Money and Finance
- Michael Pettis: Revisiting My 2011 Predictions
It is still too early for all of these predictions either to have materialized or to have failed, but I thought it might be useful to review them to see whether or not they have been reasonably accurate in describing unfolding events and, if not, how...
- Nassim Taleb Quotes (prediction)
I had this quote saved to post later, but it seemed to go well with the Tetlock article, so here it is now. THIS paper written by Taleb and Tetlock may also be worth reading (or re-reading) "I insist on the via negativa method of prophecy as being the...
- George Soros Quote
“My financial success stands in stark contrast with my ability to forecast events. In this context, we must distinguish between events in financial markets and events in the real world. Events in financial markets determine financial success; events...
- Why Did The Crisis Of 2008 Happen? - By Nassim Nicholas Taleb
Found via Farnam Street.Summary of Causes: The interplay of the following five forces, all linked to the misperception, misunderstanding, and hiding of the risks of consequential low probability events (Black Swans). I-CAUSES 1) Increase in hidden risks...
- Heretical Thoughts About Science And Society - By Freeman Dyson
At the Wesco Annual Meeting, Charlie Munger said that we should listen more to Freeman Dyson and less to Al Gore. Here’s a good article to start on that path (thanks for the link, Bud). I think the first paragraph is very applicable to investing as...
Money and Finance
Nassim Taleb: From fat tails to Fat Tony
Predictions of socioeconomic variables are as dependable as the horoscope—so let’s not rely on them in 2013. Instead we will need systems that don’t fall apart when we make a mistake. This may seem blindingly obvious but apparently it is too “trivial”, too easy to understand and implement to appeal to the zeitgeist. For, alas, though those who risk their own funds put a premium on simplicity and practicality, others—academics driven by “rank” and status, management consultants, economic “experts”, and finance analysts—have an incentive to indulge in complexity and muddle.
This intrinsic limit to predictions is here to stay with us. It will not go away thanks to hard work by zealous researchers or more funding, more data, more computing power, and more complicated theories. For unpredictability is part of any system that is prone to “fat tails”, that is, one whose properties are dominated by rare events—what I have called “black swans”. Don’t imagine that complexity, chaos theory, agent-based modeling or some other fad narrative will deliver better, more usable predictions than those failed economic methods we are still teaching our university students.
- Michael Pettis: Revisiting My 2011 Predictions
It is still too early for all of these predictions either to have materialized or to have failed, but I thought it might be useful to review them to see whether or not they have been reasonably accurate in describing unfolding events and, if not, how...
- Nassim Taleb Quotes (prediction)
I had this quote saved to post later, but it seemed to go well with the Tetlock article, so here it is now. THIS paper written by Taleb and Tetlock may also be worth reading (or re-reading) "I insist on the via negativa method of prophecy as being the...
- George Soros Quote
“My financial success stands in stark contrast with my ability to forecast events. In this context, we must distinguish between events in financial markets and events in the real world. Events in financial markets determine financial success; events...
- Why Did The Crisis Of 2008 Happen? - By Nassim Nicholas Taleb
Found via Farnam Street.Summary of Causes: The interplay of the following five forces, all linked to the misperception, misunderstanding, and hiding of the risks of consequential low probability events (Black Swans). I-CAUSES 1) Increase in hidden risks...
- Heretical Thoughts About Science And Society - By Freeman Dyson
At the Wesco Annual Meeting, Charlie Munger said that we should listen more to Freeman Dyson and less to Al Gore. Here’s a good article to start on that path (thanks for the link, Bud). I think the first paragraph is very applicable to investing as...