Nassim Nicholas Taleb – The Barbell Strategy (Options, Trading Strategies And Philosophy)

Last Updated on June 19, 2022 by Quantified Trading

Nassim Nicholas Taleb is a world-known statistician, mathematician, philosopher, trader, and investor, and his primary interests evolve around randomness, uncertainty, and probabilities. Taleb came into the limelight after his book called Black Swan became a best seller, but in our opinion Fooled By Randomness from 2001 is his best and most interesting book, at least for those who have an interest in financial markets. We even ordered Fooled By Randomness on the first day it was offered! We have been great fans of Taleb’s writing before he became famous. In our opinion, Taleb shares knowledge very relevant to traders.

In this article, we look at Nassim Taleb’s writings, upbringing, career, his barbell strategy analogy (trading strategy), antifragility, and skin in the game. We end the article with quotes we wrote down from reading his books several times.

Who is Nassim Nicholas Taleb and what is he famous for?

Nassim Taleb is famous for writing the Incerto, a book collection of all his writing (at least his writing up until now). The Incerto consists of the following books:

  • Fooled By Randomness
  • The Black Swan
  • The Bed Of Procrustes
  • Antifragile
  • Skin In The Game

The books were published between 2001 and 2018 and The Incerto series is all about probability thinking, luck, uncertainty, human biases, fragility vs antifragility, decentralization, decision-making, and (tail) risk (and much more). Taleb argues the world is complicated and interconnected and it’s futile to try to make forecasts and predictions. The world is driven by randomness and tail events that are impossible to predict. All we can do is to make sure we are as antifragile as we can get in order to thrive and prosper when we get hit by a tail event.

Nassim Taleb’s upbringing and background

His name indicates he comes from the Middle East and that is partially correct: he grew up in Lebanon in a Christian community coming from Greek ancestors, but later emigrated to study in France before he finally settled in the US.

After he arrived in the US he was a proprietary trader at several investment banks and rumor says he got financially independent (FIRE) after the 1987 crash when he managed to make a substantial amount of money. It was during this time that he got the idea of luck and randomness. Why? Because he assumed he was just plain lucky to benefit from the crash.

He has also held several academic positions at different universities. Taleb went on to found a hedge fund based on his hypothesis (Empirica Capital) together with Mark Spitznagel. We have not found much info about the fund’s performance, but the fund closed down in 2005 when Taleb chose to become a writer and a scholar. Two years later Spitznagel went on to found Universa Investments where Taleb was and still is an advisor.

Nassim Taleb options strategy

To our knowledge, Taleb made most of his money by using different options strategies, and practically all his gains during the crash in 1987 came from a specific option strategy. Also, Taleb wrote another, but shorter, trading book called Dynamic Hedging before he published Fooled By Randomness. The book was mainly about exit options strategies.

To this day, we believe Taleb and Mark Spitznagel use parts of the Nassim Taleb options strategy published in this book.

Nassim Nicholas Taleb’s barbell strategy (trading strategy)

We assume Nassim Taleb made a lot of money in the 80s and 90s. It was during this time that he discovered the distinction between being street smart vs book smart in trading. In his first book, Fooled By Randomness, Taleb described these two types as Dr. John and Fat Tony, the latter being street smart. To our knowledge, this was one of the first popularized writings where it was argued that markets are not normally distributed but that extreme events happen far more frequently than normal distributions assume. Because of this, Taleb argues, we tend to confuse luck with competence. According to Taleb, far more “good” traders have made their money being lucky than clever.

When someone hit a jackpot, they tend to think they were clever, when in reality they were lucky to hit a right fat tail. The point is, according to Taleb, to tilt your trading strategies to make money when random tail events happen in order to get “luckier” with increased probabilities. When these situations happen, you’d want to make a lot of money instead of losing money. This is what barbell strategies are all about.

What is the barbell strategy?

Nassim Taleb is famous for his barbell strategy – or perhaps it’s more like an analogy of how you can structure a portfolio or strategy. Unfortunately, many have heard about the barbell strategy, but we assume very few really understand what is meant by the trading strategy. So let’s try to capture the essence of the strategy.

This strategy is based on the analogy of a barbell – the barbell that weightlifters and bodybuilders use. The barbell is a metal bar that has weights on each size, normally of the same weight on each side. Why the barbell analogy? We assume it’s because Taleb is an enthusiastic weightlifter.

The idea is that your assets or strategies should be somewhat binary from each other – hence the barbell analogy. One side has low-risk assets or strategies, while the other side has high-risk assets or strategies. Low risk and reward vs high risk and reward. There is no middle ground! The main point and idea are to have a stark difference between the barbells as illustrated in this chart:

The barbell strategy: the left tail consists of low-risk assets while the right tail consists of high-risk assets.

The barbell strategy can be used in equities, bonds, options, futures – you name it.

Why use barbell strategies?

It’s most likely a futile exercise to predict where the stock prices will be one year from now. The best guess is up because of the long-term tailwind in the form of inflation and productivity gains, which has led to the overnight trading edge. Another option is to do what we do on this website, which is using quantified strategies to find trading edges. But that is no guarantee either.

The markets don’t go in straight lines and they like to scare us. These scares are often labeled black swan events, named after the same book by Nassim Taleb. (The book is a great read and something all traders and investors should read if they are serious about what they are doing.) What if you can manage to gain nicely during a bull market, but also mitigate risk when the inevitable correction happens? Perhaps even make money when the market crashes?

The barbell approach assumes that a strategy doesn’t make any money 80-90% of the time, but you make money in the 10-20% of the time that might capture a tail edge.

Mediocristan and Extremistan (thin and fat tails)

Nassim Taleb separated thin tails (see pic above) and fat tails: Mediocristan vs. Extremistan. In Mediocristan risks are largely contained and stay within a small group or area. This is typical in decentralized systems and the risk is not multiplicative.

Opposite, in Extremistan, risks are multiplicative and create wide knock-on effects. Examples of Extremistan are viruses (pandemics), wars, supply shocks, the EU electric grid, etc.

Because the trade patterns are global and pretty centralized, it’s important to keep the meaning of Mediocristan and Extremistan in the back of your mind when creating trading systems.

Equity barbell strategy example

If we are considering an equity barbell strategy you can have low beta stocks on one side and high beta stocks on the other. It might not even be stocks, it could be ETF’s, mutual funds, or even bonds for that matter.

Low beta stocks or assets have historical price swings than the stock market overall. High beta has opposite movements and tends to move much more than movements in the general market. For example, if the market goes up 2%, a stock or asset with a beta of 2 might go up 4%.

The beta can even be negative, meaning it has an inverse relationship with a negative correlation. Assets that go the opposite way of the overall stock market are extremely valuable from the perspective of portfolio construction because they provide a “hedge”. We have provided numerous articles about why you want uncorrelated assets in your portfolio.

Here is another example of an equity barbell strategy:

Many have heard about the Dogs Of The Dow strategy. A potential barbell strategy could be to buy the dogs of the dow and sell short the opposite stocks (the best performers).

Likewise, you can short high multiple stocks and buy low multiple stocks, or you can buy low volatility stocks and sell high volatility stocks. The latter strategy has on one side of aggressive stocks, while the other barbell has stocks that consist of defensive stocks, this could be Costco, Wal-Mart, Phillip Morris, etc. The defensive group is frequently added with bonds.

Here is another barbell equity/stock trade example:

Let’s assume you want to take some risks on technology stocks. You are confident it’s a good bet, but you are uncertain if you can handle any drawdowns. Can this fit into a barbell trade?

Assume you place 95% of your assets into conservative stocks that you are confident will still be around in ten years’ time. For example, Wal Mart, Costco, Pepsi, Hormel, Phillip Morris, or Mcdonald’s might fit this. Perhaps you buy consumer staples ETF instead (see our XLP trading article). The remaining 5% you place in the ETF with ticker code TQQQ which has 3x leverage to Nasdaq 100.

Fixed income barbell trade example

If you are a bond investor and expect rates to rise, you can invest 80% in shorter maturities and the rest (20%) in longer maturities. Because longer maturities are more sensitive to a rise in rates, you can gradually invest the coupon rate from the shorter maturities into the longer ones.

Barbell investment strategy

Many investors are worried about market crashes, for good reason, even though it hardly matters in the long run:

The problem with corrections and drawdowns is that we are prone to behavioral mistakes: traders and investors tend to sell into a panic and reenter when prices are later rising. When we make such mistakes it doesn’t matter how good the strategy is if you can’t follow it during inevitable drawdowns.

To mitigate this risk, you can implement a barbell strategy: put one portion of your assets in low-risk investments such as bonds and short-term Treasury Bills, while the other barbell has riskier assets like stocks, or even an options strategy that stand to gain if something volatile happens, no matter the direction.

Anti barbell strategy – selling and writing naked calls

If you write or sell naked calls, you most likely make money for long periods of time. Unlike covered calls, which give you protection because you own the underlying instrument, selling short naked calls makes you liable to unlimited risk, and you face the risk of losing it all when a freak event (tail risk) happens. Most calls end up worthless, and by selling and writing, you’ll have a very high win ratio. But when you face a tail risk event, you lose a substantial amount of money. It’s a negatively skewed trading strategy.

Taleb and his protege, Mark Spitznagel, argue you want to do the opposite: bleed for long periods of time until you hit the jackpot and make a killing (see more about Spitznagel later).

Alternatives to the barbell strategy

The barbell strategy is a bit too complicated for the average retail investor and trader. Warren Buffet’s old and boring advice of dollar-cost averaging into a broad index is the best alternative for the vast majority of investors.

Alternatively, you can look at the following alternatives when you make a portfolio of assets or trading strategies:

Some key points from the two first articles above:

  • If you have uncorrelated assets and strategies you can set aside a small amount for a barbell trade, like 5% for example.
  • Ray Dalio’s All Weather Portfolio has an element of trend following and tail-risk protection in the form of commodities.

Nassim Taleb, Mark Spitznagel, and Universa Investments

Back in 2007 Nassim Taleb and Spitznagel set up a hedge fund based on the principles of tail risk and barbell strategies, Universa Investments. Under the motto “a small loss is a good loss” the fund has presumably one of the best records over the last decade. Assets under management was 300 million in 2007 and in 2022 it is more than 11 billion, according to Yahoo/finance.

Universa Investments specializes in risk mitigation, deploying a tail-risk hedging strategy to limit losses from an outsized market event, like a “Black Swan.”

Universa Investments uses the barbell strategy principles:

We assume most of the fund is invested in assets that return next to nothing over time, like cash and short-term Treasury Bills, and a small part is directed at making a killing when volatility picks up – either way. We believe issuing out-of-the-money options is part of this barbell strategy (more in our article about selling puts).

The strategy spends most of the time losing money but makes big amounts when a black swan event happens as it did in 2020 when covid struck (and Taleb argues covid was not a black swan event). The whole idea is that the market doesn’t value the options correctly because the risk is underestimated during good times. When the inevitable crash occurs, Universa stands to profit. It’s all about a question about time. Reports indicate that Universa made over 4000% in 2020 when covid came out of “nowhere”.

Spitznagel has written a book called Safe Haven Investing. The book is about how you can mitigate risk when trading and investing by diversifying into assets that BOTH have the potential to reduce volatility and increase returns. The financial theory states that risk and return move in tandem, ie. you can’t get higher returns without taking more risk, but Mark Spitznagel writes that this is wrong as evidenced by his backtests and performance.

Antifragile investing and trading

Nassim Nicholas Taleb is also famous for his definition of antifragile. What exactly is something that is antifragile? We quote from an article called Fragile vs. Antifragile Investing:

An antifragile investment is something that can benefit from shocks, randomness, and disorder.

Something that is fragile must be handled with care because it can easily be broken or damaged – hence the label “handle with care”. Something that is fragile can’t sustain shocks or beating.

The opposite is antifragile:

This is something that can blossom or benefit from shocks, volatility, disorder, and randomness. Taleb argues this is something different than being robust or resilient. Examples of robustness are companies making tobacco and alcohol – they can stand the test of time. Something that is robust stays the same, while something that is antifragile deals with the unknown well and prospers.

If we try to relate this to trading we can argue mean-reversion strategies are fragile while trend-following strategies are antifragile. Why? Because mean-reversion strategies stand a high probability of being busted while trend-following is the exact opposite and gains when a trend starts getting momentum. This is why you want to combine these two types of strategies!

Nassim Taleb’s Skin In The Game

The latest book from Nassim Taleb is called Skin In The Game (2018). The expression skin in the game refers to someone who has a significant stake at risk from their own decisions.

If we’re going to summarize the book in just one sentence it must be this one:

Don’t tell me what you think, tell me what you have in your portfolio.

Talk is cheap, look at what people do – not what they say!

The book is about incentives and having something to lose or gain when taking a major decision. This is important for commercial efficiency, risk management, and governing of states. For example, Taleb argues that bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

Skin in the game is extremely important to investors because it shows if owners, executives, principals, and management have something to lose from an erroneous or fatal decision. Interests need to be aligned. It’s easy to argue too few have real skin in the game in the financial industry because research indicates that asset managers have on average just a fraction of their assets in their own funds.

Why would you trust someone who recommends something without having any relevant skin in the game?

Nassim Nicholas Taleb quotes

We end the article by listing some of the quotes we wrote down while reading Taleb’s books, and we believe the quotes below are the essence of what his books are all about. To better understand the logic behind his tail risk investments and barbell strategy, it’s essential to read Taleb.

The quotes are divided into different books and in chronological order.

From Fooled by Randomness (published 2001):

More generally, we underestimate the share of randomness in about anything, a point that may not merit a book – except when it is the specialist who is the fool of all fools.

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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.

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Having seen hundreds of people enter and exit my profession (….), I have to say that those who have had a modicum of scientific training tend to go the extra mile.

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I remind myself of Einstein’s remark that common sense is nothing but a collection of misconceptions acquired by age 18. Furthermore, what sounds like intelligent in a conversation or in a meeting, or, particularly in the media, is suspicious.

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The opportunity cost of missing a “new next thing” like the airplane and the automobile is miniscule compared to the toxicity of all the garbage one has to get through to get those jewels.

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The problem with information is not that it is diverting and generally useless, but that it is toxic.

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Finally, this explains why people who look too closely at randomness burn out, their emotions drained by the series of pangs they experience.

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My sole advantage in life is that I know some of my weaknesses.

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The firemen effect: He had observed that firemen with much downtime who talk to each other for too long come to agree on many things that an outside, impartial observer, would find ludicrous.

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At a given time in the market, the most profitable traders are likely to be those that are best fit to the latest cycle. This does not happen too often with dentists or pianists, because of the nature of randomness.

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We tend to think that traders make money because they are good. Perhaps we have turned the causality on its head; we consider them good just because they make money. One can make money in the financial markets totally out of randomness.

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In a nutshell, the survivorship bias implies that the highest performing realization will be the most visible. Why? Because the losers do not show up.

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Alas, investors and businesses are not paid in probabilities, they are paid in dollars. Accordingly, it is not how likely an event is to happen that matters, it is how much is made when it happens.

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So people in finance borrow the technique and ignore infrequent events, not noticing that the effect of a rare event can bankrupt a company.

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Why is a theory never right? Because we will never know if all the swans are white (on Popper).

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The reason I feel that he is important (Popper) for us traders is because to him the matter of knowledge and discovery is not so much in dealing with what we know, as in dealing with what we do not know.

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……we are trained to take advantage of the information that is lying in front of our eyes, ignoring the information that we do not see.

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Remember that nobody accepts randomness in his own success, only in his failure.

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In other words, the number of managers with great track records in a given market depends far more on the number of people who started.

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Causality can be very complex. It is very difficult to isolate a single cause when there are plenty around.

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What characterizes real speculators like Soros from the rest is that their activities are devoid of path dependence. They are totally free from their past actions. Every day is a clean slate.

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My lesson from Soros is to start every meeting at my trading boutique by convincing everyone that we are a bunch of idiots who know nothing and are mistake prone, but happen to be endowed with the rare privilege of knowing it.

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The book ends with this sentence:

The only article Lady Fortuna has no control over is your behavior. Good luck.

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From the Black Swan (published 2007):

 

Black swan logic makes what you don’t know far more relevant than what you do know. Consider that many black swans can be caused and exacerbated by their being unexpected.

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The strategy for the discoverers and entrepreneurs is to rely less on top-down planning and focus on maximum tinkering and recognizing opportunities when they present themselves.

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I don’t particularly care about the usual. 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?….Indeed the normal is often irrelevant.

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The human mind suffers from three ailments: The illusion of understanding (nobody knows what’s going on), the retrospective distortion (hindsight bias, rearview mirror logic) and the overvaluation of factual information.

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History does not crawl, it jumps.

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I noticed that very intelligent and informed persons were at no advantage over cabdrivers in their predictions, but there was a crucial difference. Cabdrivers did not believe that they understood as much as learned people – they were not experts and they knew it.

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If I myself had to give advice, I would recommend someone pick a profession that is NOT scalable! A scalable profession is good only if you are successful; they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards – a few can take a large share of the pie, leaving others out entirely at no fault on their own.

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We can get closer to the truth by negative instances, not by verification!

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Sometimes a lot of data can be meaningless, at other times one single piece of information can be very meaningful. It is true that a thousand days cannot prove you right, but one day can prove you to be wrong.

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Similarly, the speculator George Soros, when making a financial bet, keeps looking for instances that would prove his initial theory wrong.

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In his essay “What We See And What We Don’t See, Bastiat offered the following idea: we can see what governments do, and therefore sing their praises – but we do not see the alternative. But there is an alternative, it is less obvious and remains unseen.

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You would expect our record of prediction to be horrible: the world is far, far more complicated than we think, which is not a problem, except when most of us don’t know it.

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For many people, knowledge has the remarkable power of producing confidence instead of measurable aptitude.

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The more information you give someone, the more hypothesis they will formulate along the way, and the worse off they will be, they see more random noise and mistake it for information…..Two mechanisms are at play here: the confirmation bias…and belief perseverance, the tendency not to reverse opinions you already have. Remember that we treat ideas like possessions.

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One single institution, say, the central planner, cannot aggregate knowledge; many important pieces of information will be missing. But society as a whole will be able to integrate into its functioning these multiple pieces of information.

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Invest in preparedness, not in prediction.  

 

From Antifragile (Published 2012):

 

Heuristics are simplified rules of thumb that make things simple and easy to implement. But their main advantage is that the user knows that they are not perfect….. and is therefore less fooled by their powers. They become dangerous when we forget that.

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When you don’t have debt you don’t care about your reputation in economic circles – and somehow it is only when you you don’t care about your reputation that you tend to have a good one.

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If every plane crash makes the next one less likely, every bank crash makes the next one more likely.

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All they need is to keep their mistakes small enough so they can survive them (on reinsurance).

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And it is not stable in spite of not having a government; it is stable because it does not have one (on Switzerland).

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Systematically preventing forest fires from taking place “to be safe” makes the big one much worse. For similar reasons, stability is not good for the economy…..delaying crisis is not a very good idea. The longer one goes without a market trauma, the worse the damage when commotion occurs.

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Although the stated intention of political leaders and economic policy makers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite.

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Few understand that procrastination is our natural defense, letting things take care of themselves and exercise their antifragility.

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You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble, perhaps even go bust. Why? Someone who predicts will be fragile to prediction errors…..And numerical prediction leads people to take more risks.

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My point is that wisdom in decision making is vastly more important, not just practically, but philosophically, than knowledge.

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If a gambler has a risk of terminal blowup (losing back everything), the “potential returns” of his strategy are totally inconsequential.

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Serious empirical investigation (largely thanks to one Lant Prichet, then a World Bank economist) shows no evidence that raising the general level of education raises income at the level of a country. But we know the opposite is true, that wealth leads to the rise of education – not an optical illusion.

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People with too much smoke and complicated tricks and methods in their brains start missing elementary, very elementary things. Persons in the real world can’t afford to miss these things; otherwise they crash the plane. Unlike researchers, they were selected for survival, not complications.

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Accordingly, wisdom you learn from your grandmother should be vastly superior (empirically, hence scientifically) to what you get from a class in business school. My sadness is that we have been moving farther and farther away from grandmothers.

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Practitioners don’t write, they do. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is truly written by losers with time on their hands and a protected academic position.

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No, we don’t put theories into practice. We create theories out of practice.

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A management scholar, William Starbuck, has published a few papers debunking the effectiveness of planning – it makes the corporation option-blind, as it gets locked into a non-opportunistic course of action.

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….what I was given to study in school I have forgotten; what I decided to read on my own, I still remember.

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If I tell you that some result is true with 95 percent confidence level, you would be quite satisfied. But what if I told you that the plane was safe with 95 percent confidence level?

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Black Swan effects are necessarily increasing, as a result of complexities, interdependence between parts, globalization, and the beastly thing called “efficiency” that makes people now sail to close to the wind.

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The good is mostly in the absence of the bad.

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Cowardice enhanced by technology is all connected: society is fragilized by spineless politicians, draft dodgers afraid of poll, and journalists building narratives, who create explosive deficits and compound agency problems because they want to look good in the short term.

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Words are dangerous: postdictors, who explain things after the fact – because they are in the business of talking – always look smarter than predictors.

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So opinion makers who were so proudly and professionally providing idle babble will eventually appear to win an argument, since they are the ones writing, and suckers who got in trouble from reading them will again look to them for future guidance, and will again get in trouble.

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An academic is not designed to remember his opinions because he doesn’t have anything at risk from them.

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So the very same economist who caused the problem then postdicted the crisis, and then became a theorist on what happened. No wonder we will have larger crisis.

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Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have – or don’t have – in their portfolio

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If you go to the doctor, never ask the doctor what you should do. Ask him what he would do if he were in your place.

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Never trust the words of a man who is not free.

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The definition of the free man, according to Aristotle, is one who is free with his opinions – as a side effect of being free with his time.

 

From Skin In The Game (published 2018):

 

The knowledge we get by tinkering, via trial and error, experience, and the workings of time, in other words, contact with the earth, is vastly superior to that obtained through reasoning, something self-serving institutions have been very busy hiding from us.

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Bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions.

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Decentralization is based on the simple notion that it is easier to macrobull**t than microbulls**t.

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Decentralization reduces large structural asymmetries.

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Regulations, while appearing to be a remedy on paper, if anything, exacerbate the problem as they facilitate risk-hiding.

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Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.

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Those who talk should do and those who do should talk.

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Things designed by people without skin in the game tend to grow in complication (before their final collapse).

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More critically, people with good lawyers can game regulations.

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Whenever there is a mismatch between a bonus period (yearly) and the statistical occurrence of a blowup (say, ten years), the agent has an incentive to play the Bob Rubin risk-transfer trade.

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Don’t tell me what you think, tell me what you have in your portfolio.

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Let us conjecture that the formation of moral values in society doesn’t come from the evolution of the consensus. No, it is the most intolerant person who imposes virtue on others precisely because of that intolerance. The same can apply to civil rights.

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The market is like a large movie theater with a small door.

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Had science operated by majority consensus, we would be still be stuck in the Middle Ages, and Einstein would have ended as he started, a patent clerk with fruitless side hobbies.

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Society doesn’t evolve by consensus, voting, majority, committees, verbose meetings, academic conferences, tea and cucumber sandwiches, or polling; only a few people suffice to disproportionately move the needle. All one needs is an asymmetric rule somewhere – and someone with soul in the game. And symmetry is present in about everything.

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Someone who has been employed for a while is giving you strong evidence of submission.

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To be free of conflict you need to have no friends.

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Any form of control of the wealth process – typically instigated by bureaucrats – tends to lock people with privileges in their state of entitlement.

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Traders, when they make profits, have short communications; when they lose they drown you in details, theories and charts.

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It is downright unethical to use public office for enrichment.

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One should give more weight to research that, while being rigorous, contradicts other peers, particularly if it entails costs and reputational harm for its author.

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In any activity, hidden details are only revealed via Lindy.

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Never hire an academic unless his function is to partake of the rituals of writing papers or taking exams.

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..scientism looks more scientific than real science.

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Courage (risk taking) is the highest virtue. We need entrepreneurs.

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At no point in history have so many non-risk-takers, that is, those with no personal exposure, exerted so much control.

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If you want peace, make people trade, as they have done for millenia. They will be eventually forced to work something out…..We are largely collaborative – except when institutions get in the way.

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I have shown in Antifragile that making some types of errors is the most rational thing to do, when the errors are of little cost, as they lead to discoveries.

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How much you truly “believe” in something can be manifested only through what you are willing to risk for it.

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Not everything that happens happen for a reason, but everything that survives survive for a reason.

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Never cross a river if it is on average four feet deep.

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In a strategy that entails ruin, benefits never offset risks of ruin.

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