a journalist clueless about his ideas but he got them across anyway by ignoring her questions
See also:
Taleb's `Black Swan' Investors Post Gains as Markets Take Dive
Stephanie Baker
Bloomberg, Oct. 14, 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDVgqxiT9RSg&
Wednesday, October 15, 2008 | 03:00 AM | Permalink
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If he didn't act so crazy and if his book didn't sound so pompous, i bet more people would listen to him.
Makes me feel bad for sitting through those semesters of statistics and investment analysis.
(Mis)Behavior of Markets by Mandelbrot was also a good book on the subject.
Posted by: alex | Oct 15, 2008 3:21:52 AM
I have talked about Popper on my blog, but I see Taleb as the modern-day Popper. Taleb is a tough read in my opinion, very deliberate and challenging, and his books read almost like classical essays. I was thinking of closing out CNBC Sucks on the philosophies of Taleb, but I will leave that uncertain for now :P
I had planned on looking for Taleb's views on the financial crisis, so thanks for making it easy.
Posted by: CNBC Sucks | Oct 15, 2008 3:32:58 AM
Nassim is afraid that he is right. Aye Yai Yai! He's raising my adrenaline level, good thing I was planning to be up.
May the black swan pass by us without being seen.
Posted by: robert | Oct 15, 2008 3:42:27 AM
Imagine this: you have a pain in your side that persists. So you go to see a specialist, who tells you that you have a serious disease. Seeking a 2nd opinion, you visit another specialist who tells you that you are OK and the situation will pass. As a layman, you are unable to differentiate between the relative merits of the two specialists. Which one are you most likely to believe? Irregardless of (and often despite of) all the truly marvelous technological wizardry, we are still dealing with a fundamental human psychological structure that probably has not changed in the past 50,000 years.
Posted by: JR | Oct 15, 2008 4:15:46 AM
Taleb is Great, he always reminds of Tesla.
Wouldn't be surprised, in the least, if they were 2nd Cousins..
I love his honesty, towit: ~"I only know what I can prove, past that, I don't know. And, I don't talk about things I don't know."
Readily brings to mind, the old adage: The Key to Wisdom is Knowing what you don't Know..
It's amazing to see the contrast between Him, and those (two-)bit players they surrounded him with..That scene, in, and of, itself, shows the "Live from Fantasyland"-nature of most of broadcast Media, anywhere found..
As to his 'popularity', all you have to know is who he is calling out:
Hartford 'Professors' who roll out of bed Convinced: "They KNOW"..
Piles of Ph.d's whose Careers are predicated upon Delusion, and the Maintenance, thereof..
The whole Banking System, as we know it, whose #'s are manufactured from Whole Cloth, stitched together by 'bogus financial models'..
Fidelity, O, the Irony, the largest MutFund Pimp on the face of the Globe (also, one of the largest advertisers) actively misleading their 'di-vestors' with the Product of, more, bogus Financial Models..
The Quant jocks, Hubris defined, that pretend that their Static models can, not only capture, but predict, the slippery Beauty of a Fluid Future..
and, many, too well-deserving, others..
Yep, That'll make Him a Lock for Ms. Congenality, no doubt..
Past that, the look he gave that 'economista' when she said that we need to craft Policy that takes the 'Future' into account, was, to me, truly Priceless--that's a Polaroid worth taking..
Further, you know, I'd have a lot more consideration for the JMK-school, if they'd, only, admit that their theme song was done by The J. Geils Band..
Though, Steve Barry should note his point about the Hedge Funds yet to unwind--to his query of: "Where'd the Shorts go".
Something tells me that those books are going to are going to clear on a Archipelago and disappear into an Ocean of 'Liquidity'..
Posted by: Mark E Hoffer | Oct 15, 2008 4:21:32 AM
alex: I hope he stays crazy & pompous so we can keep profiting on his style of investing as the world foolishly ignores him!
Taleb probably won't receive the recognition he deserves until he rakes in some epic take vis a vis Soros. Then they will resent him for profiting as other suffer. Notice he has been apologetic for his success as of late?
Also, would the financial media please refrain from asking him to solve problems outside his area of focus? He isn't going to answer. Taleb does not care if governments put a pause on climate change legislation while they work on bailouts. The only reason he might care as it pertains to people attempting to quantify more of what "we don't know" such as predicting weather patterns.
Posted by: SL | Oct 15, 2008 4:44:43 AM
He is arrogant and egotistical but he is
right. I have worked in public health and
know the limitations of statistics - they can be useful for predicitng disese risk (and thats complicated because there are so many factors) but the financial markets are
something else.
Eve
Posted by: Eve | Oct 15, 2008 5:21:08 AM
I loved my statistics class, all that reverting back to the mean, variance, outlayers and all. It's all there...those models still work! What we need to realize is that truth, is still truth, even if it comes in big douses at thousand year intervals. Something tells me that they'll be talking about the times we are living in, a thousand years hence along with the architecture of Frank Lloyd Wright. They'll probably call it the great break-down of the world's financial architecture.
Posted by: JustinTheSkeptic | Oct 15, 2008 5:41:43 AM
Oh! and we all know that science and scientist have had their own agendas for a long time now...and they have had a particularly spectacular run at it. But now comes the time where not even their models can be used to hide behind. Kind of a "reverting back to the mean," of what it is to be ONLY HUMAN.
Posted by: JustinTheSkeptic | Oct 15, 2008 5:50:36 AM
Statistics help in the construction and promotion of irrefutable errors.
Posted by: zell | Oct 15, 2008 6:13:52 AM
I saw him talk a few months ago, he is a great thinker. Thanks to him for helping me to understand risk more deeply and that most people do not understand what they are talking about. I too wake up and hope I am wrong about where things might be going. As long as we are wrong the world and me are probably happier.
One of his talks he said low risk is not 100%low risk stocks, it could also be 90% cash and 10 options.
I gotta stay on top of what he says. His personal style is funny cos he talks SOOOoooooo much shit at the establisment. He pretty much says they are imbeciles and he has disdain for most of them. I wonder who he does like????
Posted by: Genomik | Oct 15, 2008 6:21:53 AM
I wish we were hearing these arguments on network tv in the US.
Posted by: Avi Green | Oct 15, 2008 7:01:21 AM
Once a practitioner walks the steps to produce a singular VAR metric, they should be aware of the inherent assumptions involved. Taleb knows the assumptions and goes after those defining them. The wide-eyed, on the other hand, are so impressed with the machinery & chicanery of the steps that they discount anyone insulting the degreed & pedigreed assumers.
It's too late to listen to Taleb, the best we can hope for is the eventual viral acceptance of his lessons.
Posted by: teraflop | Oct 15, 2008 7:02:37 AM
Taleb: Nobel for Black-Scholes should be revoked? Sometimes wrong, sometimes right, always a self-loving wanker.
http://www.npr.org/templates/story/story.php?storyId=95664742
He doesn't stop with saying models have inherent limitations, he says the people who think about them are imbeciles.
Posted by: curmudgeonly troll | Oct 15, 2008 7:12:40 AM
He doesn't stop with saying models have inherent limitations, he says the people who think about them are imbeciles.
Posted by: curmudgeonly troll | Oct 15, 2008 7:12:40 AM
Sorry Jim,
but, this: "he says the people who think about them are imbeciles." isn't so.
you might have a go at the clip, or understand his disdain is for those who Believe/Use them unquestioningly..
Posted by: Mark E Hoffer | Oct 15, 2008 7:32:44 AM
So, now that we can see how self-referential and assumption-bound the math geniuses' security-valuation models were, can be we skeptical of the math geniuses' climate models?
Posted by: Richard | Oct 15, 2008 7:35:15 AM
He is the anti-Pailin! She seems to be cocksure about everything and knows nothing!
I don't see his arrogance, only his frustration with academics and quants. Liked his book too. the first one.
Posted by: lurker | Oct 15, 2008 8:30:31 AM
There's an amazing mix-tape to be made here juxtaposing this clip and Cramer's rant last year.
Posted by: Namazu | Oct 15, 2008 8:37:43 AM
@Eve - [statistics are good for] predicting disease risk but the financial markets are something else.
Making a good prediction about the future course of an epidemic has a much smaller effect on that potential future than making a good prediction about the future state of a financial market.
Posted by: JohnL | Oct 15, 2008 10:05:09 AM
I've read "Fooled By Randomness" and "The Black Swan" several times each and have profited by knowing what I've learned from Taleb but I will bet that Taleb would tell you that this crash is not a Black Swan event . . . why? Because it was so easily predicted by so many. Black Swan events cannot be predicted, but you have to plan for them by hedging risk ALWAYS. Those who don't blow up.
Posted by: C Kincaid | Oct 15, 2008 10:08:34 AM
C Kincaid--you are correct, as Taleb does not label the credit crisis as a black swan.
the current financial crisis...
“... Is not a black swan,” Taleb interrupts. “Well, it was a black swan for the turkey [the average investor] but it wasn't a black swan for the butcher [the banks].” So the banks weren't unlucky? “Not at all. Would you say someone was unlucky if he was an unskilled pilot and he hit the storm?”
http://www.timesonline.co.uk/tol/money/article4938008.ece
Posted by: ReturnFreeRisk | Oct 15, 2008 10:40:41 AM
This is how it goes when you have two ignorant b-tches and a scientist/philosopher in one room.
Anyway. I am not sure anymore whether it is worth it trying to educate the masses. Maybe it is just better to take advantage of their stupidity and focus on one's own profit.
Posted by: derek | Oct 15, 2008 10:47:23 AM
LOL I love Taleb. He's not arrogant, he has righteous indignation...big difference.
Posted by: Robert | Oct 15, 2008 11:03:23 AM
robert,
"May the black swan pass by us without being seen."
But if it is unseen, is it a Black Swan ?
.
Posted by: VJ | Oct 15, 2008 11:06:49 AM
poor Ken Rogoff, who doesn't get to say a word. Seriously, what an insufferable wanker.
saying VAR and Black-Scholes should get thrown out is no less extreme than saying risk = VAR.
if you spend the time playing p0ker that you spend reading this guy you'll learn more about the true nature of randomness.
Posted by: curmudgeonly troll | Oct 15, 2008 11:32:44 AM
