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 Swan, Fooled by Randomness,The Bed of Procrustes), which a snippet about from the Prologue is below:
INCERTO, an investigation of luck, uncertainty, probability, human error, risk, and decision-making under opacity, expressed in the form of personal essay with autobiographical sections, parables, philosophical, historical, and scientific discussions in non-overlapping volumes that can be accessed in any order.
Antifragile cannot come soon enough!
EDIT: He is also currently allowing the viewing of Notes, Afterthoughts, and Bibliography, and also the Appendix I and Appendix II(these are draft versions and therefor “cannot be disseminated or quoted.” so these are linked to the originals and may be removed at any time (hint: save them quckly!))
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 portfolio theory (the theories named after Harry Markowitz, William Sharpe, Merton Miller), the model-based methods of Paul Samuelson, much of time series econometrics (which don’t appear to predict anything), along with papers and theories that are based on “optimization.” These bring fragility into the system.”
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 longer do this introduction. A good problem to have I guess.
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?’
Michael Elliot interviews Nassim for TIME Magazine back in December 2010 for the release of his book The Bed of Procrustes.
You’re a trader and a very successful one, do you think the sensationalized stock-market programming offered by the likes of CNBC and others has affected investor behaviour and market efficiency? (Toby Whitby, Houston)
You warned us about the financial crisis, and your prediction was right. Can you foresee any other crisis that will happen in the near future? (John Hughes, Woodinville, Wash)
Black-swan events are generally extreme outliers. Is it possible to profit from these events? (Kumaraguru Nadaraja, Adelaide, Australia)
Many people have said that specialisation is the key to human advancement, do you think that is true, or do you still feel there is a place in the world for the Renaissance man? (Cameron Reuben, Seattle)
What problems are you most interested in right now? (Kenny Smith, Boston)
Evidently it was just 5 questions, nice work TIME at least you delivered half of what you said!
Taleb tries to inform a group of economically ignorant legislators. Congress is completely clueless in regards to simple concepts such as “risk”. Taleb mentions that our society is “over-financialized” because debt to GDP has grown to unsustainable levels and that our children and grandchildren will be punished for the foolish risks that government has taken with deficit spending, drastically increasing public debt, and central planning. Unfortunately Congress has not listened and continues to spend, as they are naive enough to believe that throwing money at our problems will solve everything.
Taleb wants to suspend VaR, however that is only one minor issue. The major issue at hand is Congress; how Congress facilitates, encourages, rewards, foolish and disastrous behavior. Congressional oversight of the Federal Reserve Bank and Ben Bernanke is non existent. Congressional oversight of Housing and Urban Development is non-existent. Congressional oversight of MLB players accused of using anabolic steroids is absolutely exceptional. Luckily, Congress is there to prevent the world from losing interest in something as significant as baseball. If anything will bring about hyperinflation and/or a world wide catastrophe, it is baseball and the lack of oversight. Don’t worry about imbeciles like Paul Volcker and Alan Greenspan… go after Curt Schilling! Forget about those who created the housing meltdown and the Great Recession… forget about Andrew Cuomo, Bill Clinton, Franklin Raines, Jamie Gorelick, Jim Johnson, Rahm Emanuel, Chris Dodd and Barney Frank… go after Roger Clemens! Forget about unfunded liabilities in the ten of trillions – and perhaps hundreds of trillions – created by Ponzi Scheme policies… go arrest Mark Mcgwire!
Nassim was the feature speaker at ai5000’s Chief Investment Officer Summit in New York (May 2010). The summit had more than $1 trillion in pension, endowment, foundation, and insurance fund assets under management represented at the event. The following videos are from a Q&A with him (before) the event.
The most important issues for Chief Investment Officers (CIOs)
Be over insured, have as low leverage as you can.
Change your way of thinking by adopting at your core a defensive strategy.
Don’t be afraid of being aggressively in cash.
Avoid clustering, following what other CIOs are doing, following the crowd just because that is what everyone else is doing.
Use Taleb’s ‘Barbell Strategy’: Be very aggressive with a small part of your portfolio, and massively paranoid with the rest, giving on average medium risk portfolio. This strategy means cannot lose more than a certain amount of money that you have already allowed for the possibility of happening. Your actual risks are not dependant on a prior computation of risks.
The key central point is to generally be robust, namely being resistant to adverse shocks (black swans).
Nassim’s Investments & Exchange-Traded Funds (EFTs) for Institutional Investors
Avoid Blowups: Accept caution as a strategy
On the mishandling of the bank bailouts
Principles for a Black Swan robust world
Look to Mother Nature for Robustness
Culture change for CIOs: Insurance is not money wasted