Thursday, August 26, 2010

Nassim Taleb: "We Made $ 20 Billion For Our Clients"

Earlier this year, Nassim Taleb said there isn't enough evidence to show Buffett's five decades of investing success isn't just luck.

He also said that it made sense for "every single human being" to short Treasuries.

Great stuff.

Well, here's a quote by Taleb from this 2009 GQ article:

"I went for the jugular--we went for the max. I was interested in screwing these people--I'm not interested in money, but I wanted to teach them a lesson, and the only way you can do it is by trying to take it away from them. We didn't short the banks--there's not much to be gained there, these were all these complex instruments, options and so forth. We'd been building our positions for a while...when they went to the wall we made $20bn for our clients, half a billion for the Black Swan fund."

So, according to GQ, Taleb said "we made $ 20bn for our clients" but Janet Tavakoli checked into these claims and discovered otherwise:

"I checked with Nassim Taleb regarding the $20 billion in gains and asked if he were misquoted. He responded via email: 'The quote is inaccurate. THe [sic] 20 billion might correspond to the face value of positions.' This response is both vague and different in character from the mythical $20 billion in gains inaccurately quoted in GQ's article. The total gains could be a tiny fraction of what Taleb loosely describes as 'face value.'"

FT Alphaville offered the following view:

Tavakoli takes down GQ, not Taleb

" seems pretty clear from Tavakoli's letter that she is blaming GQ — not Taleb."

A separate article on FT Alphaville added that Taleb did point out the error to GQ beforehand:

"For whatever reason, it seems Self [the author of the GQ article] or GQ did not correct the story — perhaps because they stood by Taleb's quote.

In any case, if Taleb knew the number was incorrect he probably should have put up a note of some sort to accompany the article long before Tavakoli pointed it [sic] out the discrepancy."

Apparently, Taleb did try to correct the numbers well before the GQ article was published.


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