Is Nassim Taleb Overrated?
Could our perceptions of Talebs success suffer from survivorship bias. I don’t think Taleb is overrated but I do think his publicity has run a bit past his essential ideas.
Click Here To Find Out If Nassim Taleb Is Overrated
(H/T To Can Turtles Fly For Pointing This Out)
Introduction (Via The Big Money)
While for just about everyone involved in the markets the last two years of financial history have been a massacre, they have been a long victory lap for Nassim Nicholas Taleb. Taleb is the author of The Black Swan, the book about, as the subtitle puts it, “The Impact of the Highly Improbable.” It came out in 2007, just before everything that seemed highly improbable became painfully actual. As everyone else’s fortunes have shrunk, Taleb’s have risen. Not only have his books made him the public face of the New Catastrophism, but his insights have turned out to be extremely profitable: The Wall Street Journal reports that Universa, a hedge fund for which Taleb serves as guru and adviser, gained more than 100 percent last year and now holds $6 billion.
Additional Excerpts (Via The Big Money)
The problem with catastrophism, however, is that it’s very difficult for anyone in the market to wait around for the unexpected. And while Taleb buys insurance, most other market players prefer to sell it. In the New Yorker profile that first brought Taleb to prominence, Malcolm Gladwell cannily contrasts Taleb with Victor Niederhoffer, a hedge-fund manager whose stock in trade was selling the same kinds of options that Taleb bought. At the end of Gladwell’s story, Niederhoffer loses a lot of money. It’s a pattern that Niederhoffer repeats over and over—a later story about him christens him “The Blow-Up Artist.”
But the failures of the Niederhoffers and AIGs do not translate to a validation of Taleb-style catastrophism because these two approaches turn out to be linked. They are mirror images. In noncatastrophic times, the Niederhoffers and AIGs make money consistently and quietly and then end up losing it conspicuously and painfully. The Talebs make money rarely, amaze everyone because they do it when everybody else is getting killed—and so make it easy to forget about years of steady losses.
If you’re always planning for crisis, you look like a genius when it does come.
