Quotes Entirely Relevant to Investing
by Mr JugglesMany traders aim to get out of harm’s way by avoiding exposure to rare events – a mostly defensive approach.
I am far more aggressive than those traders and go one step further; I have organized my career and business in such a way as to be able to benefit from them.
-Nassim Taleb whose new book Black Swan: The Impact of the Highly Improbable comes out April 17th, 2007.
Past Quotes Entirely Relevant to Investing
How’s Nasim Taleb’s fund doing again? They shut down in ’02 or ’03. I can’t remember…
Do you think the best way to measure the value of investment theory or acumen is short term results?
I believe the information on his Empirica Fund is closely held, so I have no idea if it’s in existence still. I was under the impression it was mostly his own money to begin with, but if you have more clear information by all mean share.
By the nature of him benefitting from these rare events he may be right from a risk-neutral expected value stand-point but he may never realize a gain in his lifetime or the lifetime of his children because of their rarity.
The market dismisses (weights) future losses with just as a high a discount rate as future gains. Because these rare events are by nature few and far between I don’t think he’s properly applying the time value of money principle. So what a distribution has fatter tails than normal distribution? Well guess what you can put the expected date of rare event wayyy in the future because of this. Now discount this one in a million event with (1+r)^30 and you reailze the market probably factors in non-normal distribution.
He’s a great author though..just my two cents. Juggles would you invest with him?
Not necessarily but I wouldn’t rule it out. I don’t have enough infomation either way about him, his track record and what the prospective fund would set out to explicitly. Also I think the LoS portfolio is a minimum of 1% better than any other portfolio out there, so I have other reasons not to put my fictional money with anyone else.
My reaction was more against the casual reactive type of dismissal of which I generally disapprove. And I think, as you indicate, a lot of his ideas are not worthless.