Trust me, Will Self and his editors are not going to misquote anyone. see the article for yourself. surf
Thanks, surf, I just found the article, I hadn't realized you were referring to the link; it is on the first page. Taleb is his own Greek tragedy. Not content to be a successful author, he has to hype past claims that no one can verify, and indicators like his Paloma stint and the Empirica unwind suggest otherwise. Now this. Not content with good results, he has to pretend he was John Paulson. It's delusional.
To put a more generous interpretation, perhaps he meant the gain in the fund was 1/2 billion, and the fund advised other outside clients who themselves made $20 billion, but that is a far cry from Taleb making billions. Likewise the "we made $20 billion for our clients" would have to be further explained. If he advised clients, they no doubt had their own thougths and decided what to do. They made the money; he didn't make it for them--unless they were investors in the fund, but that doesn't appear to be the case here.
That is my understanding of te situation. Now someone asked for evidence about Empirica's performance, here is the quote from the WSJ article: http://www.cashandburn.com/2008/11/taleb-makes-money-where-his-mouth-is.html "While the black-swan strategy has paid off handsomely this year, it hasn't always. Mr. Taleb's previous fund, Empirica Capital, which used similar tactics, shut down in 2004 after several years of lackluster returns amid a period of low volatility." Now if we do the math, Taleb's new fund should have at least 800 million AUM. What I don't get is, how did he get so much money to play with when his previous fund's performance was lacking??? It must be good PR and the fame of his name... Edit:"Universa was launched in December 2007 with $300 million in assets. It is now estimated to be worth close to $2 billion. Technically Taleb is an âexternal advisorâ to Universa, which is managed and owned by former professional trader Mark Spitznagel." http://seekingalpha.com/article/104974-nassim-taleb-renegade-trader-with-renegade-ideas-that-work
I believe Taleb's spiel is inflated B.S. It is unlikely that his (or his partnerâs) strategy made $20 billion even on an advisory basis, if the advice was simply buying out of the money put options on the stock market. I do not believe there is enough volume available in the traded markets to come remotely close (one could look at open interest records I guess to see what percentage the aggregate would have had to own to make $20 billion). It would be hard for Taleb or the people he advised to justify buying OTC given that a Black Swan event would likely wipe out his foolish counterparts. Lots of credit risk there, and he doesn't say how he protects himself from his counterparty credit risk. It has a similar inconsistent ring of Madoffâs claims pre-scandal that he made the âsteadyâ profits in put-call spreads, which would have required markets and his fundâs capital to be much larger by orders of magnitude, if that were the strategy he used.
"Lackluster" != "Lacking" People were chasing outsized returns. Over short time horizons, that is the exact opposite of Taleb's approach. They got burned. Lesson (probably not) learned.
Taleb's tragedy is that he seems discontented with what success he has achieved and has need to claim he's on the level of a John Paulson--but he is not. The constant PR puffery seems delusional. I wish I could find it funny, but I pity the guy. <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/pu-8wGbWMro&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/pu-8wGbWMro&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>