Tavakoli's smear campaign ag. Taleb

[Thunderdog]

Quote from nitro:

1. Where I disagree with Taleb is that he doesn't propose a solution, only a criticism. He simply cites Mandelbrot and leaves it at that.

2. Further, for years he took the other side of trades that were put on by the same people that derive value and manage risk by models like CAPM. He put on these trades not because the opposing trades were ill framed, but because he simply applied the negation operator to their philosophy and therefore he must be trading truth. So, if Neiderhoffer is putting on this trade, Taleb should be on the other side of it for no reason other than Neiderhoffer uses linear statistics.

That is as naive as the people/methods he criticizes.

I'm not a math guy, but let me take a run at it.

1. Perhaps the solution is simply not to become overly reliant on numeric specificity when such reliability simply does not exist in the fullness of time.

2. If the "other side" eventually and characteristically runs into trouble at least partly as a result of its own excesses, then why would it be naive to take inexpensive opposing positions and await the inevitable?


I don't trade like Taleb does nor do I trade like the "other side" does. Even so, I'm more inclined to give the benefit of the doubt to Taleb rather than the "other side."

 

[nitro]

Quote from Thunderdog:

I'm not a math guy, but let me take a run at it.

1. Perhaps the solution is simply not to become overly reliant on numeric specificity when such reliability simply does not exist in the fullness of time.

2. If the "other side" eventually and characteristically runs into trouble at least partly as a result of its own excesses, then why would it be naive to take inexpensive opposing positions and await the inevitable?


I don't trade like Taleb does nor do I trade like the "other side" does. Even so, I'm more inclined to give the benefit of the doubt to Taleb rather than the "other side."

Because it is akin to what people on ET when they say, I want a losing system so I can do the opposite and make lots of money. Not trading a losing system is a necessary, but not sufficient condition for making money systematically.

 

[Random.Capital]

Quote from nitro:

That is as naive as the people/methods he criticizes.

Who cares? It works. Besides, he's clearly advocating for a more "naive" trading approach anyway, so it's internally consistent.

What differentiates it from the usual ET chatter of "i'll just take the opposite of stock_trader's position" is that the people saying that don't generally understand what it actually means (ie, it's NOT simply a "mirror image" trade), whereas Taleb does.

 

[Thunderdog]

Quote from nitro:

Because it is akin to what people on ET when they say, I want a losing system so I can do the opposite and make lots of money.

Actually, I don't think it is. Taleb is not doing the exact opposite thing. His actions are not a mirror image. I think his positions reflect his skepticism towards overconfidence.

 

[nitro]

Quote from Random.Capital:

Who cares? It works. Besides, he's clearly advocating for a more "naive" trading approach anyway, so it's internally consistent.

What differentiates it from the usual ET chatter of "i'll just take the opposite of stock_trader's position" is that the people saying that don't generally understand what it actually means (ie, it's NOT simply a "mirror image" trade), whereas Taleb does.

It works when? For years, he bought nickles and bled money to death year after year.

He finally caught the big one and he made money. Now people are rushing to put money in his funds, when they should be rushing to do the exact opposite.

 

[nitro]

Quote from Thunderdog:

Actually, I don't think it is. Taleb is not doing the exact opposite thing. His actions are not a mirror image. I think his positions reflect his skepticism towards overconfidence.

Taleb buys nickles because he thinks the tails are way undervalued. He is probably right but any idiot can sit there and buy nickles. It takes no skill.

 

[Martinghoul]

If you want to read a thoughtful critique of Taleb and his methods, look here:
http://www.efalken.com/papers/Taleb2.html

 

[nerofan]

did you realize that falkenstein is so jealous of taleb he is just writing anything he can throw --like comments about Taleb's publications. are u blind to the fact that Taleb is a full professor and Falkenstein is not? How can he criticize Taleb for not working with the peer system?
Falkenstein is a crank.

 

[Capablanca]

Taleb states an idea that is obvious and self-evident. He now is a convenient reference for that idea but I don't understand why there are so many people gushing over him.

 

[intradaybill]

Taleb says the obvious but it is amazing that obvious things are over the head of many academicians and politicians. Basically, Taleb implies that you need higher reserves and large trading capital to make money and you must at the same time take small risks because a black swan can wipe you out anytime. He is correct, look at what happened to many funds and banks using naive VaR measuremensts to calculate risk. Also, politicians now realize that bank reseves must be increased because of the possibility of black swans.

Taleb is a philosopher of catastrophy. He is correct that signs of pending catastrophy can increase the probability of making profits. TARP is a sign of a pending catastrophy/black swan (inflation) but not in irself. You also need to see other signs. You see several signs, you bet on a black swan and you make money. It is difficult analysis that cannot be quantified. But Taleb is correct, the right black swan cannot only destroy the financial system but the whole civilization as we know it unless we have reserves against it.

People that try to rebut Taleb attack him personally but say nothing about the essence of his message. This usually happens when someone is on a mission to discredit someone else. Taleb's message is costly for financial institutions.