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Nassim Taleb: Renegade Trader with Renegade Ideas - That Work

Taleb specifically warns against comparing reality to a casino game. He calls it the ludic fallacy. Google it.

And this sort of bear market bet he made is not his only strategy. The vast majority of the money is kept safe while a small portion is used to make risky bets. This can be getting in early on a future positive black swan, like the next google. He favors tech and ingenuity. Anything that involves tinkering.

He recomends staying away from businesses that bet against a black swan occurance, such as insurance and banking. Eh, just read the book. It's very, very nuanced. And finance is just a small part of it.


On Nov 09 11:23 AM captainccs wrote:

> It takes a very special kind of personality to be able to lose time
> and time again, hundreds of times, before getting a win. Also, there
> is no way to predict these rare and unusual results so what Taleb
> is really playing is the mis-pricing of options. Playing options
> with Black-Scholes is like playing carps with loaded dice.
>
> My point is this: If you play any casino game long enough the house
> is going to make the vigorish and you are going to lose it. Taleb
> makes hundreds of bets and most lose small and a few win big. If
> he can make money doing that it means that the options he is buying,
> in the aggregate, are underpriced while the big winners are overpriced.
> It's either that or Taleb has enough prediction abilities to milk
> a fair system. This last is doubtful by his own admission.
>
> Taleb should probably shut down Universa Investments when the bear
> market ends. In a bull market the mis-pricing of put options might
> not be enough to make money his way. Last year I was buying out-of-the-money
> call options and did quite well. That ended with the onset of the
> bear market. During the bear market I'm making money selling call
> options. Buy the bull and sell the bear.

Nassim Taleb: Renegade Trader with Renegade Ideas - That Work

Great article! I loved The Black Swan. One correction: Nassim Taleb DID see this meltdown coming, and warned in The Black Swan that Fannie Mae was "sitting on a pile of dynamite", but that their team of scientists and their computer models lulling themselves and everyone else into a false sense of security. Therefor, from Nassim's perspecitve, this wasn't technically a Black Swan, but rather a slow motion train wreck. Props to him for maneuvering accordingly.