Discussion in 'Economics' started by 2cents, Dec 15, 2008.
Classic - I was laughing my fat fool head off with the "turkey" metaphor. The scary part is the place it has in reality
Turkey example is just boom and bust.
As Soros would say we observe Taleb's boom and after bear market people realize Taleb's bust. So everybody says the same thing.
Taleb commits the logical fallacy of Appeal to Ridicule:
âSix Nobel prizes were handed out to people whose work was nothing but BS,â he gripes. âThey convinced the financial world that it had nothing to fear.â
Using the same ridiculus reasoning one could blame Newton for his failed attempt to fly a plane not well designed.
The six Nobel Prize winners provided just theories, like Newton provided a theory of gravity. If someone jumps off a cliff and expects to fly, he should not blame the law of gravity but his own failure to understand his limitations given the law.
Taleb's claims are probably motivated by some kind of religious dogma. Yes, we all know there is possibility of a black swan and that patterns can be deceiving but we also know that events that happen often have a high probability to happen again.
You totally missed his point.
His point is EXACTLY that there is no equivalent law of gravity to understand here.
You get a team of 50 phds who believe they have the law of gravity quantified in financial risk...since they believe they know exactly how gravity operates, they load the plane to its max capacity cargo wise under their assumptions on their law of gravity..then the plane crashes and everyone dies. The problem wasn't that the plane had too much cargo if your model of gravity was completely bullshit to start with.
Its funny to me how during the depth of the crisis CNBC mentioned this event was like winning the lottery twice in one week..the funny part is this seems to happen every ten years...
Its also funny how people can understand that a little knowledge of something can be dangerous because its easy to apply that knowledge in the wrong way...Far worse is having alot of bogus knowledge about something that has nothing to do with reality.
At least one of them was a senior advisor to a spectacularly blown-up hedge fund.
Why should I believe him? It's all dogmatic. He has no proof for that. The burden of proof is on him. By just saying so and talking about black swans and randomnss without presenting a rigorous model is ridiculus and shows complete ignorance.
Black swans happen infrequently and by saying that they exist that's nothing new or remarkable. In between those events, there is relative order that obeys certain rules or laws. He says nothing new. The philosopher Thomas Kuhn said the same thing many years before him about scientific revolution.
You must understand that the existence of black swans DOES NOT preclude governing laws. If someone insists so, the burden of proof is on him.
Just take one sentence from Taleb's book: "Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. "
(1) What is "interlocking fragility" ?
(2) Why is volatility reduced? Is it really?
(3) What is stability?
Then, his premises, do not support his conclusion. Appearence of stability plus the other things he mentions do not necessarily lead to a devastating black swan.
This type of wording you see in astrology books or you hear from people who pretend to be intellectualls. Pseudo science that is.
I find Taleb boring, completely unusable in my trading and quite philosophical in an abstract way. Reading Fooled by Randomness was an utter waste of my time. A two paragraph abstract would have done.
I agree. Some people called him here Captain Obvious. His books can be summarized like this:
Shit eventually always happens, but because it happens so infrequently, people don't expect it and it is very hard to take advantage of it...
and the turkeys cometh....
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