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Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

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Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#11

Post by houseabsolute »

kiba wrote: post #6
lukestevens wrote: post #4

Earlier quoted context omitted.

Those Taleb take-downs are well worth a read. Taleb makes for good media soundbites as a contrarian; but to me it seems more like anti-intellectualism for the educated. I'm not sure why he deserves that platform he apparently has. From the first piece: "So why do people listen to this guy? Part of it is doubtless the “famous for being famous” effect. Taleb is witty and clever, and ruthlessly promoted himself as a pub…

I dislike pyschoanaylsis. They're really neat explanation but they're well, lack explaining power. Plus they don't do much for learning about the truth, and they're more about attacking a person's character.

Not sure if psychoanalysis (a.k.a. Freudian psychology) has anything to do with the subject at hand. I think you mean to say you don't like comments that delve into a person's suspected motivations. But the comment you're replying to doesn't talk about motives at all. It just talks about the means this man has used to achieve fame and why they worked.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#12

Post by kiba »

houseabsolute wrote: post #11
kiba wrote: post #6

Earlier quoted context omitted.

I dislike pyschoanaylsis. They're really neat explanation but they're well, lack explaining power. Plus they don't do much for learning about the truth, and they're more about attacking a person's character.

Not sure if psychoanalysis (a.k.a. Freudian psychology) has anything to do with the subject at hand. I think you mean to say you don't like comments that delve into a person's suspected motivations. But the comment you're replying to doesn't talk about motives at all. It just talks about the means this man has used to achieve fame and why they worked.

I think you mean to say you don't like comments that delve into a person's suspected motivations.

Yes, this is what I meant.

But the comment you're replying to doesn't talk about motives at all.

Then I have completely misinterpret what the comment say.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#13

Post by sbaqai »

"[Soros] made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile, and it worked for him. There is a lot more luck involved in this strategy."

I don't buy that. Even the shallowest read of Buffett's investment history, you'll find he's always followed a very concentrated portfolio strategy. He waits for the fat pitch, and loads up when an opportunity comes along. He's mentioned that if you were to take away his top 20 best investments, Berkshire would have a pretty average record.

Does Taleb believe more decisions increase the likelihood of reverting to the mean (ie: average returns in this case)? And by that logic, Soros has made more decisions, so that must suggest its less random, and more talent? This is a classic case of man with a hammer syndrome.

By only deploying capital when the odds are disproportionately in your favor, you are LESS likely to make errors. The less decisions, the more deliberate your actions are. Inactivity isn't a measure of luck.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#15

Post by lukestevens »

kiba wrote: post #12
houseabsolute wrote: post #11

Earlier quoted context omitted.

Not sure if psychoanalysis (a.k.a. Freudian psychology) has anything to do with the subject at hand. I think you mean to say you don't like comments that delve into a person's suspected motivations. But the comment you're replying to doesn't talk about motives at all. It just talks about the means this man has used to achieve fame and why they worked.

I think you mean to say you don't like comments that delve into a person's suspected motivations. Yes, this is what I meant. But the comment you're replying to doesn't talk about motives at all. Then I have completely misinterpret what the comment say.

Yes, my comment was just that the quality of his ideas don't seem to match the size of his platform, if I can put it that way :)

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#16

Post by kragen »

sbaqai wrote: post #13

"[Soros] made a lot more decisions. Buffett followed a strategy to buy companies that had a certain earnings profile, and it worked for him. There is a lot more luck involved in this strategy." I don't buy that. Even the shallowest read of Buffett's investment history, you'll find he's always followed a very concentrated portfolio strategy. He waits for the fat pitch, and loads up when an opportunity comes along. He'…

If you have a hundred would-be Warren Buffetts who each make one investment per year, and a hundred would-be George Soroses who each make dozens of investments per year, the variance on the Buffetts' investments will be a lot bigger than the variance on the Soroses'. Consequently the richest investors out of the whole group will almost certainly be Buffetts, even if the two groups do equally well on average. In fact, the average of the Buffetts has to be quite a bit worse than that of the Soroses in order for a Soros to come out on top.

That's the argument Taleb is making: that Buffett's success is weaker evidence for the expected return of his investment strategy than Soros's success is for his.

Taleb is correct. If you think he's wrong, you don't understand his argument.

Now, you (and Buffett and Munger) argue that there's an additional reason to believe that Buffett's strategy is a good one: because fewer decisions means that each decision will be smarter. Well, you could be right. Historically, though, human beings are pretty bad at distinguishing good investment strategies from bad ones by logically analyzing their premises. So the statistical evidence Taleb is discussing counts for more, in my book.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#18

Post by drallison »

I think Nassim is standing on shaky ground here, although we do not have the full text of his remarks.

I do not think our understanding of real world economics and the way that our economy actually works is adequate to state anything about the impact of one strategy versus another. Academic Economics certainly is not adequate to predict anything in the real world with any degree of reliability. Time series analysis of indicators does not provide insight into the causes and effects of complex events. No one seems to be trying to model the impact of various strategies and compare them to observations.

Policy makers really need better, experimentally validated tools to help them make decisions. We need an experimentally verifiable model that allows rational comparison of strategies. It would be nice to have some experimental validation of the belief systems of the current economic pundits. Me, I doubt that the unfettered free market economy can deliver what is promised.

Without better understanding, we will continue to fly blind, waste resources, and make sub-optimal decisions.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#19

Post by fauigerzigerk »

rubashov wrote: post #9
patrickgzill wrote: post #7

Earlier quoted context omitted.

My view of Canada is that they have a large amount of natural resources, some even renewable natural resources, on a per-person basis. The USA has a large amount of natural resources as well, however, 10 times the population to spread it amongst.

A bet on Canada is a bet on the commodities markets, plain and simple. Canada is fucked if Bob Prechter is right. Canada does great if Jim Rogers is right.

I don't know. Isn't it possible that Canada does well supplying resources to emerging markets and the US stock market that Prechter talks about still goes down or stagnates? Prechter and Rogers don't make predictions about the same thing.

Re: Black Swan' Author Taleb: Stimulus Made Economic Crisis Worse

#20

Post by fauigerzigerk »

drallison wrote: post #18

I think Nassim is standing on shaky ground here, although we do not have the full text of his remarks. I do not think our understanding of real world economics and the way that our economy actually works is adequate to state anything about the impact of one strategy versus another. Academic Economics certainly is not adequate to predict anything in the real world with any degree of reliability. Time series analysis o…

How do you imagine experimental validation in a macro economic context?
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