Nassim Nicholas Taleb

“Steve Jobs, Bill Gates and Mark Zuckerberg didn't finish college. Too much emphasis is placed on formal education - I told my children not to worry about their grades but to enjoy learning.”

“Globalization has created this interlocking fragility. At no time in the history of the universe has the cancellation of a Christmas order in New York meant layoffs in China.”

“If you want to annoy a poet, explain his poetry.”

“We have this culture of financialization. People think they need to make money with their savings rather with their own business. So you end up with dentists who are more traders than dentists. A dentist should drill teeth and use whatever he does in the stock market for entertainment.”

“I drive a hybrid, moving into an electric car. I only drink tap water, never consume food that's travelled.”

“We have this culture of financialization. People think they need to make money with their savings rather with their own business. So you end up with dentists who are more traders than dentists. A dentist should drill teeth and use whatever he does in the stock market for entertainment.”

“Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently, like a revolver that would have hundreds, even thousands of chambers instead of six. After a few dozen tries, one forgets about the existence of a bullet, under a numbing false sense of security. Second, unlike a well-defined precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality. One is capable of unwittingly playing Russian roulette - and calling it by some alternative “low risk” game.”

“My major hobby is teasing people who take themselves and the quality of their knowledge too seriously and those who don’t have the guts to sometimes say: I don’t know....”

“You may not be able to change the world but can at least get some entertainment and make a living out of the epistemic arrogance of the human race.”

“What America does best is produce the ability to accept failure.”

“It is now the scientific consensus that our risk-avoidance mechanism is not mediated by the cognitive modules of our brain, but rather by the emotional ones. This may have made us fit for the Pleistocene era. Our risk machinery is designed to run away from tigers; it is not designed for the information-laden modern world.”

“Much of the research into humans' risk-avoidance machinery shows that it is antiquated and unfit for the modern world; it is made to counter repeatable attacks and learn from specifics. If someone narrowly escapes being eaten by a tiger in a certain cave, then he learns to avoid that cave.”

“We should reward people, not ridicule them, for thinking the impossible.”

“Delivering advice assumes that our cognitive apparatus rather than our emotional machinery exerts some meaningful control over our actions.”

“It does not matter how frequently something succeeds if failure is too costly to bear.”

“Trading forces someone to think hard; those who merely work hard generally lose their focus and intellectual energy. In addition, they end up drowning in randomness; work ethics draw people to focus on noise rather than the signal.”

“Mild success can be explainable by skills and labor. Wild success is attributable to variance.”

“Lucky fools do not bear the slightest suspicion that they may be lucky fools - by definition, they do not know that they belong to such a category.”

“Steve Jobs, Bill Gates and Mark Zuckerberg didn't finish college. Too much emphasis is placed on formal education - I told my children not to worry about their grades but to enjoy learning.”

“Unlike a well-defined, precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality.”

“[T]he epic poet did not judge heroes by the result... their fate depended on totally external forces... Heroes are heroes because they are heroic in behavior, not because they won or lost.”

“Mixing forecast and prophecy is symptomatic of randomness-foolishness...”

“I do not dispute that arguments should be simplified to their maximum... but people often confuse complex ideas that cannot be simplified into a media-friendly statement as symptomatic of a confused mind. ...MBAs tend to blow up in financial markets, as they are trained to simplify... beyond... requirement. (...I am myself the unhappy holder of the degree.)”

“[T]he mental probabilistic map in one's mind is so geared toward the sensational that one would realize informational gains by dispensing with the news.”

“From the standpoint of an institution, the existence of a risk manager has less to do with actual risk reduction than it has to do with the impression of risk reduction.”

“In the early 1990s... I became addicted to the various Monte Carlo engines, which I taught myself to build... The dividend of the computer revolution... did not come in... e-mail messages and... chat rooms; it was in the sudden availability of fast processors capable of generating a million sample paths per minute.”

“We have this culture of financialization. People think they need to make money with their savings rather with their own business. So you end up with dentists who are more traders than dentists. A dentist should drill teeth and use whatever he does in the stock market for entertainment.”

“My models showed that ultimately almost nobody really survived; bears dropped like flies in the rally and bulls ended up being slaughtered... But there was one exception... option buyers... could buy the insurance against blowup...”

“Failure saves lives. In the airline industry, every time a plane crashes the probability of the next crash is lowered by that. The Titanic saved lives because we're building bigger and bigger ships. So these people died, but we have effectively improved the safety of the system, and nothing failed in vain.”

“I have two ways of learning from history: from the past, by reading the elders; and from the future, thanks to my Monte Carlo toy.”

“A... vicious effect of... is that those that are good at predicting the past... think of themselves as good at predicting the future... [W]e live in a world where important events are not predictable...”

“There are hordes of thoughtful journalists... [I]t is just that prominent media journalism is a thoughtless process of providing the noise that captures people's attention and there exists no mechanism for separating the two.”

“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.”

“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.”

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

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

“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]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.”

“[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.”

“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.”

“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.”

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

“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.”

“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.”

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

“[W]e read too much into shallow recent history... but not from history in general [which] teaches us that things that never happened before do happen. ...outside of the narrowly defined time series; the broader the look, the better the lesson.”

“[T]here is a category of traders who have inverse rare events, for whom volatility is often the bearer of good news. Those traders lose money frequently, but in small amounts, and make money rarely, but in large amounts. ...crisis hunters. I am happy to be one of them.”

“David Hume posed the issue in the following way (as rephrased in the black swan problem by... John Stuart Mill) No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion.”

“Science had shifted, thanks to Bacon, into an emphasis on empirical observation. The problem is that, without a proper method, empirical observations can lead you astray. Hume came to... stress the need for some rigor in the gathering and interpretation of knowledge... epistemology... Hume is the first modern epistemologist... he was an obsessive skeptic and never believed... that a link between two items could be established as being causal.”

“Maximizing the probability of winning does not lead to maximizing the expectation from the game when one's strategy may include , i.e., a small chance of a large loss and a large chance of a small win. If you engaged in a Russian Roulette-type strategy... you are likely to show up as the winner in almost all samples—except in the year when you are dead.”

“[W]e like to emit logical and rational ideas but we do not enjoy this execution.”

“What is easier to remember, a collection of facts glued together, or a story, something that offers a series of logical links? Causality is easier to commit to memory. ...What is induction exactly? ...It is very handy, as the general takes much less room in onel's memory than a collection of particulars. The effect of such compression is the reduction in the degree of detected randomness.”

“I will use statistics and inductive methods to make aggressive bets, but I will not use them to manage my risks and exposure. ...[A]ll the surviving traders I know seem to have done the same. ...[T]hey make sure the cost of being wrong is limited ...they know ...which events would prove their conjecture wrong and allow for it ...They would then terminate their trade. This is called a stop loss ...I find it rarely practiced.”

“A mistake is not something to be determined after the fact, but in the light of the information until that point.”

“I always remind myself that what one observes is at best a combination of variance and returns, not just returns.”

“I try to make money infrequently, as infrequently as possible simply because I believe that rare events are not fairly valued, and that the rarer the event, the more undervalued it will be in price.”

“[B]ecoming more rational, or not feeling the emotions of social slights, is not part of the human race... not with our current biology. There is no solace to be found from reasoning...”

“Optimism, it is said, is predictive of success. ...It can also be predictive of failure. Optimistic people... take more risks as they are overconfident of the about the odds; those who win show up among the rich and famous, others fail and disappear from the analysis.”

“The information that a person derived some profit in the past... by itself, is neither meaningful nor relevant. We need to know the size of the population from which he came. If the initial population is 10,000 managers, I would ignore the results.”

“Professor Karl Pearson... devised the first test of nonrandomness... He examined millions of runs of what was called a Monte Carlo (the old name for a roulette wheel)... He discovered... the runs were not purely random. ...Philosophers of statistics call this the reference case problem to explain that there is no true attainable randomness in practice, only in theory.”

“Even the fathers of statistical science forgot that a random series is bound to exhibit some pattern... Pearson was among the first scholars interested in creating artificial random number generators, tables one could use as inputs for... simulations (precursors of our Monte Carlo simulator). ...[T]hey did not want these tables to exhibit... regularity. Yet real randomness does not look random! ...A single random run is bound to exhibit some pattern ...”

“At no point during his ordeal did Nero think of himself as 72% alive and 28% dead.”

“Probability is not about the odds, but about the belief in the existence of an alternative outcome, cause, or motive.”

“We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.”

“Wittgenstein's ruler: "Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler." (page 224)”

“[E]conomists are evaluated on how intelligent they sound, not on a scientific measure of their knowledge of reality. (page 85)”

“[E]conomics is a narrative discipline, and explanations are easy to fit retrospectively. (page 257)”

“[In] economics... you can disguise charlatanism under the weight of equations and nobody can catch you since there is no such thing as a controlled experiment. Now the spirit of such methods, called scientism by its detractors, continued into the discipline of finance as a few technicians thought their mathematical knowledge could lead them to understand markets. The practice of financial engineering came along with massive doses of pseudoscience. (page 115)”

“I disagree with the followers of Marx and those of Adam Smith: the reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or "incentives" for skill.”

“If you want to get an idea of a friend's temperament, ethics, and personal elegance, you need to look at him under the tests of severe circumstances, not under the regular rosy glow of daily life. Can you assess the danger a criminal poses by examining only what he does on an ordinary day? Can we understand health without considering wild diseases and epidemics? Indeed the normal is often irrelevant.”

“It is remarkable how fast and how effectively you can construct a nationality with a flag, a few speeches, and a national anthem; to this day I avoid the label "Lebanese," preferring the less restrictive "Levantine" designation.”

“History is opaque. You see what comes out, not the script that produces events, [...] The generator of historical events is different from the events themselves, much as the minds of the gods cannot be read just by witnessing their deeds.”

“Consider that the turkey's experience may have, rather than no value, a negative value. It learned from observation, as we are all advised to do (hey, after all, this is what is believed to be the scientific method). Its confidence increased as the number of friendly feedings grew, and it felt increasingly safe even though the slaughter was more and more imminent. Consider that the feeling of safety reached its maximum when the risk was at the highest!”

“The casino is the only human venture I know where the probabilities are known, Gaussian (i.e., bell-curve), and almost computable.”

“Probability is a liberal art; it is a child of skepticism, not a tool for people with calculators on their belts to satisfy their desire to produce fancy calculations and certainties.”

“There is no effective difference between guessing a variable that is not random, but for which information is partial or deficient (...), and a random one (...). In this sense, guessing (what I don't know, but what someone else may know) and predicting (what has not taken place yet) are the same thing.”

“Cumulative errors depend largely on the big surprises, the big opportunities. Not only do economic, financial, and political predictors miss them, but they are quite ashamed to say anything outlandish to their clients — and yet events, it turns out, are almost always outlandish.”

“Don't cross a river if it is four feet deep on average.”

“Forecasting by bureaucrats tends to be used for anxiety relief rather than for adequate policy making.”

“The same past data can confirm a theory and its exact opposite! If you survive until tomorrow, it could mean that either a) you are more likely to be immortal or b) that you are closer to death.”

“While in theory randomness is an intrinsic property, in practice, randomness is incomplete information.”

“Rank beliefs not according to their plausibility but by the harm they may cause.”

“This makes living in big cities invaluable because you increase the odds of serendipitous encounters — you gain exposure to the envelope of serendipity.”

“The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.”

“It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.”

“Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence.” Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.”

“Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.”

“Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).”

“An idea starts to be interesting when you get scared of taking it to its logical conclusion.”

“Academia is to knowledge what prostitution is to love.”

“In science you need to understand the world; in business you need others to misunderstand it.”

“Using, as an excuse, others’ failure of common sense is in itself a failure of common sense.”

“Procrastination is the soul rebelling against entrapment.”

“When we want to do something while unconsciously certain to fail, we seek advice so we can blame someone else for the failure.”

“It’s harder to say no when you really mean it.”

“Asking science to explain life and vital matters is equivalent to asking a grammarian to explain poetry.”

“You exist if and only if you are free to do things without a visible objective, with no justification and, above all, outside the dictatorship of someone else’s narrative.”

“People used to wear ordinary clothes weekdays, and formal attire on Sunday. Today it is the exact reverse.”

“The book is the only medium left that hasn’t been corrupted by the profane.”

“Restaurants get you in with food to sell you liquor; religions get you in with belief to sell you rules.”

“To be completely cured of newspapers, spend a year reading the previous week’s newspapers.”

“Success is becoming in middle adulthood what you dreamed to be in late childhood.”

“Modernity needs to understand that being rich and becoming rich are not mathematically, personally, socially, and ethically the same thing.”

“Older people are most beautiful when they have what is lacking in the young: poise, , wisdom, , and this post-heroic absence of agitation.”

“What fools call “wasting time” is most often the best investment.”

“A man without a heroic bent starts dying at the age of thirty.”

“Someone who says “I am busy” is either declaring incompetence (and lack of control of his life) or trying to get rid of you.”

“The difference between slaves in Roman and Ottoman days and today’s employees is that slaves did not need to flatter their boss.”

“You are rich if and only if money you refuse tastes better than money you accept.”

“Modernity: we created youth without heroism, age without wisdom, and life without grandeur.”

“The next time you experience a blackout, take some solace by looking at the sky. You will not recognize it.”

“You can tell how uninteresting a person is by asking him whom he finds interesting.”

“We humans lack imagination, to the point of not even knowing what tomorrow's important things will look like.”

“Preoccupation with efficacy is the main obstacle to a poetic, elegant, robust and heroic life.”

“Charm is the ability to insult people without offending them; nerdiness the reverse.”

“Those who do not think that employment is systemic slavery are either blind or employed.”

“They are born, put in a box; they go home to live in a box; they study by ticking boxes; they go to what is called “work” in a box, where they sit in their cubicle box; they drive to the grocery store in a box to buy food in a box; they talk about thinking “outside the box”; and when they die they are put in a box.”

“The twentieth century was the bankruptcy of the social utopia; the twenty-first will be that of the technological one.”

“You have a real life if and only if you do not compete with anyone in any of your pursuits.”

“Only in recent history has “working hard” signaled pride rather than shame for lack of talent, finesse and, mostly, sprezzatura.”

“What they call “play” (gym, travel, sports) looks like work.”

“Decomposition, for most, starts when they leave the free, social, and uncorrupted college life for the solitary confinement of professions and nuclear families.”

“A competitive athlete is painful to look at; trying hard to become an animal rather than a man, he will never be as fast as a cheetah or as strong as an ox.”

“Hard science gives sensational results with a horribly boring process; philosophy gives boring results with a sensational process; literature gives sensational results with a sensational process; and economics gives boring results with a boring process.”

“A good maxim allows you to have the last word without even starting a conversation.”

“The fool generalizes the particular; the nerd particularizes the general; ... the wise does neither.”

“You want to be yourself, idiosyncratic; the collective (school, rules, jobs, technology) wants you generic to the point of castration.”

“The sucker’s trap is when you focus on what you know and what others don’t know, rather than the reverse.”

“Mental clarity is the child of courage, not the other way around.”

“Wit seduces by signaling intelligence without nerdiness.”

“Greatness starts with the replacement of hatred with polite disdain.”

“The tragedy of virtue is that the more obvious, boring, unoriginal, and sermonizing the proverb, the harder it is to implement.”

“Ethical man accords his profession to his beliefs, instead of according his beliefs to his profession.”

“Just as dyed hair makes older men less attractive, it is what you do to hide your weaknesses that makes them repugnant.”

“When conflicted between two choices, take neither.”

“For the robust, an error is information.”

“It takes extraordinary wisdom and self-control to accept that many things have a logic we do not understand that is smarter than our own.”

“Intelligence consists in ignoring things that are irrelevant.”

“For the classics philosophical insight was the product of a life of leisure; for me a life of leisure is the product of philosophical insight.”

“We learn the most from fools ... yet we pay them back with the worst ingratitude.”

“The best test of whether someone is extremely stupid (or extremely wise) is whether financial and political news makes sense to him.”

“The weak shows his strength and hides his weaknesses; the magnificent exhibits his weaknesses like ornaments.”

“Social science means inventing a certain brand of human we can understand.”

“Because our minds need to reduce information, we are more likely to try to squeeze a phenomenon into the Procrustean bed of a crisp and known category (amputating the unknown), rather than suspend categorization, and make it tangible. Thanks to our detections of false patterns, along with real ones, what is random will appear less random and more certain—our overactive brains are more likely to impose the wrong, simplistic, narrative than no narrative at all.”

“There is a certain category of fool—the overeducated, the academic, the journalist, the newspaper reader, the mechanistic "scientist", the pseudo-empiricist, those endowed with what I call "epistemic arrogance", this wonderful ability to discount what they did not see, the unobserved.”

“We are robust when errors in the representation of the unknown and understanding of random effects do not lead to adverse outcomes —fragile otherwise.”

“I have respect for mother nature's methods of robustness (billions of years allow most of what is fragile to break); classical thought is more robust (in its respect for the unknown, the epistemic humility) than the modern post-Enlightenment naïve pseudoscientific autism. Thus my classical values make me advocate the triplet of erudition, elegance, and courage; against modernity’s phoniness, nerdiness and philistinism.”

“Globalization has created this interlocking fragility. At no time in the history of the universe has the cancellation of a Christmas order in New York meant layoffs in China.”

“To become a philosopher, start by walking very slowly.”

“My idea of the modern Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.”

“[I]n academia there is no difference between academia and the real world; in the real world, there is.”

“[I]t is about distortions of symmetry and reciprocity in life: If you have the rewards, you must also get some of the risks, not let others pay the price for your mistakes. ...If you give an opinion and someone follows it, you are morally obligated to be, yourself, exposed to its consequences.”

“I'm in favour of religion as a tamer of arrogance. For a Greek Orthodox, the idea of God as creator outside the human is not God in God's terms. My God isn't the God of George Bush.”

“In case you are giving economic views: Don't tell me what you "think," just tell me what's in your portfolio.”

“[N]ever engage in detailed overexplanations of why something is important: one debases a principle by endlessly justifying it.”

“You can be an intellectual yet still be an idiot. 'Educated philistines' have been wrong on everything from Stalinism to Iraq to low-carb diets.”

“You are rich if and only if money you refuse tastes better than money you accept.”