Thinking Citizen Blog — Nassim Taleb: Mathematical Statistician, Options Trader, Guru
Thinking Citizen Blog — Tuesday is Economics, Finance, and Business Day
Today’s Topic: Nassim Taleb (1960 — ): Mathematical Statistician, Options Trader, Guru
No one in the financial world over the last fifty years has had a loftier reputation for sheer brilliance than Nassim Taleb, a Lebanese-American of Greek descent who was born a French citizen and educated in France. His first bestseller was “Footed by Randomness” (2001). His most famous book is “The Black Swan” (2007). This morning I decided to do a little poking around to find and share anything he said worth remembering. Experts — please chime in. Correct, elaborate, elucidate.
THREE ADDICTIONS, LYING, THE POPULARITY OF PSYCHOPATHS
1. “The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”
2. “Half of the people lie with their lips; the other half with their tears”
3. “It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.”
SPECIALIZATION, THE RIGHT QUESTION TO ASK YOUR DOCTOR, LEARNING
1. “I’ve debated many economists who claim to specialize in risk and probability: when one takes them slightly outside their narrow focus, but within the discipline of probability, they fall apart, with the disconsolate face of a gym rat in front of a gangster hit man.”
2. “The psychologist Gerd Gigerenzer has a simple heuristic. Never ask the doctor what you should do. Ask him what he would do if he were in your place. You would be surprised at the difference.” (I second the motion)
3. “What I learn on my own I still remember.”
THE GENIUS, THE ANTIMODELS, THE PROPHET
1. “Difficulty is what wakes up the genius”
2. “People focus on role models; it is more effective to find antimodels — people you don’t want to resemble when you grow up” (rings painfully true)
3. “A prophet is not someone with special visions, just someone blind to most of what others see”
NB: “Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.” In other words, he has just re-packaged the concept of “kaizen”? (constant self-improvement)
FOOTNOTE #1 — Taleb and Laurence Peter on economists
1. “The curious mind embraces science; the gifted and sensitive, the arts; the practical, business; the leftover becomes an economist” (Taleb)
2. “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” (Laurence J. Peter, the guy who came up with the “Peter Principle” that is that “in a hierarchy people rise to the level of their own incompetence).
FOOTNOTE #2 — Taleb’s latest book is “Skin in the Game” (2018)
1. “Dedicated to “two men of courage”: Ron Paul “a Roman among Greeks”; and Ralph Nader a “Greco-Phoenician saint”.
2. “If an actor pockets some rewards from a policy they enact or support without accepting any of the risks, economists consider it to be a problem of “missing incentives”. In contrast, to Taleb, the problem is more fundamentally one of asymmetry: one actor gets the rewards, the other is stuck with the risks.”
3. “For social justice, focus on symmetry and risk sharing. You cannot make profits and transfer the risks to others, as bankers and large corporations do… Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations.”
NB: Examples: “Robert Rubin, a highly-paid director and senior advisor at Citigroup paid no financial penalty when Citigroup had to be rescued by U.S. taxpayers due to overreach. Taleb calls this sort of a trade, with upside gain but no or limited downside risk, a “Bob Rubin trade.” Many war hawks don’t themselves bear any risks of dying in a war they advocate.”
FOOTNOTE #3 — THE CONCEPT OF “INTELLECTUAL YET IDIOT” (IYI)
1. “You can be an intellectual yet still be an idiot. ‘Educated philistines have been wrong on everything from Stalinism to Iraq to low carb diets.”
2. An “IYI” is “the semi-intelligent well-pedigreed “who are telling us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for”. They represent a very small minority of people but have an overwhelming impact on the vast majority because they affect government policy. IYI are often policy makers, academics, journalists, and media pundits.”
3. “The IYI pathologizes others for doing things he doesn’t understand without ever realizing it is his understanding that may be limited. He thinks people should act according to their best interests and he knows their interests, particularly if they are “red necks” or English non-crisp-vowel class who voted for Brexit. When plebeians do something that makes sense to them, but not to him, the IYI uses the term “uneducated”. What we generally call participation in the political process, he calls by two distinct designations: “democracy” when it fits the IYI, and “populism” when the plebeians dare voting in a way that contradicts his preferences.”
Nassim Nicholas Taleb — Wikipedia
The Black Swan: The Impact of the Highly Improbable — Wikipedia
https://en.wikipedia.org/wiki/Fooled_by_Randomness
https://en.wikipedia.org/wiki/The_Bed_of_Procrustes
Antifragile (book) — Wikipedia
Skin in the Game (book) — Wikipedia
https://www.goodreads.com/author/quotes/21559.Nassim_Nicholas_Taleb
Nassim Nicholas Taleb Quotes — BrainyQuote
A LINK TO THE LAST FOUR YEARS OF POSTS ORGANIZED BY THEME:
PDF with headlines — Google Drive
Two special attachments below:
#1 A graphic guide to justice (9 metaphors on one page).
#2 “39 Songs, Prayers, and Poems: the Keys to the Hearts of Seven Billion People” — Adams House Senior Common Room Presentation, 11/17/20
YOUR TURN — Please share:
a.) the coolest thing you learned this week related to business, economics, finance.
b.) the coolest thing you learned in your life related to business, economics, finance.
c.) anything at all related to business, economics, finance.
d.) anything at all
