691 Nassim Nicholas Taleb & Scott Patterson — How Traders Make Billions in The New Age of Crisis, Defending Against Silent Risks, Personal Independence, Skepticism Where It (Really) Counts

This is a Claude AI summary of the Tim Ferriss Podcast #691- visit www.TinyTim.blog for more AI summaries, or www.Tim.blog for the official Tim Ferriss Podcasts.

Here is a summary of the key points from the podcast conversation between Tim Ferriss, Nassim Nicholas Taleb, and Scott Patterson:

Overview:

- The discussion covered Nassim and Scott's backgrounds, the ideas in Nassim's books like Fooled by Randomness and Black Swan, the precautionary principle, betting on tail events in finance, systemic risk, and applying skepticism selectively.

Key Points:

- Nassim started in trading but wanted to focus more on scholarship and moved into tail risk hedge fund Empirica. He sees tail risks as a key intellectual focus.

- Scott is a journalist who covered Nassim and later tail risk hedge fund Universa. His new book profiles Universa's strategy and philosophy.

- The Black Swan focuses on highly impactful and unlikely events. The precautionary principle says we should avoid steps with uncertain downsides even if not provably harmful.

- Universa makes asymmetric bets to profit from market crashes while limiting losses. This convexity lets small bets pay off disproportionately in tail events.

- Systemic risk has grown with global interdependence. Hedge funds now take more risks than banks. Startups relying on selling out also exhibit fragility.

- True skepticism is selective - questioning ideas but not needlessly rejecting things like vaccines with proven safety. Ancient wisdom often understood systemic risks better.

- For ordinary investors, focus on your own business domain - don't trade on theories. Avoid startup investing without expertise. Stay in your circle of competence.

- Nassim aims to formalize concepts like convexity and skepticism across disciplines like medicine in upcoming books like Principia. Non-verbal rigor separates true ideas from empty jargon.

Key quotes:

"If you must panic, panic early." - Nassim on responding to risks

"Convexity is at the center of things." - Nassim on the concept underpinning tail betting

"In the new age of crisis, can we take ideas to manage risk from Wall Street traders?" - Scott on the book's key question

https://tim.blog/2023/09/07/nassim-nicholas-taleb-scott-patterson/