Nassim Nicholas Taleb Quotes

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

“At any point in time, the richest traders are often the worst traders. This, I will call the cross-sectional problem: At a given time in the market, the most successful 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 these professions are more immune to randomness.”

“Bullish or bearish are terms used by people who do not engage in practicing uncertainty, like the television commentators, or those who have no experience in handling risk.

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 that should be the consideration.”

“Clearly, an open mind is a necessity when dealing with randomness. Popper believed that any idea of Utopia is necessarily closed owing to the fact that it chokes its own refutations. The simple notion of a good model for society that cannot be left open for falsification is totalitarian.

I learned from Popper, in addition to the difference between an open and a closed society, that between an open and a closed mind.”

“Common sense is nothing but a collection of misconceptions acquired by age eighteen. Furthermore, what sounds intelligent in a conversation or a meeting, or, particularly, in the media, is suspicious.”

“Heroes are heroes because they are heroic in behavior, not because they won or lost.”

“I have no large desire to sacrifice much of my personal habits, intellectual pleasures, and personal standards in order to become a billionaire like Warren Buffett, and I certainly do not see point of becoming one if I were to adopt Spartan (even miserly) habits and live in my starter house.”

“I will set aside the point that I see no special heroism in accumulating money, particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth (aside from the pleasure of regularly counting the beans).”

“If an event is important enough, it will find its way to my ears.”

“If the past, by bringing surprises, did not resemble the past previous to it (what I call the past's past), then why should our future resemble our current past?”

“Imagine taking a test knowing the answer. While we know that history flows forward, it is difficult to realize that we envision it backward.

Why is it so? Here is a possible explanation: Our minds are not quite designed to understand how the world works, but, rather, to get out of trouble rapidly and have progeny.

If they were made for us to understand things, then we would have a machine in it that would run the past history as in a VCR, with a correct chronology, and it would slow us down so much that we would have trouble operating.

Psychologists call this overestimation of what one knew at the time of the event due to subsequent information the hindsight bias, the 'I knew it all along' effect.”

“In a few decades will we look upon the Nobel economics committee with the same smirk as when we look at the respected 'scientific' establishments of the Middle Ages that promoted (against all observational evidence) the idea that the heart was a center of heat?

We have been getting things wrong in the past and we laugh at our past institutions; it is time to figure out that we should avoid enshrining the present ones.”

“In his Treatise on Human Nature, the Scots philosopher David Hume posed the issue in the following way (as rephrased in the now famous 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.”

“In other words, history teaches us to avoid the brand of naive empiricism that consists of learning from casual historical facts.”

“It certainly takes bravery to remain skeptical; it takes inordinate courage to introspect, to confront oneself, to accept one's limitations.

Scientists are seeing more and more evidence that we are specifically designed by mother nature to fool ourselves.”

“It is also related to a problem called denigration of history, as gamblers, investors, and decision-makers feel that the sorts of things that happen to others would not necessarily happen to them.”

“It takes a huge investment in introspection to learn that the thirty or more hours spent 'studying' the news last month neither had any predictive ability during your activities of that month nor did it impact your current knowledge of the world.”

“Many amateurs believe that plants and animals reproduce on a one-way route toward perfection. Translating the idea in social terms, they believe that companies and organizations are, thanks to competition (and the discipline of the quarterly report), irreversibly heading toward betterment.

The strongest will survive; the weakest will become extinct. As to investors and traders, they believe that by letting them compete, the best will prosper and the worst will go learn a new craft (like pumping gas or, sometimes, dentistry).

Things are not as simple as that. We will ignore the basic misuse of Darwinian ideas in the fact that organizations do not reproduce like living members of nature—Darwinian ideas are about reproductive fitness, not about survival.”

“Mathematics is principally a tool to meditate, rather than to compute.”

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

“My lesson from Soros is to start every meeting at my 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.”

“My principle activity is to tease those who take themselves and the quality of their knowledge too seriously.”

“Never ask a man if he is from Sparta: If he were, he would have let you know such an important fact – and if he were not, you could hurt his feelings.”

“No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word.”

“One cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e., if history played out in a different way).”

“One conceivable way to discriminate between a scientific intellectual and a literary intellectual is by considering that a scientific intellectual can usually recognize the writing of another but that the literary intellectual would not be able to tell the difference between lines jotted down by a scientist and those by a glib nonscientist.

This is even more apparent when the literary intellectual starts using scientific buzzwords, like 'uncertainty principle', 'Godel’s theorem', 'parallel universe', or 'relativity', either out of context or, as often, in exact opposition to the scientific meaning.

I suggest reading the hilarious Fashionable Nonsense by Alan Sokal for an illustration of such practice (I was laughing so loudly and so frequently while reading it on a plane that other passengers kept whispering things about me).”

“Our emotional apparatus is designed for linear causality. For instance, you study every day and learn something in proportion to your studies.

If you do not feel that you are going anywhere, your emotions will cause you to become demoralized.”

“People do not realize that the media is paid to get your attention. For a journalist, silence rarely surpasses any word.”

“People overvalue their knowledge and underestimate the probability of their being wrong.”

“Probability is not a mere computation of odds on the dice or more complicated variants; it is the acceptance of the lack of certainty in our knowledge and the development of methods for dealing with our ignorance.”