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First he was very famous, now he's very rich. But Nassim Taleb is still wrong.
- tokenadult 17y agoI like this comment from the submitted article: "You're right to be embarassed to be arguing against Nasim Taleb. His primary argument is that unexpected/catastrophic events (like the 1987 crash, the Dot-com crash and the 2008 crash) are far more common that most people think. A cool $10M to $30M every decade or so? Not bad in my book. How is your portfolio looking these days? Similar? I didn't think so." An investment strategy, like that described in Taleb's first book, Fooled by Randomness, that costs real money year by year for several years but then pays off hugely at a sudden moment, has just the characteristics of an insurance policy with generous policy benefits. That's a smart way to invest. By contrast, investing to gain small amounts of real money year by year followed by a catastrophic loss larger than the original investment is a bad way to invest. But that's what a lot of leveraged "hedge fund" (wrong name, really) investors were doing before the recent crash.
- billswift 17y ago"costs real money year by year for several years but then pays off hugely at a sudden moment, has just the characteristics of an insurance policy with generous policy benefits." Sounds more like playing the lottery to me. It could work reasonably well provided:1) the small losses don't add up to more than the payoffs, and 2) the payoffs aren't so far a part you go broke waiting for them. By Taleb's own arguments (in Fooled by Randomness, I haven't read The Black Swan), the unexpected events are too unpredictable to count on even that much. Most likely he's just been lucky with the timing.