On roughly 95 trades out of 100 they lose money… 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. 

Spitznagel is pretty young to be so pessimistic; only about 40. So he might have gotten that way from Nassim Taleb, the author of “The Black Swan.” Spitznagel was Taleb’s right hand man at Empirica, another doom-scenario fund. Taleb is now principal and senior scientific adviser at Universa (he shut Empirica after getting seriously ill).

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Hmm, at the very least, an interesting Idea.

The third and why your reading this, was ‘The Black Swan’ by Nassim Nicholas Taleb, which I acquired, true to form, totally randomly, from an Italian book store in a small town. Is it true? Could it be possible? Did Nassim Nicholas Taleb leave a Da Vinci style code in his book that you all missed, right under your very noses? Thus confirming the blindness to black swan events and to prove his point? Is it a sophisticated treasure hunt? What’s the prize? Is it an experiment!? Reader, you do not know, however do you enjoy finding out? You will able too with this book.

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Nice Find! HatTip to Dave Lull.

Before that, he’s writing his next one-man show, Why There is No Hope, a ‘cutting-edge’ satirical production based on philosopher and finance mathematician Nassim Nicholas Taleb’s Black Swan theory about unexpected events of large magnitude. Popularised in the aftermath of the credit crunch, Taleb’s theory for Cleese essentially boils down to the idea that we can never predict the unexpected and that so-called experts are invariably ‘hopeless’. ‘The implication is that there’s no hope if we go on the way we are, and that kind of research lends itself to very funny conclusions. [Taleb] is an unbearably vain main of course, but what he says is absolutely fantastic.’

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Post also quotes Rick Bookstaber who uses a biological metaphor – survival over time – in weighing investment strategies.

This train of thought was jogged by a Wharton discussion with Nassim Taleb on fragility and over-optimization (available via Paul Kedrosky here).

In arguing why an oil shock could actually be a good thing — a sort of wake-up call to get us off our butts — Taleb brings up the concept of “anti-fragility,” also the subject of his “Black Swan” follow-up:

There is robustness, fragility, and anti-fragility. [Anti-fragility] is not robustness, it is beyond… you give someone a little poison and they get stronger.

Economic life gets stronger not with bailouts, but with bankruptcies. Evolution works not with bailouts — there are no bailouts in nature — but with competition and natural selection.

So you need to have some stressors. And we have not been stressed enough (in regard to oil prices)… this is the fragility of depending on one source, one product.

It is optimal to use oil, but more dangerous… almost 99 cases out of 100, optimization makes you vulnerable and fragile.