Nassim Nicholas Taleb

Nassim Nicholas

Lebanese-American Essayist, Scholar, Statistician, Former Trader and Risk Analyst, Author of "The Black Swan: The Impact of the Highly Improbable"

Author Quotes

Work destroys your soul by stealthily invading your brain during the hours not officially spent working; be selective about professions.

You get pseudo-order when you seek order; you only get a measure of order and control when you embrace randomness.

Your reputation is harmed the most by what you say to defend it.

Trading forces someone to think hard; those who merely work hard generally lose their focus and intellectual energy. In addition, they end up drowning in randomness; work ethics draw people to focus on noise rather than the signal.

We are built to be dupes for theories. But theories come and go; experience stays. Explanations

We do not need to be rational and scientific when it comes to the details of our daily life?only in those that can harm us and threaten our survival. Modern life seems to invite us to do the exact opposite; become extremely realistic and intellectual when it comes to such matters as religion and personal behavior, yet as irrational as possible when it comes to matters ruled by randomness (say, portfolio or real estate investments). I have encountered colleagues, rational, no-nonsense people, who do not understand why I cherish the poetry of Baudelaire and Saint-John Perse or obscure (and often impenetrable) writers like Elias Canetti, J. L. Borges, or Walter Benjamin. Yet they get sucked into listening to the analyses of a television guru, or into buying the stock of a company they know absolutely nothing about, based on tips by neighbors who drive expensive cars.

Only he who is free with his time is free with his opinion.

Paul Krugman is a danger to society!

Prediction requires knowing about technologies that will be discovered in the future. But that very knowledge would almost automatically allow us to start developing those technologies right away. Ergo, we do not know what we will know.

Rational flƒneur (or just flƒneur): Someone who, unlike a tourist, makes a decision opportunistically at every step to revise his schedule (or his destination) so he can imbibe things based on new information obtained. In research and entrepreneurship, being a flƒneur is called looking for optionality.

Rewriting the history of technology. How, in science, history is rewritten by the losers and how I saw it in my own business and how we can generalize. Does knowledge of biology hurt medicine? Hiding the role of luck. What makes a good entrepreneur?

So I disagree with the followers of Marx and and those of Adam Smith: the reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can.

Someone who says ?I am busy? is either declaring incompetence (and lack of control of his life) or trying to get rid of you.

Take the following potent and less-is-more-style argument by the rogue economist Ha-Joon Chang. In 1960 Taiwan had a much lower literacy rate than the Philippines and half the income per person; today Taiwan has ten times the income. At the same time, Korea had a much lower literacy rate than Argentina (which had one of the highest in the world) and about one-fifth the income per person; today it has three times as much. Further, over the same period, sub-Saharan Africa saw markedly increasing literacy rates, accompanied with a decrease in their standard of living. We can multiply the examples (Pritchet?s study is quite thorough), but I wonder why people don?t realize the simple truism, that is, the fooled by randomness effect: mistaking the merely associative for the causal, that is, if rich countries are educated, immediately inferring that education makes a country rich, without even checking. Epiphenomenon here again.

The best test of whether someone is extremely stupid (or extremely wise) is whether financial and political news makes sense to him.

The classical man's worst fear was inglorious death; the modern man's worst fear is just death.

The fool generalizes the particular; the nerd particularizes the general; some do both; and the wise does neither.

The left holds that because markets are stupid models should be smart; the right believes that because models are stupid markets should be smart. Alas, it never hit both sides that both markets and models are very stupid.

The problem is that our ideas are sticky: once we produce a theory, we are not likely to change our minds.

The stock exchanges have converted from open outcry where wild traders face each other, yelling and screaming as in a souk, then go drink together. Traders were replaced by computers, for very small visible benefits and massively large risks. While errors made by traders are confined and distributed, those made by computerized systems go wild?in August 2010, a computer error made the entire market crash (the flash crash); in August 2012, as this manuscript was heading to the printer, the Knight Capital Group had its computer system go wild and cause $10 million dollars of losses a minute, losing $480 million.

The Web is an unhealthy place for someone hungry for attention.

There is no effective difference between guessing a variable that is not random, but for which information is partial or deficient... and a random one... In this sense, guessing what I don't know, but what someone else may know and predicting what has not taken place yet are the same thing.

Think of the following event: A collection of hieratic persons (from Harvard or some such place) lecture birds on how to fly. Imagine bald males in their sixties, dressed in black robes, officiating in a form of English that is full of jargon, with equations here and there for good measure. The bird flies. Wonderful confirmation! They rush to the department of ornithology to write books, articles, and reports stating that the bird has obeyed them, an impeccable causal inference. The Harvard Department of Ornithology is now indispensable for bird flying. It will get government research funds for its contribution.

Those who believe in the unconditional benefits of past experience should consider this pearl of wisdom allegedly voiced by a famous ship?s captain: But in all my experience, I have never been in any accident? of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort. E. J. Smith, 1907, Captain, RMS Titanic Captain Smith?s ship sank in 1912 in what became the most talked-about shipwreck in history.*

Only in recent history has "working hard" signaled pride rather than shame for lack of talent, finesse and, mostly, sprezzatura .

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Nassim Nicholas
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Lebanese-American Essayist, Scholar, Statistician, Former Trader and Risk Analyst, Author of "The Black Swan: The Impact of the Highly Improbable"