What is Nassim Taleb Smoking These Days?

Tue, 02/09/2010 - 14:16

Alex Crippen is reporting on CNBC that Black Swan author Nassim Taleb says Buffett may just be lucky. Taleb "says there isn't enough evidence to show that Warren Buffett's skill, and not his good luck, is responsible for the billionaire's enormous investing success over the decades.

Taleb is quoted as saying:

"I don’t want to spend too much time on Buffett. George Soros has 2 million times more statistical evidence that his results are not chance than Buffett does. Soros is vastly more robust. I am not saying Buffett doesn’t have skill—I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance."

 I have always thought this guy (Taleb) was a bit overrated, but now he seems to have wandered off into a far country that doesn't appear on the GPS nav system of rational people.

 

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Sun, 02/28/2010 - 03:38 — Daniel

Taleb

Write a book that that sells well and people will think you are an expert. Substance does not matter with medias or politicians. Taleb's three books (the three I am aware of anyway) are essentially substance free, without new ideas or useful data points. To save you some time I summarize the substance of his two best sellers for you:

Fooled by randomness: You have the mean and the variance but some fools ignore the variance.

The black swan: The mean and the variance are very difficult to evaluate because of the poor data on low probability/high severity events and as a result people tend to overestimate their knowledge and underestimate the variance.

I have to confess I am not a great fan of Taleb's personality type and as a result my comments might be somewhat one sided.

There is more substance is Berkshire's annual letters than in Taleb's books. The opinion of Taleb does not matter. Taleb seems to continuously overestimate his own knowledge. He freely gives his ill informed view on all sorts of things he is not an expert on. It is not clear the guy is an expert on anything, he sounds like a charlatan to me.

Wed, 02/10/2010 - 18:50 — Ryan

I have not read Taleb's book

I have not read Taleb's book but have thought about it--see he is coming out with a new paperback edition this May.

Think it is worth my time? I like his idea of "fat tails" and how "extreme" events can really kick one in the you butt.

Sat, 02/20/2010 - 18:46 — aliceschroeder

reading the new book

if you can think critically about what he says it's worthwhile to read the book. In fact, why not blog about it. See my next post.

Wed, 02/10/2010 - 12:28 — aliceschroeder

misquoted

is this the part that is misquoted?

I’m just saying we don’t have enough evidence to say Buffett isn’t doing it by chance.

I realize that he views almost any money manager's result as survivorship bias but if he actually said this he doesn't understand how buffett really made the money. stockpicking was only a part of it and not necessarily the most important part.

Tue, 02/09/2010 - 21:09 — Francisco Olivera

For what its worth, he did

For what its worth, he did write this on his twitter account: "nntaleb: CNBC journalists are imbeciles. "You need skills to get a BMW, skills + luck to become a Buffet" -> into "Buffet has no skills". Imbeciles."

Tue, 02/09/2010 - 17:54 — nickwebb

Nutty

I agree - I've never seen what others see in him. If this is true he's taken a one-way trip to nutsville. All I can think is that perhaps he's trying to gain notoriety by flaming Buffett? But then I think of Hanlon's Razor:

"Never attribute to malice that which can be adequately explained by stupidity."

Update - looks like he was misquoted:
http://twitter.com/nntaleb/status/8855484283

I still think he's got the wrong end of the stick. Buffett's fantastic skill at allocating capital wouldn't have come so completely if he hadn't had the luck to be born with high IQ & great memory / number facility, father as a stockbroker, running into Ben Graham etc To talk about skill+luck doesn't make sense. The luck, early on, has made a very substantial difference to the skill. To 'minus the luck' doesn't make sense and vastly underestimates WEB's skill and the value of learning from it.

Nick

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