Ten principles for a Black Swan-proof world - Taleb

[truehawk]

NT's claim to fame is that he correctly pointed out that the Value at risk models assuming a normal distribution did NOT fit reality because of the fairly frequent occurance of events 4 or 5 standard deviations from the mean. In other words fat tails.

He was right and I agree with his 10.

 

[trefoil]

I would agree.
I went looking for all kinds of things on institutional risk management afterwards, and found this interesting entry from a risk mgmt pro in Oz: Normal curves and the Levy distribution.
The comments section eventually was taken over by some super-fanatical gold bug, but the original entry and some of the comments afterwards are quite good.

 

[Eliot Hosewater]

Quote from Random.Capital:

It has to be asked - everybody knew the compensation schemes going in - why would someone put themselves at risk by giving the bonus-incentivized crowd access to so much of their money?

Good question. Let's ask CalPERS.

 

[TraderZones]

Quote from Random.Capital:

It has to be asked - everybody knew the compensation schemes going in - why would someone put themselves at risk by giving the bonus-incentivized crowd access to so much of their money?

Why do people spend hours reviewing Consumer Reports and comparison shopping on an $800 refrigerator...

But let others manage their $800,000 retirement and do their taxes for them?

The advisors who took a 2 month course, and showed people how much money they would make 40 years from now, assuming a steady 8% market growth.

No wonder Madoff lasted near 30 years.