Taleb is not very practical, he talks about having a 90/10 portfolio, where 90% is in "safe" things and 10% in things that benefit from tails (long options, venture capital, biotech etc). But he, as far as I'm aware, never helped the average person by teaching them how to construct a 90% safe portfolio. Ray Daio does some of that with his 'balanced portfolio'/risk parity ideas. How talks about how you ought to develop a portfolio that is resilient to "all weather" conditions. His firm backtested portfolios with almost 100 years worth of data and different countries and they came up with different allocations. They dont give away their secret sauce, of course, but Dalio does give up some clues on how to do that in his articles/interviews. He even gave away an specific asset allocation in the Tony Robbins finance book
Some thoughts on Nassim Taleb and risk
- Thread starter Daal
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90% in short-term fixed income of the same country is not safe at all
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The last time Taleb said something actually useful and insightful was in his "Dynamic Hedging" book. It's all been downhill from there, sadly.
I completely disagree. I'm surprised Marty that you hold that view since he does attack your industry with impunity. Rightfully so I might add. No disregard to you however. I don't expect most people who draw checks from the financial system to agree with him though no more then I expect the Catholic Church to acknowledge the criticisms launched at them.
While you're certainly entitled to disagree, I confess I am a little curious about your view, Mav...
Firstly, what is "my industry"? Is it different to your industry? Do you mean to say that you're NOT surprised that I hold the view I described?
I'm assuming you career started in banking no? I might be mistaken. My apologies if that is so. I don't work in banking nor have I ever. Yes, I'm surprised you disagree with his core ideas that those in society who take the most risk bear almost none of the consequences. Society at large has to bear them. But they get most of the gains. A free call option if you will. A nice gig if you can get it I agree. But it does distort things. His research on fragility I think is fascinating and applicable to many things, even outside finance. I'm not sure what you disagree with him about since you left that part out. His core research outside of black swans which is really a natural extension of his theory of fragility.
I've read all his work and don't take "those who take the most risk bear almost none of the consequences" as an idea of his at all, let alone a core one. Of course he is the kind of person who can get you to believe that he agrees with your core view and me to believe he agrees with my core view and Tom to believe he agrees with Toms's core view simultaneously, while you, me, and Tom all disagree vehemently! That's a luxury you have when you're a rock thrower rather than a builder, which is sadly what he's become. At this point I put up with the tedium of a bunch of chest thumping and rock throwing to get to a few of his points I think are valuable, but I'd so much rather he just dispensed with all that and grew up a little.
What I took out of AntiFragility was all about designing systems that could handle external shocks of the unknown unknown variety. I have no doubt you took out of it exactly what you stated, and if you asked someone else who read it they would say something different from both of us. Like I said, that's the beauty of being a rock thrower instead of a builder, you can be all things to all people!