Nassim Taleb is a vulgar bombastic windbag, and I like him a lot. His books do a good job of explaining some deep, important finance ideas for a general audience. He has helped popularize the notion of "skin in the game". His trolling of economists is also good for some lulz (I particularly enjoyed his coinage of the term "macrobullshitters")....However,...A fine example of something mentioned in 2010's "Berkshire May Be Required To Post Up To $8 Billion In Collateral" (BRK.A; BRK.B)":
...I think it was Boston University's Zvi Bodie* who, shrugging off the restraints of his MIT PhD, pointed out to the "expected return" crowd that if it were true that the risk of negative returns decreases as the time frame increases, the cost of long-term puts should decrease the farther out you go.Professor Smith is getting funnier* and more agreeable as he gets older. Back to "Of brains and balls: Nassim Taleb's macro bets":
Kind of an Emperor has no clothes thing to say....
*William Bernstein (No slouch either, M.D. Neurologist, PhD. Chemistry, dabbler in Modern Portfolio Theory, Bestselling Author, etc.) in one of his Efficient Frontier pieces, "Zvi Bodie and the Keynes’ Paradox of Thrift" described the professor as "Academician, raconteur, and all-around good guy Zvi Bodie...".
Then he rips his lungs out. Very typical in the academy:...
...However, Taleb has a tendency to indulge in a little macrobullshitting of his own. In February of 2010, he advised everyone in the world to short Treasuries:HT: FT Alphaville
As for Treasuries, “It’s a no brainer, every single human should short U.S. Treasury bonds,” said the hedge fund adviser and financial author.“So long as you see the picture of Larry Summers going to Davos, you have to stay short U.S. Treasuries for another year. It means they (the Obama administration) don’t know what’s going on,” Taleb said.“Every time you see the picture of what’s his name, (Federal Reserve Chairman Ben) Bernanke, and he still has that job, you have to run to make sure your position is active. So long as these two guys are in office, that’s the trade.”Taleb also recommends betting on hyperinflation using options to buy gold and silver and sell Treasuries.“You have a very small probability of making money,” he said.“But if you’re right, you’ll never see a public plane again.”This could be regarded as sound trading advice. If the large probability of small losses is outweighed by the small probability of huge gains, then it makes sense to spend a bit of your money buying deep out-of-the-money puts on Treasuries....MUCH MORE
We've had a few posts on Taleb including a well-deserved Climateer Line of the Day Award:
Climateer Line of the Day: The Modesty of Nassim Taleb Edition
I know it's early but this is going to be tough to beat:
...“I’m not interested in money; I’m not interested in finance,” Taleb says. “I’m comfortable enough as it is. I don’t need it. Finance should be a footnote in my bio, not a central component. Why should I waste time in finance when my influence as an intellectual is so high?”......MORE
As to more serious business:
June 1, 2009
Taleb Makes Hyperinflation Bet and Why You Might Want to Be Skeptical
Be careful!A couple days later:
The first point to be made is This is NOT a Black Swan bet. Black Swan's by definition come out of the blue. Inflation caused by central bank monetary and government fiscal policy is being debated in the HEADLINES!
Second, and more specific, Mr. Taleb is a better marketer than a money manager. His hedge fund returns were opaque* (which considering his self promotion implies they weren't that hot)....MUCH MORE on his lack of investing prowess
More on Nassim "Black Swan" Taleb as a Money Manager
The day the Wall Street Journal broke the news of "Taleb Makes Hyperinflation Bet and Why You Might Want to Be Skeptical" there was a minor kerfuffle about a claim “...made $20 billion for our clients, half a billion for the Black Swan fund", reported in the British GQ. I didn't understand how that could be and instead chose to focus on his Empirica Kurtosis fund's performance.Finally, a couple commentators take aim:
Here's more on the story from FT Alphaville:...MORE
Holy Cow, Is This a Paragraph or What? (Poor Nassim Taleb Never Stood A Chance)
By Joseph Cotterill (his ranting gets raves):Brian Eno Answers Nassim Taleb
...Anyway as I was saying, I’m not doing a full critique of either Antifragile, or skin in the game, here. I don’t care for the associated attack on journalists as cowards and parasites on the doers, I will say that much....MORE
Mr. Eno is an autodidactic polymath.Possibly related:
Mr. Taleb is a comedian...
Oh Berkshire Hathaway Fans: "'Black Swan' Author Nassim Taleb: Warren Buffett May Just Be Lucky" (BRK.B; BRK.A)
How to keep your name in the headlines by making a sophomore statistical point (sample size, error bars, confidence levels)....
*For example, Noahpinion on Sunday: "EconoTrolls of Academia".
