Comments on: Taleb’s Ten Principles

By: Traveller_Adventure

Traveller_Adventure — Sun, 26 Jul 2009 22:08:34 +0000

Very very interesting post..I like this one. gotta bookmark this one.

Cheers,
Blog Review

By: windows tweaks

windows tweaks — Sun, 21 Jun 2009 11:42:00 +0000

i have to say that only 4 and 9 seem true to me

By: Jack

Jack — Sun, 12 Apr 2009 00:24:04 +0000

As usual, Taleb makes sound but incredibly vague points. For argument's sake:
(1) So only low-risk projects should be allowed to take off??
(2) Yes, definitely, but what if this means letting the financial system collapse? What if it means the probability of another Great Depression is 0.25? 0.5? 0.9?
(3) Yes, but who ''crashed the bus''? People will say it was a collective bungle.
(4) Well, you're trading off one problem for another. Incentive bonuses play a role. You could argue instead that the bonuses should be structured differently: rather than maximize returns, maximize returns subject to a certain risk tolerance.
(5) What does that even mean??
(6) No one ''gave'' the children dynamite. The children will find the dynamite no matter what. The dynamite should be acknowledged and supervised.
(7) Financial markets are all about fads, trends and bubbles. I am not sure the Government can restore confidence to markets, but if it can help, why not?
(8) What about Methadone clinics? Sometimes this is tolerable if the alternative is death.
(9) On what should they depend for their retirement then? State generosity? A zero-risk, lower value pension? No. They should reduce, over time, the share of their pension that is invested in higher risk assets, e.g. stocks. As retirement nears, the pension is safe.
(10) What if the omelet is toxic? Yum.

By: Michael Drake

Michael Drake — Thu, 09 Apr 2009 14:04:03 +0000

“Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.”

The second rule is arguable (though only to the extent it's vague). The first is bloody well stupid, from both micro and macro perspectives. Economies and arm's-length business transactions depend on confidence. Period.

By: Nicholas Weininger

Nicholas Weininger — Wed, 08 Apr 2009 22:50:02 +0000

(9) and (6) seem very deeply illiberal– he's arguing for straight-up paternalism by “the smart people with clean hands” (as if that weren't one of the oldest and most useless of all the pseudo-reformers' tropes, from Bellamy onward) and forcibly stopping people from taking risks they want to take. Those who, honestly and with clear eyes, value freedom over certainty are deemed not to be “normal citizens.” This is scary stuff, and scarier because like a lot of demagogic appeals it mixes totalitarian fantasies with genuine and legitimate grievances.

By: Noah Yetter

Noah Yetter — Wed, 08 Apr 2009 17:12:11 +0000

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.

8. Do not give an addict more drugs if he has withdrawal pains.

Implementing these would require dismantling the entire system of centralized fractional reserve banking and discretionary monetary policy.

As a Rothbardian I favor this, but most don't. Something to keep in mind.

By: Situation Normal Fu

Situation Normal Fu — Wed, 08 Apr 2009 14:00:18 +0000

Wouldn't applying 9) rely on ignoring 7)? That is, not depending on retirement investing creates reliance on Social Security (which is a Ponzi scheme). or am I missing something.

By: uknowbetter

uknowbetter — Wed, 08 Apr 2009 13:48:29 +0000

I would add a super-rule:

There will always be booms and busts. Be aware of that fact and deal with it appropriately (by getting out of the way and letting failure happen).

Obama, the delusional retard, needs to have that pounded into his skull.