Nassim Taleb

I listened to the third of Russ Roberts’ Taleb podcasts last week and really enjoyed it. A few comments:

1. I love his idea about it being impossible to estimate events in the statistical tail. Insurers know this very well, which is why covers with a modeled attachment probability of anything less than, say, 2% sell for at LEAST 15%.

2. He loses me on the medical stuff, but I’m happy to endure this. If the price I have to pay for listening to a genuinely interesting contrarian is a few minutes of what I would consider a cross between complete BS and ego-maniacal musings on non-specialty topics, I’ll take it.

3. Convexity is a great thought, which is what he considers his “one idea”. Basically means that he looks for opportunities that have very small but very likely maximum downsides and very large, but very unlikely maximum upsides. In the casino of life, if you will, he’ll pick the 00 and let everyone else bet on black or red.

4. My only real quibble is that he really goes for the pompous public intellectual thing. He loves name-dropping famous thinkers and busting out words you haven’t heard in a while. But, again, I’ll stomach the pomposity for the thought provocation.

Thanks, Nassim.