Nassim Nicholas Taleb Quotes

I reject a sole time series of the past as an indication of future performance; I need a lot more than data.

Sometimes market data becomes a simple trap; it shows you the opposite of its nature... [e.g.,] Currencies that exhibit the largest historical stability... are the most prone to crashes.

Many scientists... are... subject to such foolishness... One flagrant example is... global warming... These scientists initially ignored the fact that these [high temperature] spikes, although rare, had the effect of adding disproportionately to the cumulative melting of the ice caps. ...[A]n event, although rare, that brings large consequences cannot be ignored.

In most disciplines... asymmetry does not matter. ...People in most fields ...do not have problems eliminating extreme values from their sample, when the difference in payoff between different outcomes is not significant ...A professor ...removes the ...s, and takes the average of the remaining ones, without ...being ...unsound. A casual weather forecaster does the same ...So people in finance borrow the technique and ignore infrequent events, not knowing that the effect ...can bankrupt a company.

I have organized my career and business in such a way as to... benefit... I am profiting from the rare event, with asymmetric bets.

Why do [people] confuse probability and expectation, that is, probability [vs.] probability times payoff? Mainly because much... schooling comes from examples in symmetric environments... the... bell curve... is entirely symmetric.

Just as an animal could have survived because its sample path was lucky... free of the evolutionary rare event, the "best" operators in a given business can... One vicious attribute is that the longer these... can go without encountering the rare event, the more vulnerable they will be to it. ...[S]hould one extend time to infinity, then by , that event will happen with certainty—the species will be wiped out! For evolution means fitness to... only one time series, not the average of all possible environments.

There is a saying that bad traders divorce their spouse sooner than abandon their positions. Loyalty to ideas is not a good thing for traders, scientists - or anyone.

[T]hey share the traits of the acute successful randomness fool who, in addition, operates in the most random of environments. ...[T]heir bosses and employers shared the same trait. They, too, are permanently out of the market.

[A]t any point in time, the richest traders are often the worst traders. This I will call the cross-sectional problem: At a given time... the most successful traders are likely to be those fit for the latest cycle.

Veteran trader Marty O'Connell calls this the firehouse effect. ...[F]iremen ...who talk to each other for too long come to agree on many things that an outside, impartial observer would find ludicrous...

A trader's mental construction should direct him to do precisely what other people do not do.

[N]ews... is full of noise and... history is largely stripped of it.

Over a short time increment, one observes the variability of the portfolio, not the returns. ...[O]ne sees the variance, little else. ...Our emotions are not designed to understand the point. ...I deal with it by having no access to information. ...I prefer to read poetry.

I... found a significant advantage in selecting aged traders, using as a selection criterion their cumulative years of experience rather than their absolute success... [O]lder people have been exposed longer to the rare event and can be, convincingly, more resistant to it.