Before writing my of critisism I must confess that I have read both his prior books and actually quite liked them!

Taleb admires among philosophy, mathematics and history the most his own ingenuity. Hence, the word creation self-impressed.


1.) His ongoing discussions around the black swan phenomenon are becoming fatiguing and show little new insight or original thought. The whole conversation around the BLACK swan may one easily lead to forget that the swan might also be GREEN, BLUE, RED or any other color. Building a trading strategy around outliers (betting on the black swan) appears bizzare to me. His trading suggestions do not take into account the simple fact that there outlier events can take an infinite form (unspecific) but one can only make specific bets. That might be a reason why we do not see Taleb on the Forbes list (maybe he is the black swan).

2.) His eloquent use of the English language makes his ideas appear smarter and more intimidating. Adding philosophical terms and poetry to his study field makes critics appear uneducated if critics cannot come up with quotations from Homer and Aristotle. Ideas should stand critisism and not be defended through pompous language. I dislike such rhetorical cheats.

3.) His latest research paper where he intrigued many financial professionals with a word play demonstrates his self-impressedness.

His question was:

"A stock (or a fund) has an average return of 0%. It moves on average 1% a day in absolute value; the average up move is 1% and the average down move is 1% [...] What is the daily sigma? [...] "

Solution:

The average absolute 1% moves translate into a 1.25% daily volatiliy.

(Un-)surprisingly, many professionals got the answer wrong ...

Next time I won't forget when I calculate volatility in my spreadsheet that
- I first calculate daily returns and
- then calculate the modulus of the daily returns and
- then take the sum of the modulus of the daily returns and
- then CORRECT the sum with the inverse of sqrt(2/pi)