4 ms·

Nassim Nicholas Taleb Sees Worse Tail Risks Than in 2007 [video]

46 points by ry4n413 9y ago

SomeStupidPoint 9y ago
Is there a text summary of his point somewhere? I absolutely hate video for this sort of thing.
- Mathnerd314 9y ago
  Just open the network summary in the developer tools and find the XML request that gets sent when you turn on closed captions. Taleb's speech, summarized & cleaned up a little, for the lazy: Donald Trump is the fellow who never had a supervisor in his life. No boss. So he does not know how to express things in a way that a supervisor can understand. You have to translate what he says. The reason he fired James Comey is he [trump] does not collude with the Russians. There are a lot of things that Trump came to do that are substantial. The first one is after 32 years, fixing the tax code. The tax code is something that is metastatic. Unless someone cuts the whole thing, you need someone aggressive. Number two is obamacare is a disaster. The real train wreck is globalization; I wrote about it in "the black swan." unfettered globalization leads to a conflagration of companies. He wants to fix some of the things in the system that are not sustainable. That is the third point. The fourth point is we have a problem with what we call the pseudo-elite. Last 10 years it's been swelling. Not just Obama, although it accelerated greatly under Obama. The pseudo-experts, I describe them as incapable of finding a coconut on coconut island but because they have an ivy league degree, they are given a position. You need to replace these people, with do-ers. Number five is Trump came on a platform of non-interventionism. In terms of foreign policy. I am anti-metastatic bureaucracy running stuff like that. You need someone to fix the system. He is aggressive enough on this platform but he may not deliver and I am very worried that this is not what I see from his recent actions. The thing I disagree with Donald Trump on is he came in with the market on a high. Trump should disassociate himself from the market. Trump is claiming credit on the market he is getting, he is buying it on the highs. That is not rational. He should disengage himself in the market because he hasn't inherited a good situation. Obama has artificially stabilized the market for the past 8 years. Claiming credit for the rise in the market makes Trump vulnerable, if that Novocain is removed. In my opinion, we have risk today we did not have before; everyday it gets worse. You have a huge, considerable rise in the stock market. I would tell you today that if you own stocks without a hedge, it's not rational. The last time we were here I explained my research. If you are exposed to tail risks, you are alpha and future returns will be divorced from the return of the market. People don't realize that. It's like buying a house without insurance. You cannot really look at what will happen to your house based on the housing market, unless you are hedged. -- I didn't bother including the title quote about 2007, it seems out-of-context and kind of irrelevant. The interviewer put words in Taleb's mouth and Taleb didn't reject them out of hand. It's not Taleb's main point by any stretch, and 2007 is too specific a date for the kinds of trends Taleb is discussing. Tail hedging strategy is explained in many places, e.g. https://www.thefelderreport.com/2016/08/15/worried-about-a-stock-market-crash-heres-how-you-can-tail-hedge-your-portfolio/ https://www.thefelderreport.com/2016/08/15/worried-about-a-s... http://www.zerohedge.com/news/2015-01-23/mark-spitznagel-value-tail-hedged-equities http://www.zerohedge.com/news/2015-01-23/mark-spitznagel-val... I don't really know enough about finance to evaluate it.
  - mikeyouse 9y ago
    If Taleb had published the Black Swan and then retired, he would have been a legend. Instead he keeps talking and it becomes clear that there isn't much difference between him and someone like Peter Schiff.
    - mherrmann 9y ago
      I'm just reading Antifragile. It's interesting as well.
    - ryankennedyio 9y ago
      I think this is a sound, critical review of the Black Swan & Taleb in general. Funnily enough, the criticisms of him are more relevant/prominent now than nearly a decade ago when this was written. http://falkenblog.blogspot.com.au/2009/03/review-of-talebs-black-swan.html http://falkenblog.blogspot.com.au/2009/03/review-of-talebs-b...
      - elipsey 9y ago
        Great review, thanks for posting this. To anyone considering reading the book I would recommend this article instead. I quit Black Swan part way through because, like the talk quoted above, it was long on invective, but seemed short on verifiable predections or generalizable methods. I just couldn't make it through the trolling...
    - taw55 9y ago
      It appears his claim to faim was 2008, which imo wasn't a black swan event at all (to anyone watching private sector indebtedness figures).
      - wand3r 9y ago
        That's a very small pool of people.
      - tbihl 9y ago
        As he is fond of saying, Thanksgiving isn't a Black swan event unless you're the turkey.
tim333 9y ago
tl;dr his main point re the markets is that they are priced higher than 2007 so have further to fall. He implies unhedged stock ownership is not rational at this point.

46 points by ry4n413 9y ago

SomeStupidPoint 9y ago

Is there a text summary of his point somewhere? I absolutely hate video for this sort of thing.

Mathnerd314 9y ago
Just open the network summary in the developer tools and find the XML request that gets sent when you turn on closed captions. Taleb's speech, summarized & cleaned up a little, for the lazy: Donald Trump is the fellow who never had a supervisor in his life. No boss. So he does not know how to express things in a way that a supervisor can understand. You have to translate what he says. The reason he fired James Comey is he [trump] does not collude with the Russians. There are a lot of things that Trump came to do that are substantial. The first one is after 32 years, fixing the tax code. The tax code is something that is metastatic. Unless someone cuts the whole thing, you need someone aggressive. Number two is obamacare is a disaster. The real train wreck is globalization; I wrote about it in "the black swan." unfettered globalization leads to a conflagration of companies. He wants to fix some of the things in the system that are not sustainable. That is the third point. The fourth point is we have a problem with what we call the pseudo-elite. Last 10 years it's been swelling. Not just Obama, although it accelerated greatly under Obama. The pseudo-experts, I describe them as incapable of finding a coconut on coconut island but because they have an ivy league degree, they are given a position. You need to replace these people, with do-ers. Number five is Trump came on a platform of non-interventionism. In terms of foreign policy. I am anti-metastatic bureaucracy running stuff like that. You need someone to fix the system. He is aggressive enough on this platform but he may not deliver and I am very worried that this is not what I see from his recent actions. The thing I disagree with Donald Trump on is he came in with the market on a high. Trump should disassociate himself from the market. Trump is claiming credit on the market he is getting, he is buying it on the highs. That is not rational. He should disengage himself in the market because he hasn't inherited a good situation. Obama has artificially stabilized the market for the past 8 years. Claiming credit for the rise in the market makes Trump vulnerable, if that Novocain is removed. In my opinion, we have risk today we did not have before; everyday it gets worse. You have a huge, considerable rise in the stock market. I would tell you today that if you own stocks without a hedge, it's not rational. The last time we were here I explained my research. If you are exposed to tail risks, you are alpha and future returns will be divorced from the return of the market. People don't realize that. It's like buying a house without insurance. You cannot really look at what will happen to your house based on the housing market, unless you are hedged. -- I didn't bother including the title quote about 2007, it seems out-of-context and kind of irrelevant. The interviewer put words in Taleb's mouth and Taleb didn't reject them out of hand. It's not Taleb's main point by any stretch, and 2007 is too specific a date for the kinds of trends Taleb is discussing. Tail hedging strategy is explained in many places, e.g. https://www.thefelderreport.com/2016/08/15/worried-about-a-stock-market-crash-heres-how-you-can-tail-hedge-your-portfolio/ https://www.thefelderreport.com/2016/08/15/worried-about-a-s... http://www.zerohedge.com/news/2015-01-23/mark-spitznagel-value-tail-hedged-equities http://www.zerohedge.com/news/2015-01-23/mark-spitznagel-val... I don't really know enough about finance to evaluate it.
- mikeyouse 9y ago
  If Taleb had published the Black Swan and then retired, he would have been a legend. Instead he keeps talking and it becomes clear that there isn't much difference between him and someone like Peter Schiff.
  - mherrmann 9y ago
    I'm just reading Antifragile. It's interesting as well.
  - ryankennedyio 9y ago
    I think this is a sound, critical review of the Black Swan & Taleb in general. Funnily enough, the criticisms of him are more relevant/prominent now than nearly a decade ago when this was written. http://falkenblog.blogspot.com.au/2009/03/review-of-talebs-black-swan.html http://falkenblog.blogspot.com.au/2009/03/review-of-talebs-b...
    - elipsey 9y ago
      Great review, thanks for posting this. To anyone considering reading the book I would recommend this article instead. I quit Black Swan part way through because, like the talk quoted above, it was long on invective, but seemed short on verifiable predections or generalizable methods. I just couldn't make it through the trolling...
  - taw55 9y ago
    It appears his claim to faim was 2008, which imo wasn't a black swan event at all (to anyone watching private sector indebtedness figures).
    - wand3r 9y ago
      That's a very small pool of people.
    - tbihl 9y ago
      As he is fond of saying, Thanksgiving isn't a Black swan event unless you're the turkey.

tim333 9y ago

tl;dr his main point re the markets is that they are priced higher than 2007 so have further to fall. He implies unhedged stock ownership is not rational at this point.