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That guy who called the big one? Don’t listen to him.

boston.com

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Re: That guy who called the big one? Don’t listen to him.

#31

Post by patrickgzill »

borism wrote: post #14
aothman wrote: post #6

A lot of this has to do with the way we "score" forecasts. Applying some kind of uniform weighting over forecasts is the natural, and wrong, way to think about things. Nassim Nicholas Taleb (black swan, fooled by randomness) has written about his trading strategy. At his fund, he consistently takes positions that predict extreme events, and he's wrong almost all the time, consistently producing grinding, negative ret…

he's wrong almost all the time, consistently producing grinding, negative returns. He's only been right a couple times, but when he's right he's really right, making enough money that he doesn't need to make money anymore AFAIK his hedge fund haven't been right "big" even once so far and clients are only withdrawing money with a loss after few years...

20 seconds of search engine gets me:

http://en.wikipedia.org/wiki/Nassim_Taleb#Finance_career

Perhaps you should invest the extra 19 seconds between typing "AFAIK" and actually, you know, Knowing.

==== "founder of Empirica Capital, after which Taleb retired from trading and became a full-time author and scholar in 2004.[33] Taleb is currently Principal/Senior Scientific Adviser at Universa Investments in Santa Monica, California, a tail protection firm owned and managed by former Empirica partner Mark Spitznagel.

Taleb reportedly made a multi-million dollar fortune during the financial crisis that began in 2007, a development which he attributed to the failure of statistical methods in finance.[34]

Universa is a fund which is based on the "black swan" idea and to which Taleb is a principal adviser. Separate funds belonging to Universa made returns of 65% to 115% in October 2008.[20][35] In the wake of the economic crisis that started in 2008, Taleb has become an activist for a "black swan robust society"" ===

Re: That guy who called the big one? Don’t listen to him.

#32

Post by patrickgzill »

To write about Roubini's misses and not mention:

1. quantitative easing [which had the effect of propping up the stock market], and

2. the creation of a backdoor funding initiative to subsidize the investment banks on the backs of all USD savers, by pretending they are regular banks, allowing them to borrow at the nonsensical rate of 0% (or nearly that) [allowing banks to make billions per year nearly risk-free, thus keeping them from going under]

betrays either the article writer's dishonesty, or lack of knowledge on the subject.

Re: That guy who called the big one? Don’t listen to him.

#33

Post by narrator »

patrickgzill wrote: post #32

To write about Roubini's misses and not mention: 1. quantitative easing [which had the effect of propping up the stock market], and 2. the creation of a backdoor funding initiative to subsidize the investment banks on the backs of all USD savers, by pretending they are regular banks, allowing them to borrow at the nonsensical rate of 0% (or nearly that) [allowing banks to make billions per year nearly risk-free, thus…

Mainstream Economics assumes the monetary system and government policy are some abstract and perfect continuous function. As perfect example the IS/LM curve. They aren't though, they can radically change the rules anytime they want to throwing years of equations out the window. Imagine the utter theoretical chaos that would be caused if the U.S defaulted on its bonds because Treasuries represent the "Risk free rate of interests" variable present in perhaps thousands of economic models.

Re: That guy who called the big one? Don’t listen to him.

#34

Post by sogood »

noelchurchill wrote: post #2

To me it seems that hardest part about predictions is the timing. It's not too hard to understand the macro economic trends and to see which way the wind is blowing, but it's very hard to know when it will happen and how quickly it will happen. That's why day trading is gambling. The long term buy and hold, and the averaging down strategies will make you money, as long as you understand mid to long term direction of…

Markets can remain irrational longer than you can remain solvent. -- Keynes.

Re: That guy who called the big one? Don’t listen to him.

#35

Post by tygorius »

noelchurchill wrote: post #2

To me it seems that hardest part about predictions is the timing. It's not too hard to understand the macro economic trends and to see which way the wind is blowing, but it's very hard to know when it will happen and how quickly it will happen. That's why day trading is gambling. The long term buy and hold, and the averaging down strategies will make you money, as long as you understand mid to long term direction of…

Actually if there's any one lesson to be learned from the last dozen years of the stock market's swings, it is that "buy and hold" is dead as a useful investment strategy.

As to gambling vs. trading, there's a whole industry of people who train traders in eliminating the gambling psychology that can destroy equity so quickly. A short time frame only exacerbates the psychological weakness.

Oddly enough successful day traders, that is, those who hold their positions for mere minutes and close out all positions by the close of the trading day, are about as far from gamblers (in a psychological sense) as you can get.

Re: That guy who called the big one? Don’t listen to him.

#37

Post by iamwil »

mixmax wrote: post #22

"when people study success stories exclusively — as many avid devourers of business self-help books do — they come away with a vastly oversimplified idea of what it takes to succeed. This is because success is what economists refer to as a “noisy signal.” It’s chancy, fickle, and composed of so many moving parts that any one is basically meaningless in the context of the real world. By studying what successful ventur…

So then I wonder if that makes a case for Jessica Livingston writing a book called "Founders that Failed", rather than "Founders at Work 2"?

Re: That guy who called the big one? Don’t listen to him.

#38

Post by noelchurchill »

tygorius wrote: post #35
noelchurchill wrote: post #2

To me it seems that hardest part about predictions is the timing. It's not too hard to understand the macro economic trends and to see which way the wind is blowing, but it's very hard to know when it will happen and how quickly it will happen. That's why day trading is gambling. The long term buy and hold, and the averaging down strategies will make you money, as long as you understand mid to long term direction of…

Actually if there's any one lesson to be learned from the last dozen years of the stock market's swings, it is that "buy and hold" is dead as a useful investment strategy. As to gambling vs. trading, there's a whole industry of people who train traders in eliminating the gambling psychology that can destroy equity so quickly. A short time frame only exacerbates the psychological weakness. Oddly enough successful day…

Actually if there's any one lesson to be learned from the last dozen years of the stock market's swings, it is that "buy and hold" is dead as a useful investment strategy.

I might have misused the term buy and hold. I meant to ignore the intraday swings and keep your eyes on the overlying trends. I certainly don't think you can blindly hold an index fund these days and plan on retiring on it.

Re: That guy who called the big one? Don’t listen to him.

#39

Post by me_again »

noelchurchill wrote: post #38
tygorius wrote: post #35

Earlier quoted context omitted.

Actually if there's any one lesson to be learned from the last dozen years of the stock market's swings, it is that "buy and hold" is dead as a useful investment strategy. As to gambling vs. trading, there's a whole industry of people who train traders in eliminating the gambling psychology that can destroy equity so quickly. A short time frame only exacerbates the psychological weakness. Oddly enough successful day…

Actually if there's any one lesson to be learned from the last dozen years of the stock market's swings, it is that "buy and hold" is dead as a useful investment strategy. I might have misused the term buy and hold. I meant to ignore the intraday swings and keep your eyes on the overlying trends. I certainly don't think you can blindly hold an index fund these days and plan on retiring on it.

My 401K's in a 'LifePath' fund- more-or-less an index tracker which shifts more weight from a stock index funds into bonds as your nominal retirement day approaches. It's quite possible I'll come to regret it, but I can't think of a safer approach.

Re: That guy who called the big one? Don’t listen to him.

#40

Post by gwern »

iwwr wrote: post #25

In October 2008, he predicted that hundreds of hedge funds were on the verge of failure and that the government would have to close the markets for a week or two in the coming days to cope with the shock. Most hedge funds would have been bankrupt if not for the bailouts, so he was technically correct.

So you're saying Nouriel's prophetic vision includes the entire economic world except the government?

Wow, what a flaw. Almost as bad as kryptonite.

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