Nicholas Nassim Taleb Wrong Again, Loses Temper

What does Nicholas Nassim Taleb and Paul Krugman have in common? A tendency to make a lot of wrong predictions and not own up to them. Second, a tendency to sanctimoniously blame certain people like the 1%, bankers, high frequency traders, congress, Wall St., the fed, and economists for societies problems. But mostly bad predictions and lots of them.

The problem with moralizing is that if the empirical data doesn’t agree then 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 firm XYZ 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.

If you’ve ever watched Taleb’s videos or read his books his investment strategy boils down to buying stuff that benefits from disorder (like options) versus stuff that contingent upon remaining stable (long equities, for example). Taleb’s approach is to take many small bests in the hope one of them will payoff so that the loss of any one trade is very small. The problem is there is no evidence this is actually a viable trading strategy. Events like 1987 crash will never happen again and can be relegated as anomalies that can be discarded for all practical purposes. If you continue to bleed small amounts of money in anticipation of another Black Monday you’ll go broke before it happen.
‘Skin in the game’ isn’t virtuous. It just means you lose a bunch of money and you’re still wrong. A least economists when they are wrong don’t lose lots of money.

That’s why we need to vote Republican, for pro-growth policy such as tax cuts, deregulation and defense spending. A republican super majority will mean no more brinkmanship over the debt ceiling nor shutdowns. Shutdowns have only occurred under democratic presidents and let’s not forget that the economy entered a recession on the Clinton surplus. Stocks will respond favorably to any clues of republicans winning control, so we recommend being long defense & technology sectors, oil, or the broad indexes. It will be interesting to see how the GSE’s (Fannie May FNMA and Freddie Mac) respond to a republican supermajority. We predict these stocks will surge up to 1000% because a republican controlled government would be more amenable to privatization. The left more than anyone else want the shareholders to lose all their money to ‘save tax payers’ even though these holders DO pay the same taxes as everyone else. The irony. Tax payers, by in large, have gotten over 2008. It’s not fair to make the shareholders collateral damage over the left’s longstanding war against the rich.

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