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Fama was wrong about everything. I think Nassim Taleb should have deserved it, for actually "predicting" the crises. http://www.youtube.com/watch?v=S3REdLZ8Xis

Fama was wrong about everything. I think Nassim Taleb should have deserved it, for actually "predicting" the crises. http://www.youtube.com/watch?v=S3REdLZ8Xis&list=PLzfJcwakFwlXX98P1pteZDYHqBUyf3dy2 http://www.youtube.com/watch?v=S3REdLZ8Xis&list=PLzfJcwakFwl...

omonra 13y ago
He predicted the crisis in December 2012?
- bachback 13y ago
  No, he published the Black Swan in 2008, which as a term is now part of the dictionary. He very thoughtful about the term predictions, so it is much more a framework for statistical thinking. Actual help work, as opposed to the nonsense that is currently economics.
  - omonra 13y ago
    Umm..ok. But the point of Black Swan is that certain are unpredictable. Yet plenty of people saw the crisis coming [2,3]. Taleb was not one of them - please see [0] If you are a Taleb fan (or just curious), check out this critique of his work: [0] http://quixoticfinance.com/tag/nassim-taleb/ http://quixoticfinance.com/tag/nassim-taleb/ [1] http://unpleasantfacts.com/falken-on-taleb http://unpleasantfacts.com/falken-on-taleb People who actually predicted the crisis [2] http://www.amazon.com/Greatest-Trade-Ever-Behind-Scenes/dp/0385529945 http://www.amazon.com/Greatest-Trade-Ever-Behind-Scenes/dp/0... [3] http://www.amazon.com/The-Big-Short-Doomsday-Machine/dp/0393338827/ref=pd_bxgy_b_img_z http://www.amazon.com/The-Big-Short-Doomsday-Machine/dp/0393...
    - zurn 13y ago
      At any given moment there are "plenty" of people who think the sky is falling. How do you account for survivor bias.
      - omonra 13y ago
        You know, in billiards (pool) you have to actually point to the hole in which you plan to sink the bal. So that if the ball ends up in some hole (but not the one you anticipated), you don't get credit for it. Same here - if you read the piece (http://quixoticfinance.com/tag/nassim-taleb/ http://quixoticfinance.com/tag/nassim-taleb/) it exlains in detail how Taleb's claim to predicting the crisis is 100% off the mark (and the said thing is that he knows it, which makes him a poseur).
  - zmk_ 13y ago
    Taleb only clearly pointed out that if you use pricing formulae based on the assumption of a time-inavariant Gaussian distribution of returns, all small gains you accumulate in the good states will be wiped out and more by losses you will suffer in the bad states. But this is because you have underestimated the downside risk. If you used a havy-tailed distribution (e.g. something from the stable family, which was suggested by Mandelbrot (1963) and Fama (1965)) and/or allowed for time-variability of moments and/or accounted for systemic risk you would see different prices of assets that better reflect that downside risk.
asgard1024 13y ago
There is a paper from Dirk Bezemer about who predicted the crises: http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf Edit: I certainly wish Steve Keen would get the prize. He is the Keynes of our time. But man can only dream.
yummyfajitas 13y ago
What claims did Fama make that you believe are wrong, and why?

omonra 13y ago

He predicted the crisis in December 2012?

bachback 13y ago
No, he published the Black Swan in 2008, which as a term is now part of the dictionary. He very thoughtful about the term predictions, so it is much more a framework for statistical thinking. Actual help work, as opposed to the nonsense that is currently economics.
- omonra 13y ago
  Umm..ok. But the point of Black Swan is that certain are unpredictable. Yet plenty of people saw the crisis coming [2,3]. Taleb was not one of them - please see [0] If you are a Taleb fan (or just curious), check out this critique of his work: [0] http://quixoticfinance.com/tag/nassim-taleb/ http://quixoticfinance.com/tag/nassim-taleb/ [1] http://unpleasantfacts.com/falken-on-taleb http://unpleasantfacts.com/falken-on-taleb People who actually predicted the crisis [2] http://www.amazon.com/Greatest-Trade-Ever-Behind-Scenes/dp/0385529945 http://www.amazon.com/Greatest-Trade-Ever-Behind-Scenes/dp/0... [3] http://www.amazon.com/The-Big-Short-Doomsday-Machine/dp/0393338827/ref=pd_bxgy_b_img_z http://www.amazon.com/The-Big-Short-Doomsday-Machine/dp/0393...
  - zurn 13y ago
    At any given moment there are "plenty" of people who think the sky is falling. How do you account for survivor bias.
    - omonra 13y ago
      You know, in billiards (pool) you have to actually point to the hole in which you plan to sink the bal. So that if the ball ends up in some hole (but not the one you anticipated), you don't get credit for it. Same here - if you read the piece (http://quixoticfinance.com/tag/nassim-taleb/ http://quixoticfinance.com/tag/nassim-taleb/) it exlains in detail how Taleb's claim to predicting the crisis is 100% off the mark (and the said thing is that he knows it, which makes him a poseur).
- zmk_ 13y ago
  Taleb only clearly pointed out that if you use pricing formulae based on the assumption of a time-inavariant Gaussian distribution of returns, all small gains you accumulate in the good states will be wiped out and more by losses you will suffer in the bad states. But this is because you have underestimated the downside risk. If you used a havy-tailed distribution (e.g. something from the stable family, which was suggested by Mandelbrot (1963) and Fama (1965)) and/or allowed for time-variability of moments and/or accounted for systemic risk you would see different prices of assets that better reflect that downside risk.

asgard1024 13y ago

There is a paper from Dirk Bezemer about who predicted the crises: http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf http://mpra.ub.uni-muenchen.de/15892/1/MPRA_paper_15892.pdf Edit: I certainly wish Steve Keen would get the prize. He is the Keynes of our time. But man can only dream.

yummyfajitas 13y ago

What claims did Fama make that you believe are wrong, and why?