More Nassim Taleb 24/7 - Virginia Tech Massacre

Discussion in 'Chit Chat' started by QuantPlus, Apr 24, 2007.

  1. In a world flooded with junk and pseudo science...
    Here is a widely circulated piece...
    That links VAT massacre to Taleb's theories:,1764076.column?coll=la-news-comment-opinions

    IMO, this kind of speculation is silly...
    Especially considering that Taleb's main prediction appears to be FALSE.

    Just as there will be fewer but bigger bestsellers, Taleb argues...
    So there may also be "fewer but bigger crises" in the realms of finance and geopolitics.

    The above has NOT in any way been proven true...
    By market action or geopolitics...
    In fact...
    Computer driven market efficiency...
    Has so far DISPROVEN Taleb's prediction...
    With market volatilities stuck at all time lows.

    Beware obsessive people and one trick ponies...
    Whether they are obsessed with "Black Swans" or anything else.
  2. I thought that Taleb's thesis was about the difficulty of predictions. He certainly says a thousand times that he doesn't make predictions.

    Why do you select one speculation on Taleb's part and convert that into his "main prediction"?

    And how on earth does "computer driven market efficiency" disprove Taleb's supposed prediction? Do you mean that lower market volitilites are caused by computer trading and that this demonstrates the falsity of the "prediction" that there will be fewer big bestsellers and fewer but bigger financial and geopolitical crises? I don't get the connection.

    I think your view needs some further argument.
  3. It's interesting how differently people can see the same thing. To me, Taleb is often profound -- one of the few people I know of who actually understands something about something.

    But it's difficult to the point of impossible to have a meaningful discussion about this. The divergence in views is too far back to come to common ground.
  4. His earning on opm would be a Black Swan.
  5. It seems to me that we have to distinguish questions of the truth or falsity of Taleb's position from value judgments about how he might have acted based on those judgments.

    In particular, if we infer from Taleb's position or background that he could have done something that he did not do, and then make a value judgment about what he did not do, we are obligated to defend both the inference and the judgment.

    In your second paragraph, you infer from what you know of him that Taleb could have developed methods of trading or investing that capitalized on his research and insights and make a negative judgment of him for not doing so. My view is that Taleb is simply being consistent with what he has come to understand. If you conclude that something cannot be done, and then you don't attempt to do that, I don't see how it is reasonable to criticize you for your non-action.

    Your position essentially contradicts Taleb's. Taleb says that statistics and mathematics are not useful, or not very useful, in prediction and forecasting (I'm not sure he says that about hedging). You take him to task for not developing a significant breakthrough in the use of statistics for forecasting. It seems to me that before you can criticize Taleb's actions you have to show what's wrong with his basic claim that statistics is not a viable means of forecasting.

    I don't know, perhaps for the reason you cite, whether or not there are solutions for high income people at top-tier brokerages. If there are, then this is a counter-example to Taleb's position, a falsification of it. Taleb would simply be wrong. If that is the case, then I would really like to know it, and I suspect Taleb would also. So I have to ask how you know that these solutions exist (since they are highly secret)? What grounds can you give for me to accept that? I can't very well give up the logic of Taleb's position on what appears for now to be rumour.

    On the other hand, it is precisely Taleb's claim, in my understanding, that such supposed solutions contain deep flaws that will appear at inconvenient times in the future. The Long Term Capital Management case is an example. It was just such a "solution" by genuinely intelligent people deceived by their math and statistics. Taleb cites many such examples, not limited to high finance.

    Your comments about Taleb attempting to generate "buzz" and keep his "star on the rise" implies a sort of intellectual dishonesty on Taleb's part; as though there is nothing of value in his work and he is just trying to sell hot air. But whether one agrees with his conclusions or not, I don't see anything other than serious intellectual work.

    I gather you think it is a "sellout" because Taleb has not developed methods to do what his whole argument shows cannot be done; and you think it he is "irrelevant" because his argument is just wrong. You may well be right, but so far, it seems to me that you have made the statements without backing them up very well.

    By the way, the last I heard, Taleb was running a fund that traded based on his "black swan" theories. Has this changed?