N. Taleb on CNBC - "I have no choice but to own stocks"

livinlite · Post by **livinlite** » Tue Mar 13, 2012 6:27 pm

http://www.cnbc.com/id/46718912
First interview from the Black Swan author in a while..thoughts?
Sounds to me like he is hedging pretty heavily and sees us in a very hi-risk, hi-black/gray-swan-exposure environment currently.
I'm guessing he had plenty of cash socked away in risk-free accounts though too.
Anyway, I thought it was a pretty interesting interview from a non-pumpmonkey on CNBS.

Dragline · Post by **Dragline** » Tue Mar 13, 2012 6:59 pm

Thanks for that.
Taleb tends to follow "barbell" type strategies, often with way out of the money options to offset his principal positions.
But he is not really focused on trading these days, just preservation of capital. He has been against Treasuries for at least a couple years now. But a year and a half ago he was long gold and short stocks. That seems to have changed.

JohnnyH · Post by **JohnnyH** » Tue Mar 13, 2012 7:21 pm

Buying OTM options is usually very unprofitable. If he's been betting on another crash since 08, he might be almost done as a money manager due to sustained losses.

Dragline · Post by **Dragline** » Tue Mar 13, 2012 8:07 pm

He doesn't manage any money other than his own. But he became wealthy trading options and then went ERE so he could reinvent himself as a modern philosopher.
If you want an education in trading options, pick up his "Dynamic Hedging" sometime. But you better have your math hat on.

JohnnyH · Post by **JohnnyH** » Tue Mar 13, 2012 8:49 pm

@dragline: Awesome, thanks for the info and book rec... I have new found respect for the guy, knowing that he started as at trader and was ERE.

livinlite · Post by **livinlite** » Tue Mar 13, 2012 9:39 pm

I hadn't thought of it that way, but Taleb and Benoit Mandelbrot (discussed at length in Black Swan) are two great examples of the ERE lifestyle we could all aspire to:
1) get really good at what you do through consistent/persistent hard work
2) live your principles (don't take a job at J.Aron for the money), but realize you have to make concessions at times
3) find a way to earn your F-you money (Taleb mentions it that way too)
4) leverage your career into your interests and keep learning all the time (Mandelbrot worked in finance so he'd have access to huge data-sets he could use to study his risk/fractal theories on)
5) post-ERE - work just as hard, but do it solely for what you're passionate about -- writing books, philosophizing, working for the greater-good of society, etc.
I also read a lot of Zen principles in The Black Swan: all is impermanent, the future is not ours to know, etc.

livinlite · Post by **livinlite** » Tue Mar 13, 2012 9:44 pm

Sidebar: Can someone confirm that the following chapter is all that's new in the second edition of "The Black Swan"?
http://www.fooledbyrandomness.com/robustness.pdf
If so, I don't need to hunt down the second edition..
Thanks!

secretwealth · Post by **secretwealth** » Tue Mar 13, 2012 10:20 pm

livinlite, great post and great ideas. I want to comment on this:
"4) leverage your career into your interests and keep learning all the time"
This is a great strategy, but quite hard to do in reality, because we are trained and encouraged to specialize, as Jacob discusses in his book. The trick, then, is to step back from your specialization and understand what ideas, theories, and interests behind your field are most attractive to you personally and see how these transfer to other issues and, consequently, other potential revenue streams.

livinlite · Post by **livinlite** » Tue Mar 13, 2012 10:24 pm

@secret -
Great point; I was thinking of it in terms of what you can take from your current position to inform your future goals..maybe it's something as simple as improving your business writing, maybe it's networking, maybe inter-personal skills, research skills, etc.
I think it's sort of a way of trying to see the positives in what you are doing on your way to ERE so you don't get bogged down in every day feeling like you hate what you are doing and find it totally useless. Even while flipping burgers you could be improving your hand-eye coordination for future wood-working skills..no?
It's not easy, but boy, if you can master that outlook on life, things will be much more interesting as you make your way towards your goals.

secretwealth · Post by **secretwealth** » Tue Mar 13, 2012 10:35 pm

I wish I could think that way--I have a bad habit of seeing work as drudgery. It's like a light switch--as soon as I make money from something, even if it was something I loved, all of a sudden I being to loathe it.

Post by **jacob** » Wed Mar 14, 2012 1:48 am

If you can't get enough Taleb, go to ssrn.com and type in Taleb in the search box. He's writing technical papers as well. (He's a professor at NYU-Poly).
http://www.poly.edu/user/gammafooledbyrandomnesscom
Another guy you might want to check out is Espen Gaarder Haug.
And to stay with the thread, this week John Hussman claimed that current conditions are worse than 98.5% of history

http://hussmanfunds.com/wmc/wmc120312.htm

(He writes a weekly commentary every Monday. It's good for tempering/"perspectivizing" your outlook)
Of course, today the feds announced the bank checks that everything is honky dory (unless you're Citi) which caused the banking sector to rise 5%+ in the span of two minutes [which is one of the fastest ways I've ever made a grand] (even if you're Citi---C subsequently declined by half; tomorrow's opening will be interesting).

livinlite · Post by **livinlite** » Wed Mar 14, 2012 6:57 pm

Thanks for the links.
Tomorrow's (today's) opening was indeed interesting. Looks like those 5% gains were given back.
This market seems like a great place for blackjack players to have their day..not so great for long-term investors or fixed-income types.
Karl Denninger had a decent write-up today on the risk/reward that's out there right now and who should/n't be in stocks right now. The guy annoys me when he trends into social issues, but I did enjoy reading "Leverage" -- checked out from my library.
BTW - I've already been able to use NNT's theories at work and am getting some good traction from them on a risk coverage basis (utility industry)...I could go into more detail in a PM if anyone's interested.

Dragline · Post by **Dragline** » Sun Apr 08, 2012 10:15 pm

Taleb just posted the draft prologue to his new book if you are interested:
http://www.fooledbyrandomness.com/prologue.pdf

Dragline · Post by **Dragline** » Fri Apr 13, 2012 5:25 pm

Here's another piece of the new book:
http://www.fooledbyrandomness.com/ting.pdf