A few thoughts on Nassim Taleb's work

Updated: June 2, 2023 Reading Time: 2 minutes

Taleb is best known for his arrogant, straight-to-your-face character yet funny and wholesome character (which reminds me of my dad, perhaps that’s why I always enjoy reading Taleb) who most often appears in Twitter fights. He is, of course, known for his best-selling books series Incerto, most notably his books “Black Swan” and “Fooled By Randomness”. Though I have to say that both Antifragility and Skin in the Game are underrated. The first of these changed my worldview while I was in college – it is not an understatement that reading this book made me change my mind about pursuing a career in academia. The second one is practical, almost a guide to life.

But here I want to focus on Taleb’s lesser known writing, the technical ones. The entire Incerto has a compendium of mathematical papers in which he (and colleagues) try to back up all the claims about fat tails, and black swan events using rigorous probability theory. I’ve started reading them (or at least trying to) and I have to say that despite some concepts being fairly advanced all the papers are quite approachable. Taleb doesn’t go for extravagance and academic authority in his papers. He’s not an academic who has to impress his colleagues. He’s a trader who wants to understand things. A few examples from his paper “Probability, Risk, and Extremes”:

When discussing the different types of distributions that there are, Taleb has a word of his own for the most weird distributions of all. He write: “Then there is a distribution right at the top, which I call the Fuhgetaboudit. If you see something in that category, you go home and you dont talk about it.”

“Our grandmothers understand fat tails. These are not so scary; we figured out how to survive by making rational decisions based on deep statistical properties.”

“No risky exposure can be analyzed in isolation: risks accumulate. If we ride a motorcycle, smoke, fly our own propeller plane, and join the mafia, these risks add up to a near-certain premature death. Tail risks are not a renewable resource.” No hard-to-find words, no pompous language. Very refreshing and entertaining.