That time I phoned Black Swan author Nassim Nicholas Taleb

Despite recent developments, I will focus on my niche of telling you about things that happened 15 years ago. Around 2005, I met a unique trader / investor for whom I continue to have great respect. Let's call him Bruce Wayne. I asked Bruce about his strategies and he said the book Fooled by Randomness by Nassim Nicholas Taleb was the best encapsulation of his thinking. Nassim, who subsequently wrote The Black Swan and Antifragile is definitely having a moment. On January 26, he co-wrote a paper warning about the systemic risk of coronavirus. And ever since, he has been vocal about the dangers of under-reacting, often by calling others idiots, as is his style.

What I connected with most in Fooled by Randomness is Nassim's belief that many market participants fool themselves about what is knowable. The only trader Nassim respected was George Soros, who maintained a very flexible trading strategy. At the time, I was also big on Soros and finding trading tricks to compensate for the fact that very little is knowable. Bruce Wayne had said he was so impressed with the book that he almost called Nassim. Around 2007, I was raising money for a US fund and talking to people who could help me. I actually did cold call Nassim. Be warned that all my phone call stories are lame, since, by definition, I did not meet the person. When I reached him, Nassim answered from a place that sounded like a bar. He said something like "I cannot speak with you, sir". He did not call me an idiot or ask whether I had skin in the game. He was very curious about how I had gotten his number. But as you know, I don't discuss sources or methods. That was the entirety of the call.

Nassim has been affiliated with a tail risk hedging operation run by Mark Spitznagel, called Universa Investments. After 2008, there had been lots of interest in tail risk hedging strategies. Since then, I had assumed Universa had fizzled given 10 years of relatively low vol. But it turns out, the firm has prospered and was recently managing $4 billion. The fund is reported to have been up by about a 1,000% in February and a multiple of that in March. At last, my quest for a fund with respectable performance is over.

You can read a summary of Fooled by Randomness on my other blog Second Mouse Plan.


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