Saturday, April 08, 2006

Gladwell on Nassim Taleb

Sanjay pointed me to this article, which is a great read, and a good expose on how Taleb works. Taleb of course, was the guy who wrote Fooled by Randomness, which I reviewed last year. Gladwell's article is even more insightful than Taleb's book.

Empirica has done nothing but lose money since last April. "We cannot blow up, we can only bleed to death," Taleb says, and bleeding to death, absorbing the pain of steady losses, is precisely what human beings are hardwired to avoid. "Say you've got a guy who is long on Russian bonds," Savery says. "He's making money every day. One day, lightning strikes and he loses five times what he made. Still, on three hundred and sixty-four out of three hundred and sixty-five days he was very happily making money. It's much harder to be the other guy, the guy losing money three hundred and sixty-four days out of three hundred and sixty-five, because you start questioning yourself. Am I ever going to make it back? Am I really right? What if it takes ten years? Will I even be sane ten years from now?"
Post a Comment