Get it while you can! These links frequently turn into 404s.
Friends, the packaging around the philosopher’s stone. A long section. Comments welcome. Thanks.
http://www.fooledbyrandomness.com/innovation.pdf
Apparently the NNT quotes Bloomberg posted earlier today (and to which I posted a link) were taken out of context and NNT isn’t too happy about it.
So why is Taleb so furious?
Basically he says he wasn’t giving investment advice at all, and that he was giving an hour-long lecture on anti-fragility and risk, and that he was making a long-term structural call based on the fact that Europe was moving towards decentralization (which in his book is good), even if in the meantime they have to break a few eggs.
He insists the lecture had nothing to do with investment advice, and that it was just a discussion of structure.
The line about “fun” currencies, he says, was a joke.
Here are some quotes from our call with him.
———–
“It’s very simple I was giving a lecture on risk management.”
“Two problems in the long run of risk.” The first problem is deficits. The second one is centralization.
“I’m making a broader long-term call”
“I’m making a long-term risk management call.”
“I was massively angry”
“I spoke for an hour on methods of my risk heuristics.”
“And these f*cks, all they did, and take out of context comments on investment
“They’re going in the right direction, but they’re going to break some eggs.”
“This is not a market call, this is a structural call.”
Europe is decentralizing. The US is “Obamaizing”
“I was presenting my book on the idea of anti-fragility.”
“He turned me into an investment caller like all these,”
“They made it a caricature of what I said.”
“Gross caricature.”
via Nassim Taleb Responds To Bloomberg Article – Business Insider.
Thanks Dave!
The more frequently you look at data, the more noise you are disproportionally likely to get (rather than the valuable part called the signal); hence the higher the noise to signal ratio. And there is a confusion, that is not psychological at all, but inherent in the data itself. Say you look at information on a yearly basis, for stock prices or the fertilizer sales of your father-in-law’s factory, or inflation numbers in Vladivostock. Assume further that for what you are observing, at the yearly frequency the ratio of signal to noise is about one to one (say half noise, half signal) —it means that about half of changes are real improvements or degradations, the other half comes from randomness. This ratio is what you get from yearly observations. But if you look at the very same data on a daily basis, the composition would change to 95% noise, 5% signal. And if you observe data on an hourly basis, as people immersed in the news and markets price variations do, the split becomes 99.5% noise to .5% signal. That is two hundred times more noise than signal —which is why anyone who listens to news (except when very, very significant events take place) is one step below sucker.
via Noise and Signal — Nassim Taleb | Farnam Street.
HatTip to Dave Lull.