“It is well known that I am never wrong (see Me, 2007). Others have been right in the past, however it was only because of pure luck.”
I read studies that say that as the fund gets bigger its performance suffers. Harder to get into and out of trades the bigger you are. Also, it’s harder to invest in the best asset class to generate alpha (microcap).
At least a year ago when I read his book, he was running a fund and advising clients. I think this article discusses it: http://online.wsj.com/article/SB122567265138591705.html
There was also a youtube video where he discussed investing strategies. I remember the hedging part having to do with extremely out of the money options on certain index levels.
I think there is some truth to what he says. But then there are some notable exceptions. But at any rate, I find it useful to listen and try to adapt accordingly – even if I’d like to be able to prove him wrong ha ha
I think he and Blake should get together and brainstorm to solve the worlds problems. I don’t see why this should deter any of us from being in the investment industry. Maybe we’ll get lucky. Who this article should really be aimed at are people like endowments and pension funds.
lol classic. I wish he could read this.
From the article I can gather that he sniffs his own farts, almost as frequently as he googles himself, so hopefully he stumbles on this.
The message is simple, but the guy is incredibly high on himself. All of his books and articles for decades have boiled down to 2 points:
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Survivorship bias
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Nassim Taleb is smarter and more awesome than you (even though nobody is supposed to be smarter than anybody else)
This is a huge factor. There are small / microcap funds that have returned 30%, 40%, or higher compounded annually over extended time periods (decade plus). The strategy does not scale past a few hundred million though, and definitely not past $500 million – the names are just too illiquid. That said, it’s not about luck, there is a method or system that can be reproduced by someone with sufficient skill. If you’re managing 10 billion, however, then by definition you have to be in liquid stuff, and that stuff is much more competitive and efficient.
So is Taleb gonna be the first one to get out of the investment industry?
I really enjoy Taleb’s way of thinking. He is smart in a creative, independent way.
But sometimes I get the impression that he is trolling himself.
His books have sold millions of copies. If you should ask him about it - Im not sure that he would say that it’s actually a Black Swan.
his books were not even enjoyable…i would not recommend it…there is a few good ideas here and there…
I thought his idea of black swans was definitely interesting and worthwhile - especially the black swans that happen simply because they’re not supposed to happen.
I’ve read his book and though it had some great ideas sprinkled throughout, but I’m convinced this guy is high on his own ego supply.
Are people really still listening to this guy?? It’s quite likely we’ll look back in 15 years or so and laugh at these so called experts (Nouriel Roubini, Meredith Whitney, Jim Rogers, Marc Faber, Peter Schiff, etc.). I have came to the conclusion that they are nothing more than dunces that will go the way of abby joseph cohen. Perhaps Taleb is somewhat right in that luck is the only possible way that these people have enjoyed success despite their flawed logic. We live in a very pessimistic world and no one seems to focus on the huge positive macro trends at hand. I think the positives far outweigh the negatives. I also believe that despite the gloomy prospects constantly being presented to us the financial sector, especially investment management, will continue to grow over the long haul in mature economies. Call me crazy but I don’t believe that private/public debt will cause a reversal in this long term trend for mature economies (and I don’t buy Charlies Mungers argument to cut the financial sector to 1/5 of pre-crisis levels). As far as investment management, as I am sure you have all read the superinvestors of graham and doddsville, there is much more than just pure randomness to consistently generating market beating returns. Obviously relationships go a long way in the industry, but at the end of the day a smart fund manager putting in the hard work and generating the returns will win!
(Nouriel Roubini, Meredith Whitney, Marc Faber, Jim Rogers, Peter Schiff, etc.)
I literally ignore all and everything these people say aside from J Rogers who made a fortune with his talent…i think one of the worst is Marc Faber cause he sucks at stock picking and he is a likely a pedo living in Thailand…
I think Munger’s sector cut is really based on his belief the financial sector overall adds very little to society…i kinda agree…
The only person higher on himself than Taleb is Gary Shilling, author of “the age of deleveraging”.
Woah buddy, no need to make it personal LOL
I heard Faber speak once and I felt like jabbing a pencil in my ear mid-way through.
i did read Faber’s book…it was actually very good…good historical insights…
Respect.
Didn’t Faber guarantee the Dow was going to 3,200?