Typical Taleb

April 8, 2009

Op-ed in FT from Nassim Nicholas Taleb on how to avoid Black Swans. One of his points that is really revolutionary

Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).

This is the an extraordinary piece of advice. He essentially seems to be saying that people should completely stop investing in the equity markets, even debt which chases for yields is verboten. Somehow this does not strike as being very sensible. People get accustomed to a lifestyle and they chase returns so that when they retire they are able to live a meaningful life. In a world of scarce resources, how those resources will be allocated depends on the price that it’s users are willing to pay. However harsh it may sound, a richer/high status person will always get better treatment in most aspects of life than someone lower down the totem pole.

Everyone implicitly understands this and tries to maximise their usage of resources by trying to garner as much as possible in every way possible. A more nuanced and meaningful solution is needed to the question of providing for the future.


Rules of Living according to NNT

August 4, 2008

I am a huge fan of Taleb’s work. Here are his Tips on how to live.

Taleb’s top life tips

1 Scepticism is effortful and costly. It is better to be sceptical about matters of large consequences, and be imperfect, foolish and human in the small and the aesthetic.

2 Go to parties. You can’t even start to know what you may find on the envelope of serendipity. If you suffer from agoraphobia, send colleagues.

3 It’s not a good idea to take a forecast from someone wearing a tie. If possible, tease people who take themselves and their knowledge too seriously.

4 Wear your best for your execution and stand dignified. Your last recourse against randomness is how you act — if you can’t control outcomes, you can control the elegance of your behaviour. You will always have the last word.

5 Don’t disturb complicated systems that have been around for a very long time. We don’t understand their logic. Don’t pollute the planet. Leave it the way we found it, regardless of scientific ‘evidence’.

6 Learn to fail with pride — and do so fast and cleanly. Maximise trial and error — by mastering the error part.

7 Avoid losers. If you hear someone use the words ‘impossible’, ‘never’, ‘too difficult’ too often, drop him or her from your social network. Never take ‘no’ for an answer (conversely, take most ‘yeses’ as ‘most probably’).

8 Don’t read newspapers for the news (just for the gossip and, of course, profiles of authors). The best filter to know if the news matters is if you hear it in cafes, restaurants… or (again) parties.

9 Hard work will get you a professorship or a BMW. You need both work and luck for a Booker, a Nobel or a private jet.

10 Answer e-mails from junior people before more senior ones. Junior people have further to go and tend to remember who slighted them.