Shared by JohnH

HatTip to Dave Lull. From NNT’s notebook.

145 Intervention Bias

Shared by JohnH

HatTip to Dave Lull.

The Bed of Procrustes by Nassim Nicholas Taleb – Random House

I can’t tell when Nassim Nicholas Taleb, author of The Black Swan and Fooled by Randomness, is serious and when he’s winking wildly in his newest book, The Bed of Procrustes: Philosophical and Practical Aphorisms. My bemused and befuddled response to the book is either a testament to my insight or ignorance. I freely throw my hands up in the air and declare that I do not know which it is.

The Bed of Procrustes: Philosophical and Practical Aphorisms

Taleb is a modern philosopher mislabelled as a finance guru by the mainstream media. His insights into finance are well established in his earlier books, but any writer or reporter who narrowly defines Taleb in this fashion misses the point.

“Greece’s economic ills are a trivial menace to the global economy compared with the much graver threat posed by a heavily-indebted and seemingly immobile U.S. government, author Nassim Taleb said Monday. ‘There is a serious problem in the U.S.,’ Taleb said after speaking at a business conference here. ‘The U.S. deficit is around $1.5 trillion. It’s far more dangerous than Greece.’”

“Mr. Taleb said investors and government officials around the world are unwise to focus so much on Greece when the real ‘elephant in the room’ is the U.S.”

Mr. Taleb keeps the metaphors coming (“Greece is peanuts” The U.S.? “A time bomb.”) throughout his comments.

Curiously, the author of The Black Swan and Fooled by Randomness, proceeds to describe the U.S. in rather less dramatic terms.

“This is not an insoluble problem,” he said of the U.S. debt crisis. “You can fix it with some fiddling here and there. But you need the will to do it. And you need consciousness about the importance of debt. I don’t see that. Politicians are good at getting elected, not at solving problems like this.”

In July Universa intends to tap the financial adviser market by offering its own black swan ETF. The fund will mimic some of the strategies employed by its institutional-only hedge fund and will have an expense ratio of 1.5%.

Will Universa be able to repeat its outsize returns in another crash? Clifford Davis, head of equity derivatives at BNP Paribas
(
BNPQY.PK –

news
–

people
), is skeptical. “A true black swan event is by definition different from all previous crises, and markets don’t react in the same way.”

Spitznagel is unruffled as he sits in his office listening to classical music and losing money each day. He is ready and waiting for the next black swan to arrive.