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Nassim Taleb thinks real estate will be the first thing to collapse

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Just now, BorrowToLeech said:

Academic citation to prove me wrong, I dare you. 

2018 N N Taleb, How much data do you need? An operational (presasymptotic) metric for FatTailedness, f. International Journal of Forecasting  [MATHEMATICAL STATISTICS, PROBLEM OF INDUCTION]

2018 Taleb N.N., and P. Cirillo, "On the shadow moments of apparently infinite-mean phenomena" Proceedings ICCS 2018, Springer [STATISTICAL METHODOLOGY, EXTREME DEVIATIONS]

2018 N N Taleb, The Logic and Statistics of Extremes, f. in The Darwin College Lectures, Cambridge University Press  [MATHEMATICAL STATISTICS]

2018 N N Taleb, Election Predictions as Martingales: An Arbitrage Approach,  Quantitative Finance [MATHEMATICAL STATISTICS]

2018 Fontanari, A., Taleb, N. N., & Cirillo, P. Gini estimation under infinite variance,  Physica A: Statistical Mechanics and Applications. [MATHEMATICAL STATISTICS]

2018 N N Taleb, "(Anti)fragility and convex responses in Medicine" [MEDICINE] Proceedings ICCS 2018, Springer 

2017 Cirillo, P. and N N Taleb, "The Decline of Violent Conflicts: What Do The Data Really Say?" f. Publications of the Nobel Foundation, Proceedings of the Nobel Symposium [STATISTICS, POL SCIENCE]

2018 N N Taleb, E Canetti et al,  in  A Guide to IMF Stress Testing II: Principles, Concepts and Frameworks. forthcoming, International Monetary Fund [RISK]

2017 N N Taleb, "Fragility and Environment", in Proceedings of 12th Royal Colloqium, Swedish Academy of Sciences  [RISK, ENVIRONMENT]
 
2016 Cirillo, P. and N N Taleb, "On the tail risk of violent conflict and its underestimation" Physica A: Statistical Mechanics and Applications [STATISTICS, EXTREME DEVIATIONS]

2016 Cirillo, P. and N N Taleb, "Expected Shortfall Estimation for Apparently Infinite-Mean Models of Operational Risk", Quantitative Finance [RISK, EXTREME DEVIATIONS]

2015 Taleb, N.N, Model error and dimensionality discussion paper [PROBABILITY]

2015 Taleb, N.N., and Raphael Douady, "On the Super-Additivity and Estimation Biases of Quantile Contributions", Physica A: Statistical Mechanics and Applications [STATISTICS, PROBABILITY]

2015 Geman, Don, Hélyette  Geman, and N.N. Taleb,"Tail Risk Constraints and Maximum Entropy" Entropy  [PROBABILITY, RISK]

2015 Taleb, N.N. and Sandis (f. 2014), in Oxford University Press Handbook on Professional Economic Ethics: Views from the Economics Profession and Beyond, George DeMartino and Deirdre McCloskey, Editors [PHILOSOPHY/ETHICS]

2015 Taleb, N.N.,  "Biases and errors of the Gini Coefficient for Fat Tailed Variables", [MATHEMATICS, WEALTH DISTRIBUTION]

2015 Milanovic, B., and Taleb, N.N., "How the superrich may be indifferent to income growth in their countries" not yet submitted discussion paper [ECONOMICS, WEALTH DISTRIBUTION]

2015 Taleb, N.N., "Unique Option Pricing Measure with Neither Dynamic Hedging nor Complete Markets", European Financial Management [(MATHEMATICAL) FINANCE, DERIVATIVES THEORY]

2015 Sandis C. and N.N. Taleb,  (eds.) J Boaks & .M. Levine, Leadership and Ethics ( Bloomsbury, 2015)[PHILOSOPHY, ETHICS]

2015 Norman, J., Bar-Yam, Y., Taleb, N.N. , Issues in Science and Technology [RISK, ECOLOGY] 

2014 Taleb, N.N., Read, R., Douady, R, Norman, J., Bar-Yam, Y., The Precautionaty Principle [RISK, ECOLOGY] under revision

2014 Taleb, N.N. and Greg Treverton, The Calm Before the Storm: Why Volatility Signals Stability and Vice Versa, Foreign Affairs [INTERNATIONAL RELATIONS]

2014  Taleb, N. N., in Tapiero, Bensoussan and Guégan, Future Perspectives in Risk Models and Finance, Springer [RISK]

2014 Sandis C. and N.N. Taleb,  The silver rule for acting under uncertainty, Philosophers' Magazine [PHILOSOPHY, ETHICS]

2014 Taleb, N.N. and Rupert Read, Religion, Heuristics, and Intergenerational Risk Management, Econ Journal Watch [RISK, PHILOSOPHY]

2014 Taleb, N.N., and Gregory F. Treverton, Markers of Country Fragility: a methodology to detect the fragility of a political unit, RAND National Security Research Division PR-1154-USG March 2014 [RISK, SECURITY, POLITICAL SCIENCE]

2014 Taleb, N.N., Elements of Quantitative Finance: Four Points Beginner Risk Managers Should Learn from Jeff Holman's Mistakes, Quantitative Finance [QUANT FINANCE]

2014 Taleb, N.N., and Tetlock, P., On the Difference between Binary Prediction and True Exposure With Implications For Forecasting Tournaments and Decision Making Research [DECISION THEORY]

2014 Taleb, N. N. , and C. Sandis, "The Skin In The Game Heuristic for Protection Against Tail Events", Review of Behavioral Economics (Inaugural Issue)[ETHICS/PROBABILITY/RISK MANAGEMENT]

2013 Taleb, N.N. , 2013, "No, Small Probabilities are not "Attractive to Sell" Financial Analysts Journal [RISK MANAGEMENT]

2013 Taleb, N.N. and Douady, R.,2013, Mathematical Definition and Mapping of (Anti)Fragility, Quantitative Finance, [RISK MANAGEMENT]

2012 Taleb, N.N., Elie Canetti, Elena Loukoianova, Tidiane Kinda, and Christian Schmieder (2012) A New Heuristic Measure of Fragility and Tail Risks: Application to Stress Testing , IMF [ECONOMICS, RISK]

2012 Taleb, N.N., and Martin, G. (f. ), "On Some Consequences of the Spurious Tail", [still] under revision, Journal of Alternative Investments [FINANCE]

2012 Taleb, N.N. and Martin, G. ( 2012), How to Avoid Another Crisis, f. SIAS Review of International Affairs [POLITICAL SCIENCE/PUBLIC POLICY]

2012 Taleb, N.N. and Martin, G. ,The Illusion of Thin Tails Under Aggregation, Journal of Investment Management [STATISTICS/FINANCE]

2012 Taleb, N.N. and Martin, G., Internationella Studier, Utrikespolitiska Institutet/The Swedish Institute of International Affairs [POLITICAL SCIENCE/PUBLIC POLICY]

2012 Taleb, N.N., The Future Has Thicker Tails than the Past: Model Error as Branching Counterfactuals, B. Mandelbrot Memorial  [PHILOSOPHY/STATISTICS]

2012 Taleb, N.N., and Goldstein, D. (2012),The Problem is Beyond Psychology: The Real World is More Random than Regression Analyses, International Journal of Forecasting [DECISION THEORY]

2011 Taleb, N.N., and Blyth, M. , The Black Swan of Cairo, Foreign Affairs, 90,3 [POLITICAL SCIENCE]

2011 Douady, R. and Taleb, N. N., Statistical Undecidability, never submitted [MATHEMATICS]

2011 Taleb, N.N. Why Did the Crisis of 2008 Happen?, invited [then withdrawn by author, New Political Economy] [Also presented to the Obama Commission] [POLITICAL SCIENCE]

2010 Taleb, N. and Tapiero, C.  The Risk Externalities of Too Big to Fail, Physica A: Statistical Physics and Applications

2010 Haug, E. G. and Taleb, N. N.  Option Traders use Heuristics, Never the Formula known as Black-Scholes-Merton Equation, Journal of Economic Behavior and Organizations [ECONOMICS]

2010 Taleb, N. N. (2010) Common Errors in the Interpretation of the Ideas of The Black Swan and Associated Papers, Critical Review, Vol 21, No 4 [withdrawn by author during editing] [POLITICAL PHILOSOPHY]

2010 Mandelbrot, B. and Taleb, N. N. “Random Jump, not Random Walk", in The Known, the Unknown, and the Unknowable, Richard Herring Ed., Princeton University Press  [STATISTICS, EPISTEMOLOGY OF PROBABILITY]

2010 “Beliefs, Decisions, and Probability” , Blackwell Companion to the Philosophy of Action (with Avital Pilpel) [PHILOSOPHY]

2009 Taleb, N. N. Errors, Robustness, and the Fourth Quadrant, International Journal of Forecasting, 25 [DECISION THEORY/STATISTICS]

Taleb, N. N., Goldstein, D. G., and Spitznagel, M.  "The Six Mistakes Executives Make in Risk Management", Harvard Business Review , October [MANAGEMENT]

2009 Makridakis, S. and Taleb, N.,  "Decision making and planning under low levels of predictability", International Journal of Forecasting, 25 [DECISION THEORY/STATISTICS]

2008 Taleb, N. N. (2008) Infinite Variance and the Problems of Practice, Complexity, 14(2). [MATHEMATICAL FINANCE]

2007 Goldstein, D. G. and Taleb, N. N. (2007) We Don't Quite Know What We Are Talking About When We Talk About Volatility, Journal of Portfolio Management, Summer 2007.[FINANCE]

2007 Taleb, N. N. "Black Swan and Domains of Statistics", The American Statistician, August 2007, Vol. 61, No. 3 [STATISTICS]

2007 Taleb, N. N. and Pilpel, A.  Epistemology and Risk Management, Risk and Regulation, 13, Summer 2007 [RISK/PHILOSOPHY]

2005 Derman, E. and Taleb, N. N. The Illusion of Dynamic Replication, Quantitative Finance, vol. 5, 4 [MATHEMATICAL FINANCE]

2005 Taleb, N.N.   I problemi epistemologici del risk management  in: Daniele Pace (a cura di) Economia del rischio. Antologia di scritti su rischio e decisione economica, Giuffrè, Milano [RISK/PHILOSOPHY]

2004 Taleb, N. N. “Bleed or Blowup: What Does Empirical Psychology Tell Us About the Preference For Negative Skewness? ”, Journal of Behavioral Finance, 5[ FINANCE]

2004 Taleb, N.N. “Randomness and the Arts”, Literary Criticism/Critique Littéraire [COMPARATIVE LITERATURE]

 “The Risk of Severe Infrequent Events” (with George Martin), The Banker, Sept 2007 [FINANCE]

 "Fat Tails, Asymmetric Knowledge, and Decision Making, Essay in the Epistemology of Power Laws", Wilmott, 2005 [MATH FINANCE]

Foreword, Lectures on Stochastic Volatility, J. G. Gatheral (Wiley, 2006) [MATH FINANCE]

“These Extreme Exceptions of Commodity Derivatives”, in Commodity Derivatives, Helyette Geman (Wiley, 2004) [ FINANCE]

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with all that peer reviewed literature - he could be wrong, and it is all so many words (with maths).

peer review isn't everything.

BUT - he is original, in academic terms at least.

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Nothing there to refute the suggestion that the Black Swan idea isn’t just a weak rehash of the induction problem.

Nothing at all to suggest any particular originality, or deep thinking of any kind.  

Here’s his view on what caused the crisis:

http://www.fooledbyrandomness.com/crisis.pdf

Clear and insightful or pretentious waffle?  Strip away the ******** about fourth quadrants and tail risks, and what is left?  Nothing that wasn’t said better - in more detail and clarity - by the amateurs on here before the crisis.

Edited by BorrowToLeech

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22 minutes ago, BorrowToLeech said:

Nothing there to refute the suggestion that the Black Swan idea isn’t just a weak rehash of the induction problem.

Nothing at all to suggest any particular originality, or deep thinking of any kind.  

Here’s his view on what caused the crisis:

http://www.fooledbyrandomness.com/crisis.pdf

Clear and insightful or pretentious waffle?  Strip away the ******** about fourth quadrants and tail risks, and what is left?  Nothing that wasn’t said better - in more detail and clarity - by the amateurs on here before the crisis.

Fair play. What's the induction problem in this context?

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8 minutes ago, Si1 said:

Fair play. What's the induction problem in this context?

Hume's problem of induction, to be fair Taleb is very open about his intellectual debt to Hume in the books we're discussing.

4 hours ago, zugzwang said:

Taleb is a kind of anti-Soros.

Perhaps Taleb is more like a true disciple of Popper, who was a true disciple of Hume, and Soros is the anti-Popper who disinherited himself from scepticism.

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16 minutes ago, darkmarket said:

Hume's problem of induction, to be fair Taleb is very open about his intellectual debt to Hume in the books we're discussing.

 

In that case BorrowtoLeach is perfectly entitled to disregard Taleb in that respect.

His reference to shut me up would be Hume then.

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6 hours ago, prozac said:

I have read one and a half of his books and think, all he is saying is common sense I don’t need to read his books for that

But the sad fact is a huge amount of the public lack common sense - and so the 'need' for these books.

Edited by anonguest

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6 minutes ago, Si1 said:

In that case BorrowtoLeach is perfectly entitled to disregard Taleb in that respect.

His reference to shut me up would be Hume then.

I still think Taleb has made a contribution to that school of thought, maybe a smaller one than he might like to imagine but he's in impressive company.

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1 minute ago, darkmarket said:

I still think Taleb has made a contribution to that school of thought, maybe a smaller one than he might like to imagine but he's in impressive company.

Fair enough. Nice nuanced point.

I think popularising it is important too.

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6 hours ago, BorrowToLeech said:

Hard Maths 😆

Here’s a summary of just one tiny element of Taleb’s ********, as tackled by grown ups:

https://stanford.library.sydney.edu.au/archives/sum2016/entries/induction-problem/

For an even more specific example:

"Consider a turkey that is fed every day," Taleb writes. "Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race 'looking out for its best interests,' as a politician would say.

"On the afternoon of the Wednesday before Thanksgiving, 

something unexpected will happen to the turkey. It will incur a revision of belief."

Here's Taleb's famous chart. 

turkey taleb

 

This is basically the book's entire message wrapped up in one graphic.

Which is just:

“The man who has fed the chicken every day throughout its life at last wrings its neck instead, showing that more refined views as to the uniformity of nature would have been useful to the chicken.” - Bertrand Russell

You could write a book to prove, oh sorry he beat you to it

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1 hour ago, Si1 said:

Fair enough. Nice nuanced point.

I think popularising it is important too.

Right, and I don’t take issue with that. My issue is with the implicit claim that no-one else knows or thinks about this stuff.

Popularise, yes, I’ll give him that, but without making it clear that these are old ideas and the issues he raises are well known.

Also, I dispute that this has much to do with the credit crunch. 

I’ll concede that it’s not irrelevant - people thought house prices would always rise because they had always risen, but that’s just human nature. The real issues concern the formation of credit bubbles rather than any risk modelling issues.

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2 hours ago, darkmarket said:

Hume's problem of induction, to be fair Taleb is very open about his intellectual debt to Hume in the books we're discussing.

Perhaps Taleb is more like a true disciple of Popper, who was a true disciple of Hume, and Soros is the anti-Popper who disinherited himself from scepticism.

Soros isn't the anti-Popper! You must read Reflexivity, complexity and the nature of social science by Eric Beinhocker. He uses Hawking and Mlodinov's concept of model-dependent realism to build a bridge between Soros' reflexivity and Popper's evolutionary epistemology, while locating economics (the study of complex reflexive systems) at the far end of a spectrum of complexity with simple mechanical systems at the other.

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1 hour ago, BorrowToLeech said:

Right, and I don’t take issue with that. My issue is with the implicit claim that no-one else knows or thinks about this stuff.

 

Yes. Taleb himself said he finished his PhD and went into trading (stocks securities whatever) and was shocked at the numerical techniques and rules used that weren't in the academic literature on financial risk.

He always says he's a trader first and an academic less importantly.

But again yes in general terms nothing he says is original. In the gilded world of academia he is formalising and popularising this stuff. The fact remains that in academia you can't cite 'common sense (1996)'

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9 hours ago, darkmarket said:

This is the main problem with Taleb's big idea. He concentrates completely on probability, he never examines a coordinated system involving finance ministries and central, investment and retail banks. He doesn't raise the possibility the algo traders were well aware of the long-tail risks, and their managers were equally aware the taxpayer would inevitably bail them out, perhaps because that would make him less special.

He also went onto CNBC and shilled a long EUR short USD position around a year ago, never mentioned it since.

On the other hand, he is respected academically for his work on probability, his opposition to untested genetic editing seems sound for the same reason he was right about long tails elsewhere, and he's involved with Universa, suggesting his investment record deserves respect too.

Skin in the game is the analysis of systems and what works.

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4 hours ago, zugzwang said:

Soros isn't the anti-Popper! You must read Reflexivity, complexity and the nature of social science by Eric Beinhocker. He uses Hawking and Mlodinov's concept of model-dependent realism to build a bridge between Soros' reflexivity and Popper's evolutionary epistemology, while locating economics (the study of complex reflexive systems) at the far end of a spectrum of complexity with simple mechanical systems at the other.

Yes, I had a look at Beinhocker but it didn't strike me as very convincing to build on top of a flawed model, which is a more accurate description of his project than a bridge, as you suggest.

You'll note he's funded by Soros to publish this independent analysis, it's just more of the same hubris.

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On 05/11/2018 at 20:43, thewig said:

To be fair this very site here has predicted sixty eight of the last four black swans 🧐

Brilliant.  If you are expecting a black swan event and it doesn't happen, is that a black swan?

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On 05/11/2018 at 20:49, Burbujista said:

Well, you are not a good reader then... because he doesn’t focus on the black swans, he focuses on how to prepare for them and even spotting  them in advance not be a sucker.

Fooled by Randomness was also good, largely explaining how we get into such messes and how lucky people confuse luck for talent.

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55 minutes ago, Mikhail Liebenstein said:

Fooled by Randomness was also good, largely explaining how we get into such messes and how lucky people confuse luck for talent.

Agreed! I have read them all. Even his papers! He is an interesting chap because he doesn’t give a shit about what people think about him, is quite genuinely rude and cynical. He is pretty much how I am by nature tbh...

The only big problem is that there are signs that he was a clear influence on the design of Help to Buy...

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15 hours ago, Bear Hug said:

Brilliant.  If you are expecting a black swan event and it doesn't happen, is that a black swan?

You can't expect a black swan event; by definition, a black swan event is unexpected!

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11 minutes ago, zugzwang said:

You can't expect a black swan event; by definition, a black swan event is unexpected!

That is not true, take the case of the turkey. For the turkey it was a black swan, but for the farmer it was not. That is exactly what Taleb argues with this methaphore. One of the main things is “don’t be a sucker”.

You can see it in reality when people say: “the government won’t allow it to happen”, well... even the government has it’s limits...

Obviously a black swan is not expected by the majority.

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16 hours ago, Bear Hug said:

Brilliant.  If you are expecting a black swan event and it doesn't happen, is that a black swan?

It’s not about forecasting. When we say “predicting” is about being prepared for them. Nassim is not a forecaster, he is a risk manager!

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16 hours ago, darkmarket said:

Yes, I had a look at Beinhocker but it didn't strike me as very convincing to build on top of a flawed model, which is a more accurate description of his project than a bridge, as you suggest.

You'll note he's funded by Soros to publish this independent analysis, it's just more of the same hubris.

No, I didn't notice that Beinhocker was funded by Soros! I'll have to read the paper again in that light. However, I'm still inclined to believe that Soros' focus on fallibility and the limits to knowledge is inherently sound.  Compare and contrast with the neoliberal concepts of representative agents and infinite foresight.

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I thought his main point was that not only are BS inevitable, but that their significance greatly outweighs normal, predictable, events. Consequently, given that classical economics only allows for the predictable, classical economics will always lead to negative outcomes. It maybe a simple message - which is, in essence, "car crashes are rare, but that doesn't mean you shouldn't wear a seat-belt" - but mainstream economists insist on ignoring it (largely, one suspects, because taking it seriously would make most economists redundant).

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