A spurious tail is the performance of a certain number of operators that is entirely caused by luck, what is called the “lucky fool” in Taleb (2001). Because of winner-take-all-effects (from globalization), spurious performance increases with time and explodes under fat tails in alarming proportions. An operator starting today, no matter his skill level, and ability to predict prices, will be outcompeted by the spurious tail. This paper shows the effect of powerlaw distributions on such spurious tail.
The Green Lumber Problem, outlined in Nassim Taleb’s upcoming book Antifragile, is essentially misunderstanding which facts are relevant vs those which are not in regards decision making under uncertainty.
“In one of the rare noncharlatanic books in finance, descriptively called What I Learned Losing A Million Dollars, the protagonist makes a big discovery. He remarks that a fellow called Joe Siegel, the most active trader in a commodity called “green lumber” actually thought that it was lumber painted green (rather than freshly cut lumber, called green because it had not
Just spotted Nassim Taleb’s upcoming book Antifragile on Penguin Books UK website. The website shows a different cover to the stacked boxes in the post below, and has a different subtitle “How to Live in a World We Don’t Understand” which would presumably be for the UK market. Publish date appears to be 27th of November 2012.
Antifragile joins the previous works of Nassim’s continued exploration of the concepts of risk, uncertainty, probability, and decision making (plus many others threads), all under the umbrella of how to live in a world we don’t understand. “It’s all the same book” he has said before. I appears he has turned his works into a trilogy of sorts The INCERTO (The Works on UNCERTAINTY: Antifragile, The Black
It covers his typical Black Swan message that we cannot predict these certain class of rare but consequential events and so we need to become robust to them rather then relying on forecasts. The economic models that we use to calculate the probability of these rare events needs to go out the window.
“What goes out of the window? The entire discipline of modern finance and
Nassim gave this talk in April 2012 and if I am not mistaken it was the first official public introduction of the concept of Antifragile, however at the time Nassim had planned to call the book “Antifragility” and later changed it due to concerns from the publisher.
I love the introduction, asking the audience for the opposite of fragile. I have heard him do this a number of times when he first started introducing the idea, and everybody always says “robust”. The issue is now as the idea enters the common discourse he can no
Renowned academic and author Nassim Nicholas Taleb discusses his groundbreaking ideas and their relevance to the current economic crisis, national policy making and other topics with Rohan Silva, senior policy advisor to the Prime Minister.
At the The Deloitte Innovation Growth Track program in January 2011 employees were given the opportunity to ask Nassim Taleb some questions. The program in the Netherlands, covered eight sessions on different topics with speakers specialising in these themes.
1) ‘If Black Swans happen more today than we think, why is man so poorly adapted to rare and improbable events?’
2) ‘What has been the largest Golden Swan in 2010?’
3) ‘How can we assist out clients in identifying their own Black Swans?’