Nassim Nicholas Taleb & Scott Patterson - How Traders Make Billions in The New Age of Crisis

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Nassim Nicholas Taleb (@nntaleb) spent 21 years as a risk-taker (quantitative trader) before becoming a researcher in philosophical, mathematical, and (mostly) practical problems with probability.
Taleb is the author of a multivolume essay, the Incerto (The Black Swan, Fooled by Randomness, Antifragile, The Bed of Procrustes, and Skin in the Game), covering broad facets of uncertainty. His work has been published into 49 languages.
In addition to his trader life, Taleb has also written, as a backup of the Incerto, more than 70 technical and scholarly papers in mathematical statistics, genetics, quantitative finance, statistical physics, medicine, philosophy, ethics, economics, and international affairs around the notion of risk and probability (grouped in the Technical Incerto).
Taleb is currently Distinguished Professor of Risk Engineering at NYU's Tandon School of Engineering (retired). His current focus is on the properties of systems that can handle disorder ("antifragile").
*
Scott Patterson (@pattersonscott) is an investigative reporter for The Wall Street Journal, currently based in Washington DC, working on climate and energy policy. His new book is Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis, a profile of the rise of “black-swan traders,” such as Nassim Taleb and Mark Spitznagel, as well as a survey of the many perils the world faces today-and how we might fix them.
Scott has covered everything from Berkshire Hathaway to stock exchanges to high-speed traders to the financial regulators. His first book, The Quants, describes the rise of mathematical finance and delves into its role in the 2008 financial blowup. Dark Pools, his second book, tells how computer traders took control of the U.S. stock market, starting from the birth of computer trading in the 1980s to the explosion of high-frequency trading in the late 2000s.
00:00 Intro
00:36 How Scott and Nassim first connected.
03:14 Why Nassim would rather be remembered as a scholar than a trader.
05:23 You can’t forge a new friendship without breaking a few eggs.
07:57 Silent risk, tail events, and one-trick ponies.
18:39 What prompted Scott to write Chaos Kings?
27:31 Pseudo-efficiency, pseudo-optimization, and pseudo-sorries.
29:54 The joy of writing a preemptive resignation letter.
30:55 Developing resilience against criticism.
34:09 Recurring patterns in successful investors.
38:21 Nassim: contrarian, or simply independent?
41:08 Jiving with skeptical turkeys.
46:52 Living in the polycrisis.
54:22 The precautionary principle.
55:59 Fat tails, thin tails, and the COVID vaccine.
1:07:58 GMO risks and Monsanto intimidation tactics.
1:11:54 Implementing the precautionary principle at a large scale.
1:14:06 Uncertainty and the climate crisis.
1:17:11 Convexity in the face of financial crisis.
1:24:54 Are investors overpowered in an interconnected world?
1:29:58 Utilizing the precautionary principle in the real world (for better and worse).
1:36:14 The flow-on effect of having skin in the game.
1:38:51 The ponzification of startups and an overdue reckoning.
1:42:50 What convexity at the center of all things conveys.
1:50:05 Where to find Scott and Nassim.
1:51:29 What Nassim is working on now.
1:54:50 New insights from ancient words.
1:58:57 Parting thoughts.
***
Tim Ferriss is one of Fast Company’s “Most Innovative Business People” and an early-stage tech investor/advisor in Uber, Facebook, Twitter, Shopify, Duolingo, Alibaba, and 50+ other companies. He is also the author of five #1 New York Times and Wall Street Journal bestsellers: The 4-Hour Workweek, The 4-Hour Body, The 4-Hour Chef, Tools of Titans and Tribe of Mentors. The Observer and other media have named him “the Oprah of audio” due to the influence of his podcast, The Tim Ferriss Show, which has exceeded 900 million downloads and been selected for “Best of Apple Podcasts” three years running.
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[@timferriss]

Brought to you by AG1 all-in-one nutritional supplement drinkag1.com/tim Helix Sleep premium mattresses helixsleep.com/tim and LinkedIn Jobs recruitment platform with 900M+ users linkedin.com/tim

[@xXxRK0xXx]

AG1 is a pyramid scheme why are you promoting it? Serious question.

[@user-zm5vx6ll6j]

So nice to see Nassim in 4K instead of 144p (his favorite resolution).

[@GaminHasard]

HHhaha Made me laugh out loud.

[@yrahmed]

Oh wow, I wasn’t expecting Nassim to show up to a podcast

[@stillakzo]

Exactly

[@SummaPlusANumberGrrr]

Been waiting for this one since Tim started podcasting!

[@yrahmed]

That’s so dope, I didn’t realize Nassim was was a fan of Tim. Especially since Nassim went hard on Lex wanting him on his podcast

[@stillakzo]

@@yrahmed Lex is a crook. He uses MITs name to look legitimate which is greatly exaggerated. Tim is a legit guy.

[@AlexD-qj9pe]

SAME

[@gegalla1]

Best interview i've seen with Nassim because Tim let him talk and listened.

[@yington]

Any proof

[@shiewhun1772]

Scot: "Nassim mentioned his contrarian nature" Nassim: *interjects* "It's not a contrarian nature, it's independence".

[@KenLongTortoise]

Chritopher Hitchens made the same point about his default stance

[@Alem_Mehari]

😆gotta love it

[@963seeker]

Ferriss has an innate ability to make his guests feel at peace and really talk about their ideas. A very rare skill.

[@paulcnichols]

Tim Ferriss must be a real one to survive Nassim's legendary block list.

[@MarketStoic]

"If you have to panic, panic early. Panic NOW" - Nassim. Love it!

[@shiewhun1772]

This is an incredible podcast episode. I have seen podcasts where people come to discuss their books and ideas. But I don't think I have seen one like this. It is foundational thinking. The guests, the hosts, the subject matter - put together for a great episode so far. More like this, Tim.

[@ganj0rm0n]

Nassim effing Taleb on the Tim Ferriss Show. How awesome is that.

[@claudius3980]

Bro ikr?!?!?! He doesn't do many podcasts

[@AzossAwwYea]

Mr dream guest

[@osidbitar8555]

I always thought he must've done a podcast with Tim over the years but it was never there when I searched it. Cool to see it finally happen.

[@user-hj5bh5gz3v]

This is a fat tailed event, NNT on a podcast! The man's books have changed my life. Well done Tim.

[@GermanwithGerry]

What are the most important things you learned from him? And how do these ideas actually apply to real life? I'm genuinely interested as I only really got into taleb's work recently ...

[@lelandwatson4925]

His ideas can be extrapolated to just about any area of life which is partly why he's my favorite author. He taught me mental toughness, meaning and consequences of risk, understanding that the world is largely not comprehensive(and random), skin in the game, and how real learning comes about. This is just a generic list his incerto led me much further into discovery of his influences. And the ideas are quite intuitive and yet counterintuitive, bc he knows real winners must have scar tissue.

[@timjrgebn]

​@@GermanwithGerry As someone who has really dug into his work in relation to philosophy and complex, dynamical systems, what I'll say is his contributions to the concept of antifragility is very real. Is it at the level of Einstein, that's somewhat of a stretch. I'd place it more around the ballpark of David Graeber's deep dive into Bullsh** jobs, namely very foundational work that's incremental in nature. What you have to understand is Einstein, David, Graeber, etc., are intellectual thinkers. Most importantly, free thinkers. So when we say "so what, what can I do with this," it's coming from most of us who are very far from free. Nassim is part of the top investor class, who he himself has said benefits from lower class (we'll call it further down the antifragility ladder) people failing but still believing it's worth it. If you dig into his work and understand it, he refers to antifragility as what the system is at the expense of individuals being the most fragile. Nassim is at the top of the antifragility class at the expense of the lower, more fragile, class. He knows it, even says it in his books, and tries his best to help however he can knowing this. In essence, he gives very similar (arguably identical) suggestions as Fredrick Niechzte, Stoics, Jasper, maybe Camus to an extent. Even Niechzte said "what doesn't kill me makes me stronger," which is roughly the same as saying you're antifragile. The only difference is he's giving a different reason for the same answers: it's all random, the game is an illusion, so might as well be free. David Graeber's was basically: Majority of the economy is bullsh** and the solution is free thinking people. David and Taleb even mention concepts of UBI in their work, to not Crush people from too much fragility demanded by an antifragile system. Whether you read Nassim, David, Stoics, or Fredrick Niechzte, Camas, etc., they all gave the same final conclusion. The best life is as a free thinker and a free person. That's it.

[@timjrgebn]

​@@GermanwithGerry As someone who has really dug into his work in relation to philosophy and complex, dynamical systems, what I'll say is his contributions to the concept of antifragility is very real. Is it at the level of Einstein, that's somewhat of a stretch. I'd place it more around the ballpark of David Graeber's deep dive into Bullsh** jobs, namely very foundational work that's incremental in nature. What you have to understand is Einstein, David, Graeber, etc., are intellectual thinkers. Most importantly, free thinkers. So when we say "so what, what can I do with this," it's coming from most of us who are very far from free. Nassim is part of the top investor class, who he himself has said benefits from lower class (we'll call it further down the antifragility ladder) people failing but still believing it's worth it. If you dig into his work and understand it, he refers to antifragility as what the system is at the expense of individuals being the most fragile. Nassim is at the top of the antifragility class at the expense of the lower, more fragile, class. He knows it, even says it in his books, and tries his best to help however he can knowing this. In essence, he gives very similar (arguably identical) suggestions as Fredrick Niechzte, Stoics, Jasper, maybe Camus to an extent. Even Niechzte said "what doesn't kill me makes me stronger," which is roughly the same as saying you're antifragile. The only difference is he's giving a different reason for the same answers: it's all random, the game is an illusion, so might as well be free. David Graeber's was basically: Majority of the economy is bullsh** and the solution is free thinking people. David and Taleb even mention concepts of UBI in their work, to not Crush people from too much fragility demanded by an antifragile system. Whether you read Nassim, David, Stoics, or Fredrick Niechzte, Camas, etc., they all gave the same final conclusion. The best life is as a free thinker and a free person. That's it.

[@samirelzein1095]

Seeing Nassim living in his element here. Tells me he s in good company.

[@MrSharklet]

Nassim freaking Taleb Been waiting forever for this one with Tim

[@tungha94]

Freaking?

[@mattdearman4244]

This is such a rare treat to come across. Thank you Mr Ferriss

[@warrenrox]

Best Nassim interview ever, and therefore one of the best podcasts ever. Thank you Tim 🙌🏼

[@marcusmarcula]

Wow Tim didn't realize you shared so much history with Taleb. I just finished Chaos Kings a couple of days ago, and am now currently waiting on Mark's book Safe Havens. This was a pleasant surprise, as initially when I saw you had tweeted this out, I at first was skeptical because Nassim is very selective on who he interviews with, but I am so surprised and impressed with the level of detail and wisdom Nassim brings to the table as always, as there is never a boring interview or exchange between him. He adds even more depth and background to the story as well after having read the book. Thank you for having him, definitely a memorable and informative interview.

[@nikhilabi2230]

Never expected a podcast with Nassim

[@nishantchandra2876]

“Venture capitalists are rich on companies that never made a penny” true indeed

[@lesleyjohnson8488]

I’m a huge fan of Aquinas myself, Nassim! But sadly, not in the original. Wow. This was such an amazing discussion. Really appreciated the closeness and comraderie of Scott and Nicholas. Almost reading each other’s minds.

[@Mihanik0]

Thank you so much Tim. For bringing such amazing personalities onto the show and into the wider view!

[@djgetnasty]

Tim this is one of your best podcasts ever - Scott is great and Nassim RULES!

[@siddharthyadav3699]

You know it when the OGs NNT and tim discuss options and hack, exploring their works was perhaps the biggest inflection point of my life.

[@gedewahyu.p]

agreed, changed my life forever!

[@McQuinTrix]

Nassimji's knowledge is so broad and amazing amazing!

[@DerMaxMaster]

Tim is just doing a great job. I love his way of leading the interview and his calm and positive attitude.

[@chrisyoung9742]

Amazing as always, thanks Tim!

[@canxida]

Thank you for posting this!

[@olivercarmack4515]

I loved Scott Patterson book. This came at a perfect time.

[@pradeepkumaras8846]

You never miss two people - Naval & Nassim .....❤❤❤❤

[@jamespier7801]

Taleb blithely says, “Don’t pollute” without ever mentioning the economic cost of “don’t pollute.” His legendary independence is a put-on.

[@MFJoneser]

Placing any import or weight on this guy’s ideas is dangerous. Intellectual inanity

[@litmus_test]

Read his books. He talks at length about economic cost of “don’t pollute”

[@imadmoujahid3431]

It's always amazing to listen to The Great Nassim

[@steveurquell3031]

You know the interviewer is solid when Nassim shows up on A PODCAST! Awesome talk guys, thanks.

[@wildmanmike100]

Ok. Tim is back. Seeing NNT made me feel like the first time I read 4HWW. Man 2005 was such a buzz.

[@LivingProcess]

Brilliant as always

[@mattkelly5051]

Cool! Been waiting to hear Taleb on here since you started the podcast

[@gabriel_augustob]

The best podcast ever

[@lifeisabadjoke5750]

Really

[@james2653]

NNT disagreeing with being called a contrarian made me chuckle

[@slofty]

Contrarianism is consonant with inconsistency, which he is not.

[@burningproblem]

Nassim! What an unexpected treat!

[@elementred2359]

Tim finally doing the studio❤❤❤

[@LukeB83]

"So people ask me how do i invest in tech startups... i tell them dont!" Tim giving the free financial advice right here...

[@johnjuliusjamora]

Waited for this for years Now the next "I hope you get as a guess" for me is Mark Spitznagel

[@rhclark6530]

Great discussion. Few people have influenced my worldview more than Nassim. I wish he would chime in on AGI and the Precautionary Principle.

[@itsdilshod]

It's certainly easier for one to read Nassim than to listen to him.

[@sebwoz8766]

100% agreed. I am glad his audiobooks have a hired voice actor.

[@Learna_Hydralis]

He developed a non-smoking related throat cancer one time in his life and if you know him well he take the identity of an author not a speaker, not a presenter or anything else.

[@TheNimblegeek]

Finally seeing/hearing Taleb in a podcast :)

[@Kevin-eg6vg]

Covid broke taleb’s brain

[@kippsguitar6539]

Absolutely agree, so disappointed in his twaddle here, just nonsense

[@electricalengineer6502]

I respect talebs ideas. I have used them in a few areas of my life. But he was totally wrong on masks and the jabs. He and Ryan holiday are not stoics, despite their use of stoic ideas.

[@yrahmed]

45:40 oooh wee I wasn’t expecting Nassim to mention Al Ghazali. I can’t wait until Tim discovers the philosophy of the Sufi skeptics

[@IlyaAvdeev]

YOU ARE THE BEST! JUST WOW!

[@thefunexaminedlife1145]

"Robustness is when you care more about the few who like your work than the multitude who hates it (artists). Fragility is when you care more about the few who hate your work then the multitude who loves it (politicians)." Great quote. Thanks. What do you call it when someone cares more about the truth than whether or not anyone likes or hates their work? E.g. RFK

[@christopheroh.]

That would be authenticity, which I'm not pointing out in support of your example. I have no interest in KZbin comment rhetoric.

[@duncanmaclennan9624]

*Ive known artists who care more about the few who hate their work than the multitudes who love it

[@ray-mc-l]

mmm RFK had no problem hiding his brother's extra marital affairs. Maybe a whistleblower like Daniel Ellsberg or Edward Snowden is a better example?

[@benhopkins674]

Tims the Goat

[@elementred2359]

this looks amazing!!!!

[@claudeambrus6242]

“Unless you are a trader do not trade, unless you are a baker do not bake” (Nassim Taleb)

[@brad-smith]

Step 1: Watch this video. Step 2: Contemplate career change. Step 3: Realize I'm better at watching videos. 😂 Great insights from the masters!

[@PolskiOfficial]

Man this is sick!!

[@aarok2817]

Holy cow, I’ve read 4hww and non technical incerto, now TF interviews NNT!!! Edit: takeaway is to focus on my job and the things I’m good at, not get distracted by speculative investing… :)

[@investingjim2801]

Taleb claims No Risk Studies on GMO @1:09:18. I would like to know which risk studies he has researched on vaccines, specifically Covid vaccines?

[@astronaft2]

He is a brilliant thinker. But maybe he didn't allow himself to think how vast big pharma manipulation and interferences are. Hence took those studies without criticism. Listening to Antifragile - it's infiltrated with "avoid iatrogenics, nature is robust, what humans do is not robust, avoid doctors whenever you can" message. Yet he rationalized mRNA use.

[@bradleygerdes138]

this was long awaited

[@thesquealingpartridges7285]

Such a good combination

[@siddharthghosh8750]

Nietzsche also said something similar to Taleb about sceptics

[@sgngoasheng]

Great stuff!

[@jamessp500priceactionpage3]

I remember when Tim Ferris said he left Silicon Valley partially because it has the highest proportion of people who think they are smart. higheer interest rates will clear these guys out

[@quantumfizzics9265]

Nassim the goat 🐐

[@IsaacWendt]

Would have been interesting to get Telebs take on the vaccine and covid with the third option of ivermectin being a good safe alternative and also would have been interesting to hear his thoughts on the government completely lying about the origin and funding of the lab etc. Always a great interview anytime you get to hear Teleb talk.

[@chandanthakur5236]

I will save it to watch it slowly!

[@EdArmGuitar]

I have already listened this twice!!! So much to learn. Amazing!!! Thanks Tim!

[@troygallaty4361]

Would love Nassim to jump on the podcast circuit a true awesome thinker and doer of our time

[@jeffhicks8428]

Self evident why it's not the case. McLuhan, the medium is the message. This form caters to a culture of mass illiteracy. 2/3 of the US can't read on a 6th grade level, the average American reads on a 3rd grade level.

[@angkurrongpi4910]

The great Nassim Taleb

[@subhranshudas8862]

Mr.Taleb in the house.

[@prashantyewale8343]

Antifragile is the most misused one, I agree as he said what doesn't kill you makes more stronger but what what kills doesn't make you stronger. To become antifragile you have to remove fragile first. If there is uncertainty with the pilot you don't fly.

[@adlos6168]

Incredible

[@mark.mahorney]

They did panic early and badly, shut the world down but the summer. Everything nassim said about pandemics during was wrong

[@mark.mahorney]

Maybe he wanted a bigger shutdown bc it would be the black swan he's always wanted

[@Reutzel507]

He is pro vaccine but not GMOs. His argument is about the spread and the science. He contradicted himself in on argument.

[@kippsguitar6539]

Yes I got it too, so disappointed

[@andneomatmj23]

so good!

[@ottomanbob]

So excited ugh

[@baja3080]

What book are they talking about on the 18 minute mark??

[@pedromacedo6202]

Nassim :))) Thanks Tim

[@catsnchaos]

I liked it. * the head nod indicating respect *

[@ReflectionOcean]

Key Insights: - Misinformation and conspiracy theories can lead to dangerous consequences, such as the rejection of vaccines. - The precautionary principle encourages the elimination of fragilities before pursuing anti-fragility. - Convexity and scalability are important factors to consider in various fields, including medicine and finance. - Investors should focus on their areas of expertise and avoid unnecessary risks. - The banking sector is relatively safe due to its utility-like nature, while the private equity sector is more fragile. Actionable Items: - Eliminate fragilities and focus on building anti-fragility in one's area of expertise. - Avoid engaging in trades or investments without proper knowledge and understanding. - Stay informed and critically evaluate information to avoid falling victim to misinformation. - Apply the precautionary principle when assessing risks and making decisions. - Consider the potential impact of scalability and convexity in various fields.

[@junal27]

Could please someone repeat the name of the first book the first invited talks about?, for a non English speaker to catch it is a challenge, thanks

[@BlokMonk]

It's been wonderful to witness tims intellectual growth

[@msftman1]

I admire Nasim a lot, enough to set aside his assessment of the Covid “vaccines.” I will certainly be employing the precautionary principle with respect to would be authoritarians the next time they take a bite at the apple.

[@parabob2359]

His assessment of covid vaccines is correct.

[@MFJoneser]

@@parabob2359lol

[@bleacherz7503]

I saw Tim at one of his earliest conferences , 2007 ish. He was insightful then as well

[@bleacherz7503]

So did I , in Northern Virginia

[@oneconsulting8431]

Goose bumps… Taleb the legend

[@socalled33]

Nah he's a triple vaccinated coward who bottled it during covid by taking the poison jabs, blocking all open debate on his Twitter about it too. Now in late 2023, it's overwhelmingly evident he made the wrong decision but he will never admit it, or worse, he's stubborn enough to actually believe he made the right choice. Here's a direct quote from this podcast: "Covid is a lot more dangerous than you think. And the vaccine is what made it tolerable." He actually believes that blatant lie. It was never any deadlier than the common flu and had a 99.9997% survival rate for anyone who wasn't already on death's door. He falls into the unfortunate, disgraceful camp of "I'm so glad I got the vaccine, otherwise it would have been much worse" but doesn't realise any illness he got was because of the vaccine itself.

[@claudeambrus6242]

“What do not kill you make you stronger, but what kill you do not make you stronger” (Nassim Taleb)

[@bigdawg2566]

1:51:50 “It’s liberating to me to be able to write without having the narrative” Tim did that inspire you to write your next book ? Amazing podcast

[@RugilePenno-ly8jh]

Beautiful, thank you :-)

[@dontrushtohate]

These guys make me at COVID

[@stillakzo]

Nassim taleb 🔥🔥🔥

[@hasnainabbas3442]

Tim Ferriss, I knew he would get NNT on his show one day. Ferriss called him cantankerous in naval podcast, but naval and Tim agree how much wisdom NNT has

[@erickhill4287]

I think the term metacrisis is more apt than polycrisis. Like Scott says, the sum is greater than the parts. It's a crisis of crises

[@alexi2460]

Tractor rotortiller in Sonoma county, numerous wineries use roundup at the base of the vines. Scary sxxt

[@JuicinVibes]

I'd be afraid of covid too if I was sedentary fat old man

[@naeemparvez]

Ferriss & Taleb across from each other? There goes my afternoon.

[@torpedospurs]

With the MRNA vaccines there was very little testing compared to the norm and they wer given to literally billions in the space of a year. I get it that at the time it might have been a solid decision to use them against the uncertainty being presented by the pandemic itself, but does it really qualify as non-fat-tail?

[@sidd5711]

Very nice

[@jfinca]

Nassim is the GOAT

[@moneyballmoves]

What’s the thing with the Ferrari and the bike?

[@Geroscientist]

I think it probably speaks to Tim Ferriss as a person that Nassim Taleb would come on to his podcast. Taleb very rarely appears on podcasts...

[@kevinkasimov651]

If you advocate for a vaccine on the basis that it will reduce transmission of a pathogen, then shouldn’t it actually do that? Not just be a therapy?

[@johns4412]

His understanding of these vaccines is dismal

[@kippsguitar6539]

I'm so disappointed one of my literary hero's talked such nonsense on the vaccine debate, history shows it was an enormous error fuelled by social media and corporate greed

[@polysaturated]

I was wondering about that too. If you still get Covid and add the risk of the vaccine on top you might be worse off, especially if you already had COVID and then got the jab.

[@AlaskaJiuJitsu]

37:04 When I hear him say a billi has a dark side - as someone who has seen some of the most insane things imaginable - this scares me.

[@Omkar3324]

FINALLY