Four Years Later, Taleb Still Holding Grudge Against Pinker

Grumpy, anti-HBD liberal Nicholas Nassim Taleb is still holding a grudge against Steven Pinker and Richard Dawkins – four years later! – after getting his butt handed to him in the ‘IQ wars’.

I agree. No one should buy your books. Your books rehash what statisticians and traders already know, repackaging the obvious as something ‘new’. Anyone who has studied statistics or has traded options for longer than a year is aware of fat tails and the limitations of conventional option pricing models and the Gaussian distributions that underpin them. Second, mathematically, Taleb’s methods are neither viable nor profitable anymore. [1]

Same for those Gladwell books and other pop-psychology rubbish. This includes much of behavior finance, studies of human ‘irrationality’ under controlled conditions, and the like.

Of course, most science books that are written for the general public do a lot of rehashing, but the authors of said books typically don’t go around attacking scientists who are smarter and better-informed than they are. When they do, it typically backfires, as in the case of Stephen Jay Gould who erroneously accused the late Samuel Morton of data fabrication. It backfired, reveling Gould as the fabricator, and now Gould’s legacy has been damaged – at least in the eyes of other anthropologists.

And now the big lib takes a shot at The Donald:

Taleb should stick to Twitter debates against opponents who are too busy and respected to waste their time arguing with him, since he loses actual debates.

He’s also a crybaby and hypocrite, accusing the media of taking him out of context, while simultaneously seeking media attention to promote his books. He says he begs the media to go away, but he keeps arguing with everyone. In other words, he wants attention provided the conversation goes the way he wants. And when it doesn’t, he attacks his opponents and then deletes his tweets. Here is an example. This is hilarious. It’s funny because of how easily trolled he is, and how someone with a book titled Antifragile has such a delicate ego.

In spite of all his rantings, Taleb never actually formulates tenable solutions.

The problem with moralizing is that if the empirical data doesn’t agree, you’re just falling victim to your own confirmation bias; this is bad for yourself and your readers. Another problem is that it leaves little grey area, such as how much a firm should be punished for taking a bailout. Taleb has said on numerous occasions that bailed-out banks should forfeit bonuses and officers should be paid a ‘civil servant’ salary, but he never specifies for how long. What if a bailed-out bank only took a tiny bailout and has reformed? When would it shed its scarlet letter.

Taleb is one of those liberals like Peter Schiff and others who pretend to be on the ‘right’ yet advocate policy and hold opinions that communists and socialists would approve of. Let the banks fail and end the fed? Communists want that, too, because it would cause the economy and stock market to fall, and hence rich, productive people would lose a lot of money, creating more wealth equality even if society is worse-off as a result. Then the left can swoop in to ‘fix’ the problem that they themselves exacerbated, rebuilding society in their image. This is communism 101: crisis, revolution, rebuilding.

Contrary to popular belief, it’s communists who are anti-intellectual, not conservatives. Read any history book on the matter; in all communist regimes, intellectuals were persecuted.

Here is some more anti-intellectual liberalism by Taleb:

Just another example of turning high-IQ into a handicap, arguing that intellect must be in lieu of ethics or creativity. And yes, smart people make mistakes, but so do dull people, too. If a rocket blows up on the launchpad, do we fire the rocket scientists and replace them with ditch diggers?

Is it any surprise he’s close with Gladwell?

Pinker, who is a neo liberal, has spoken out many times against communism. Taleb? Never. Harris and Dawkins, as part of the ‘neo atheist movement’, care about the free dissemination of ideas, denouncing Islamism while feminists, who claim to care about human rights, remain silent on Islam, instead attacking men and Christians. Welfare liberals like Taleb want to impose their anti-intellectual provincialism on the world, in much the same way communists do. The left’s logic is, ‘if an intellectual makes a mistake, all intellectuals are wrong and narrow-minded’ or ‘intellectuals have no skin in the game, so they are wrong and should be ignored’ or ‘book smarts are better than street smarts’. (Good luck building a computer or curing a disease with ‘street smarts’) ‘Blame rich people’, ‘blame smart people’ are mantras of the left.

[1] The Taleb ‘barbell’ strategy only works when you have high interest rates, like before 2008, since you can use the compounded interest to finance losing out-of-money (OOM) put bets, and also because the market has a tendency to fall when rates are high (like 1987, 70′s, early 80′s, 1989, 1997, 1998, 2000, 2007). High interest rates also makes put options cheaper, in accordance to the Black Scholes option pricing formula. Thus, high interest rates may give the put buyer a positive expected value. But with rates still close to zero, this method doesn’t work. Then you have the constant stock buybacks, record high profits that keep growing, consumers that won’t quit consuming, and so on. A totally different macro landscape than before 2008 when such a strategy was viable.

In a paper, Taleb argues that selling OOM puts is a bad idea due to the volatility explosion, but this assumes that options are priced strictly under the Black Scholes framework and that options can be traded at infinitesimally small fractions of a penny. In reality, the volatility smile or skew makes these far OOM put options much more expensive than assumed by Taleb and the Black Scholes framework, thus substantially limiting potential profit. Also, there is a minimum ‘ask’ price for OOM puts, usually a couple cents. The huge multipliers given by Taleb are under the assumption you can buy OOM options for infinitesimally small fractions of a penny, which you obviously can’t.

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