Nassim Taleb on What Bitcoiners, Anti-Vaxxers and Deadlift Maxis All Get Wrong

Seychelles for two weeks. It's not I'm not a huge beach vacation person, so it wasn't a place that I would normally go to, but it was absolutely gorgeous. Highly recommend it. I think it's ruined me for all other beaches in the future. But I am happy to be back and recording with you once again. And I missed you too, Joy, thank you. It's great to have you back and you sound great. You know what I did this week? I can take a guest, but go ahead. I did a deadlift. I did I've been I've been.

I've been lifting weights at the gym and I did. I'm not gonna say what I was about to say, Dare I asked, I'm not going I'm still very weak. I'm not going to say what my pr is, my personal record is. But it was very satisfying. I felt good and now I'm like gonna keep doing I've been doing weights for a little while. But Joe, is it? Is it a real deadlift if you're not bragging about it on Twitter? When I'm when I hit bragging level,

I will definitely brag. But uh, I bet everyone can figure out where I am going with that, because we're going to be speaking today with one of the foremost When I think of our this guest, I think of as many things, but I think of him as one of the foremost deadlift advocates in public. I of course know exactly who you're talking about. Um, this is somewhat and you know, certainly a personality and a character, especially online on Twitter. I think we've both at various times

been blocked by him. Have quite a few people. Yeah, so I think I tweeted this while I was on vacation, actually, But one of the craziest things to me about twenty twenty three is that I find myself not only unblocked by this guest, but also nodding my head yes, sperously in agreement with him on a variety of topics. Twenty twenty three is a very weird year for that very reason, because it's like, oh yeah, totally right. Anyway, we just gotta get right into it. So we are, of course

speaking with the one and only Nessim Nicholas Teleb. He's a professor at NYU. He is an advisor at the Terrorist Fund Universa. He is the author of several books, including The Black Swan and Anti Fragile and Fooled by Randomness. And he is a deadlift advocate. And he has also gotten into cycling lately, which is interesting. And he is a flaneur. I don't even know where to start. This seems thank you so much for joining us. Every time I see the word flaneur, I forget what it means.

What does it mean? Yeah? I have to remember exactly what it means, because the original designation is for someone who walks around aimlessly, and I tried to journalize it to someone who loves things aimlessly just for the fun of it, without the prescribed plan. And if you find something interesting, then you go with it. So it's funny because I started off by saying that you I could

think of you as a deadlift advocate. But this year you're getting into road biking, which is interesting because you know, this kind of very different type of exercise. It's not the type of exercise I associate you with. It's a little a cyclist. Why what's the deal with getting into cycling? I was a cyclist. We met last which is about fifteen years ago, and I had a near miss with

the truck. And then I switched to a combination a lot of walking and some intense but short episodes of weight listing by weight lifting, and then I, you know, I had to follow the evidence, started reading the literature, and I realized that weight listing is not good for your heart. So it's actually it's not good at all on its own, but it's it's needed, it's necessary, but you know, let's see evidence. It causes out stiffness a lot of things. You know, there's an adaptation. What you

want to lift very heavy objects. Your body adapts by doing things that are not helpful full lock term survivals. You need to compensate, and how do you compensate instead of just walking something a little more intense than walking, but not very intense. So here you have a vart veil, a lot of a lot of Arabic exercise low grade, and the occasional full body weight list. So just a variation on what I was doing. But you've got to

follow the otherness. I mean, the literature is stark that wait listening is not follow your heart, but that because it causes some adaptation by your heart that I'm not very good, causes lock term heart failure. And if you that by doing overcompensate by doing Arabic exercise, which is more naturalistic than you got both. I think flexibility is also a sort of underrated component of that as well.

But so I'm trying to think how to take it from here, and I'm very I'm going to try to avoid doing a lot of media navel gazing in this interview. But there is one question that I have to ask, just because I think it feeds in to a wider point about your online presence. But why did you block me and Joe and why have we been unblocked? I think a largely a lot of my blocking is not

done by me directly, by some automated boss. You had to understand that I got besieved by finance people, and you know that time don't get wrong with the general finance ground and by the crypto people, particularly after I took positions that are not very favorable to the crypto people. So you do block and cleanse up my sheet. Just block things. And I had someone who happened to be in the Ukraine at the time helping me. You know, do automatic blocking. I believe, believe it or not the

best thing to do with your Twitter feed. Just block groups because then then things become clean. Oh, I believe it for sure. So so unfortunately that you guys, But then I blocked people when I realized went too far. Thank you. So the first reaction is called gianni gativa. It's like you close the door and then you let in those you think that we're excluded or will not degrade defeat. That's a great answer. Doesn't have anything to do with disagreements. It has to do with the style, right.

But I think the people that that annoy the most of those are lippicks because of diversity conversation and lippicklers are I meantrolls. You can see the trollstickers people don't

notice the liptickage. Well, since you mentioned it already, let's just start with the crypto thing, because what's interesting to me about your disagreements with crypti people, bitcoin maximalists, etc. Is many of them, i think, looked up to you and they read antifragil and that right, and they read anti fragile, and they read fulled by randomness, and they read the black Swan, and that informed them that it's like, okay, we need to adapt, get it, get into this currency

that's very hard, that is anti fragile, Bitcoin the ultimate anti fragile currency. And so to their mind, they were many of them looked read your work and this is what they took away. And so what did they get wrong? Okay, So the first thing is that my work is first about avoiding tailor risk. Basically, if we want to do well, we must first survive. And it's not like a separable condition.

So one is going to avoid fragilities. And it turns out that as much as a federal reserve induces for agility in a system, and as mush as I dislike Bernachy, it turns out that bitcoin is a lot worse. It is itself a very fragile commodity, and it got of course cartaeiled, you know, Russia people, it's a very small level of people start controlling it, and it's fragile in a sense that if one day, if the you know, all the miners go to the beach for one day,

for an hour, it's god. Whereas if you have gold, I have a necklace here. The gold necklace, if I leave it on the gaund for one hundred thousand years, will still be gold. It may its financial value, but its physical quality will will not be altered. Whereas bitcoin it's just a book entry that needs to be maintained and would collapse. But a lot of other things promised about bitcoin that are not delivered, like it was meant to be a transactional thing, don't out to be a

speculative item. So I realized quickly that I made a mistake with bitcoint like I made a mistake by avoiding a Roman exercise, and of course I was I was at some point an owner of bitcoin. I publicly said that I made a mistake, and I went short bitcoin later, but it was not good for the system, and I tlied that the paper that was published from quantity to finance, where you look at hey, what's the currency, what's the inflation hedge? What is a refuge investment? And Bitcoin satisfied

none of these. So people, of course they get angry because because they had a feeling that they're going to believe you for shading your mind. They don't realize that I'm not selling that, you know, a recipe, I'm selling process. Certo is the way of thinking, way approaching things, and if you realize that something is fragile, immediately do something about it. So and remarkably, it's the same fluster of people who read anti fragile and thought that, hey, you know,

what doesn't kill you makes you stronger. That's that's get affected with the vaccine was that was covid, and let's ignore covid. We're going to make a stronger it's going to kill a few people. So that kind of eugionism and that kind of stuff I realized was an imficult

to me, profoundly indamicul to me. So such the same crowd that was denying COVID saying, hey, you know, it's just a virus, it's going to make you stronger, didn't realize that they explained an antifragile jumping one foot will make your bones stronger, but a thousand feet will not

help you too much. I mean it may help you know, the caretaker and people who organize funeral, but not not you that so, so I realized very quickly there's a cluster of people who were most into Bitcoin is a very point, very naive reasoning, extremely naive reasoning thinking, hey, you know, it's an inflation hedge. As we saw it

was a reverse inflation hedge. But the good thing that I figured out quickly to pull out in time, in sense that it lost its value and we realized there was inflation in the same group of people who were into conspiracies, all generals conspiracies. And that's not the crowd I want that. That's not the crowd I want to be associated. You mentioned that bitcoin was bad for the system, and I think that's sort of the connective tissue that leads into some more recent events with the banking system.

But can you talk a little bit more about that, like how do you see bitcoin? Actually, yeah, okay, let's look at why why we have bitcoin and why we are talking about the point. Effectively, it's the incompetence of I want to call Bernancism, you know, because sometimes you got to put name to a tendency. That the federal

reserved job is not to do structural things. That fellow reserved job is to engage in monetary policy and typically the short term monitoring policies to and their mission was an asthment and will be the stability of the United States first. So their job is too ease. When when economic condition and you know, threat inflation, and when when a hard economic condition, but that you cannot replace a

structural policy with a moneitoring polst. In other words, we had a problem was debt, and you can't solve that problem by putting interest rates at zero for a long time, or if you put interface at zero, it should be for short periods of time while looking for an alternative. So when they did for fifteen years, they put interface at zero, and that that does create tumors were the first.

So let's say the root of everything is interest rates at zero, which ironically created the point and of course created balls. Is h I would say posy like class of investments, because there's no time value of money anymore. Your discount you don't know what even you know what discount rate is. And we created generation of people who don't know the cost of funds, cost of money. So and anyone with fifteen years of experience in finance, you know,

and no more doesn't know anything about interest rates. So interest rates as zero create stumers. Read estate values go up dramatically because of custom holding mansion is close to nothing or was closed nothing. And created a class of investment called you know, VC funds. And these were in the old days were promising you cash flow, okay, cash flow. Today they're promising you around the funding where you're going

to sell it to someone else. So we moved from the classical cash flow model or even if you're negative cash flow, the promise of future cash flow to the promise of selling the company to someone else. And you have millionaires in Silicon Valley who you know, got rich from companies that never made the penny. So that's that's the background. And of course you're going to have a story like the going take off because it doesn't cost

that goal. Since you mentioned it, I'm curious COVID specifically in your criticism of anti vactors, and I find that one of the things that I think is interesting, is it's not clear to me how you think about these problems because they're okay, the vaccine is fairly new, it seems to be relatively untested as a technology, and when there are other sort of scientific advantage that you've really

recoiled against. For example, I think you're very critical about GMO crops and you're worried about the tail risks posed by those. So can you talk a little bit about your framework and thinking about why is something like the covid vaccine you're comfortable with, whereas something like GMO crops

to you, creates an uncomfortable level of tail risk. Okay, so before we start, let's say that you're not you cannot compare vaccines to GMOs because vaccines are tested an individuals, so you can see the side effect individual GMOs would be a systemic they spread to the environment. And then also you're not thinking of the vaccine, you know, for because because you think it's that they stood or you know it's going to be pleasant. So we take it

the vaccine. We've got a plot the vaccine versus covid, and covid was not something benign, so comparing it's a risk management difference between two items and two things I'd like to mention here. The first one is that very rapidly, you know, I waited a little bit, and very rapidly I saw that I had very large number of vaccinated people and no side effects, and people say, well, we needed more time. They didn't understand that you can replace

sample size. Time was sample size in the sense that if it's something related to genetic states are going to take place, or something of the genetic nature, like cancer program, that it would be the equips that the large sample size compensates for lack of time. I actually overcompass because we have the illusion that after Hiroshima people got cancer about twelve and a half years later. That's not true.

Some people got cancer within a few months. But the distribution, there's a distribution because we need X number of mutations. Like when you go to Las Vegas. For an individual to win eight times in a row take decades years of waiting. But if you have a billion people in a casino, you're going to have that, you know, every hour. So this is where this is where very rapidly I realized that the vaccine that not really pose a threat of that nature, and I wrote technical comments of that.

But to go back to the pandemic, what would you know my thinking? You know, basically my specialty is fat tailed events. See, I've don't spend all my life dealing with that central problem. How do you do statistical pools for fat tailed stuff like masonic pandemic happened. I started publishing in that field because people didn't realize that you have to think differently when it comes to fat tails. You see, you cannot take averages, you shouldn't do ni

forecasting and get involved in a few polemical discussions. But published like seven or eight papers in ronals on on that, including masks. And I may have one on vaccine if people keep you denying the French or the risk defferential between vaccine and the disease. But there's a lot of stuff people don't get about the COVID. The first one, I would say that it is not something that affects

the old. It affects everybody in proportion for the mortality, so it's not particularly And otherwise if you say, okay, it's only in the old, then you should you should say okay, let's stop dealing with cancer, because cancer affects the elderly disproportionately, or let's stop carreology. It costs too much money. You know, Jim Bros. Don't need it because they're thirty eight years old. Um, it's the same. It's the same iselm. It builds us in proportion to age.

So in other words, if you your your mortality risk goes up by eight percent, regardless about the age of thirty. Of course above some specihold and that's not well understood. So it's not an old person problem. And as diseases not covid by itself. So the bunch of things people didn't get. But I you see, I was known initially by you other people for the Blacks soon as the author of full Barandimus, and that book was misunderstood. Initially I was saying that there is I'm not saying there's

you know, no skills, that there are no skills. I'm saying the world is more rather than you think. But I'm not saying it's all rival Well, actually I wanted it. Yes, let me finish one point. Vandom is connected to the idea. So one of the messages of the full barandomness is and we tend to be swayed by anecdotes, and I noticed that over time things got worse. I mean, the circle is sold I don't know, seven eight nine million copies world by But at the same time, and a

lot of people who made the same mistake. People are swayed by the anecdote. So so whether it's COVID vaccines, whether it's a nice story with a midcoin, whether it's stuff about elections, were swayed by the anecdote. So our world is becoming more complex requires more statistical sophistication, while social media is driving the best to the most primitive

way of thinking. Sorry to interrupted your trace. No, no, no, this is actually exactly what I wanted to ask you, something that I've actually always wanted to ask you for a long time. Is is there at tension between you know, you say in a lot of your works that we shouldn't trust experts necessarily you should be wary of you know, I think you call them either bullshitters or other other words. But but wait, but on the other hand, you know

it's something like the vaccine. I doubt that the average person has the scientific background to look at the literature and say, oh, this makes sense or it doesn't. And in that case, it seems like we should be trusting experts. So how do you square those two things? Yeah, no, I made in the black swan to answer your a precise question. Had to explain which fields in which field the expert as an expert, and it's which field the expert is what I call it the s met word. Okay,

And the difference has to do with fat delay. If the micro is much easier to microbs than microbs, so that lewis, the dentist is going to be an expert a dentist, the plumber is an expert at being a plumber, but the micro economists, we're not sure is an expert at microeconomics. And the same thing happens in medicine if the bologists were not really experts of what's going on because it's fatal, but doctor doctor and visual doctor is going to be an expert. And we're dealing with tim

tailed processes. When you look at the time series for vaccines and things like that, vaccine is it's a tailed, it's not a fat tailed one. So the that's the difference with GMO. So sim tailed was the sat tailed And of course it would be too complex to explain here, but I explained it in the Black Swan. It's a difference between the income of a speculator and the income of the dentist. One has winner, the winner they call effects.

The other one is more narrowly distributive. So this is where where I saw mainly a difference between experts and non actually later on and it's some more thinking and scanning the game, saying how can you solve the problem and the things The difference is scan in the game that if you have skin in the game, then you have survival, and then we know if you're an expert, or if there's any way to bust your claims okay and and make you exit the pool, then then of

course an expert will will have a filter eliminating pseudo experts and particularly those who represent risks for others. A surgeon who you know, does that surgery is going to ex the pool. So there's a mechanism and surgery, there's a mechanism economic life. A grocer who doesn't understand NAMA sheets or doesn't stand cash flow will go out of business. But there are places where the process is delayed, namely technology, namely microeconomics. Economics. I guess the difference. I keep going

back to the difference. Say your plumber is an expert at plumbing, but forecaster is not an expert that forecasting. And there are fields where you have a lot of b s, like for example, psychology, psychology or what I mean, economics are called not clinical the one that deals with biases and stuff like that, and there's all bs and they can't be caught, whereas medicine is is on firm grounds, of course, and it's not perfect. Medicine made a lot

of stakes, but it's fundamentally self correct. So I get the distinction. But I guess my other question is you yourself as a flaneur, and um, you know a thinker, you sort of you. You go from topic to topic to topic, and you know you say that you're my rule. Let me tell you my rule, right. My rule is I published in purely journal and the topics two professional.

And that's my problem with Peterson all the guys is that I speak about men that I have seven papers, and I mean more than the local doctor in medical uh topics, Okay, whether it's published in medical journals or published in other scientific fields. I talk about genetics, I have two published and two coming and genetics. Actually one published, one accepted, one and two coming in genetics. So I basically I never talked about the subject unless I engaged

the expert. And that was my fight with a lot of people. So so my idea is not necessary to publish a perio view journal. If you are in a practical profession, like if you're a truck drivers talk about trucks, you don't need to publish. But if you're sitting and then in every tower in somewhere, you need to engage the professional, not you know, not be an expert on just on Twitter. And that's my rule. And people don't

realize that I'm subjecting myself to that discipline. Well, so I got I did any papers after Blacksman eighty papers? Technical papers? Why not? Because you know, it's not for the image. It's because I require from others some kind of technical expertise before listening to them. Speaking of I guess bullshitters, and speaking of Twitter, and speaking of people who say a lot of things on topics that they either are not experts on or have not published in

a rigorous manner. There's Twitter, that's true, but there is a certain class of people that in the see, you have been going back and forth with venture capitalists for

several years now. Many of the prominent ones have fashioned themselves and these sort of like philosopher kings, waning on everything from tech to politics, to what the FED should do, to declining fertility rates in the West, and all these things that they're up and armed about, and they've gotten really loud about how banking works in the wake of

the failure of SVB. You seem to have a special place in your heart of disdain for many of these people, because, of course, your natural inclination is still believes that natural capitalists do a great job, that they contribute to society, that the strength of them that we have to whatever computer program we're us about, you know, for this podcast, that's the inclination. When you scratch, you realize that maybe maybe maybe that was a game, but the game has

changed dramatically. And you have a bunch of people who package companies. They're good at packaging companies, and of course the thing has public characteristics. And not only that, but they think that society old them something because we use an iPhone, okay, so so they have they had a feeling, you know what you're using an iPhone. Therefore, you owe me some things that were coming and they me up. Okay.

Plus a lot of these are libertarians, but it so happened that a lot of people are libertarians until they have the first brought out. So so DC, I mean, in principle, it's a very normal professional professionals, but you want to avoid the rent seeking by that profession as a whole. And this is why every profession, although you have reviewed with unpro in economics, you have to just make sure there's some accountability, external accountability or an adult

supervision from the outside. And it looks like dcs are not doing what they claimed to do. I mean, think of all these billionaires, and you realize that there are a lot of these billionaires are billionaires from funding. If Tracy and I started a company tomorrow, we put ten thousand dollars each, is it okay? Crazy? Well, put ten

thousand dollars. I think maybe I can afford ten ok So we put okay, so so so Tracy and I put in ten thousand dollars, and I have companies verse twenty thousand dollars, right, and then we decide to sell to Joe one percent of a company four thousand dollars. Guess what, Tracy, and now now are you know have three nine point some percent of who you know, our

pointy thousands became almost fifty thousand dollars. Joe, you're good for one k, right, I could sweat so exactly so, and then you have a friend who's going to spend another k to buy point one percent, and the company and so on. This is a lot of a lot of these party A lot of characteristics are president and a lot of systems. It's just you know, of course

there's value somewhere. They produce good stuff. We had a lot of recently a lot of the countries, but we have to be aware that there's a lot of smoke. And also also I realized that that game was fueled by low interest rates. Right. Well, so that is the general the sort of like the general theory, the general case against listening to a lot of these individuals on

every topic they wish to a pine on. Can you just talk a little bit about the specific particularly in the collapse of SVB and you've criticized several of them which we don't need to mention my name, but about their level of understanding of the banking system and finance and finance risks, etc. What do you you know, what do you think is it just a sort of bias sort of like you know the cliche there's no libertarians and a bank round or something, or is there a

deeper misunderstanding that many of them have about how the structure of the banking system works. Yeah, I mean, first they couldn't. I mean many of them understand the difference between losing money for credit invest for credit reasons or

versus losing money because of the term structures. You see that banks web made a mistake of investing Lockdome first of all, and that's pretty much the way we think about it universal that if you look at convex versus callcave investment, you really have to have deep misunderstanding of finance to invest very long to and bonds that pay you no interest because basically you have no upside and

all downside from there, you see. So so these banks are very fragile and they invested, and it's a current play that the US government has got to pay that debt and don't use it to think the praises of bitcoin because bitcoin suffered from it, and effectively bitcoin rarely when they built out the banks. So I'm given one example. But then again, let me tell you, when you become prominent, irresponsible for your words because you may influence others, right,

and that's my role. I mean, you can whatever I say in public about public in private about public matters. Okay, it's public, and I should be held accountable for all my mistakes. And I made a lot of mistakes, and they're accountable for a lot of other stakes. Well, you justus You've got to be self correctly. Just on the venture capital model. I mean, I take the funding point

and I wholly agree with it. But it seems like also one of the reasons that VC and tech investments in general became so popular during an era of low interest rates was that, you know, if you can't get a decent return from investing in traditional financial assets, then why not basically purchase a lottery ticket for the next Google or the next Amazon, or you know, even Bitcoin

at times has been described as a lottery ticket. Is there an overlap between trying to identify tail risks, which you know, almost by definition are unknowable and that kind of model of trying to purchase a lottery ticket for the next big thing, because it seems like both those two things you never really know what the next black Swan event is going to be or the next big

technological innovation. This is a big question. It's because people keep telling me you like to engage in the trades that have high probability of a small loss, a small probabilities loss. Okay, why don't you just buy a lostry ticket? And you want to explain the condition. The number one condition is still have positively expective return. You see that your met must have you must not be a turkey. In other words, by the lucky. It is completely irrational.

Long run, you're not gonna make any money. But if you engage in taylor Is trade. We believe that in myself, which is published a paper explaining option pricing fifty years after black trolls, to explain that a lot of people think these options are expensive, like expensive lockery ticket effects, because they have the long proble we made we made

the paper public. But the problem of the central problem that you should focus on expected value and a lot of places and to repeat that appeared to be negative expected value and finance effects positively effective value and vice versas. It's very rational to go buy to receive. He thinks that you the dollar resturnment's two thousand dollars, But I

thought it will happen. Now the story is oversold, and that was a low interest rate game because now people are going to focus on profitability and these companies may not survive. And if you buy, by the way, if you buy into a lot of it. DC has a lot of companies, So if you buy into a lot of companies, you lose that skewed attribute, so you no

longer have a symmetry with small losses big gains. If I invest on a million companies with small lost big games, okay, I would have studied resturns if I have positive effective retirement. What did Sam Bankman Freed misunderstand about positive EV Because my understanding is that him and his whole crew thought, well, huge risks were worth it if there's even a slight edge, if there's a slight positive EV And of course they

took the ultimate risk and it blew up. But they seemed to think that these risks were worthwhile because in part they wanted to make a lot of money, in part because they thought it was important to save the world. To make money to save the world from perceived threats, whether it's AI or anything else. What did he misunderstand about probabilistic thinking? Okay, thought, so this is it's great to talk about him, not because it's sim but because

of that group of people. Yeah, we have this entire collection of the young individuals who think that the past does not exist. See, when I was a trader in my twenties, I picked the brain every older trader who had survived. And that was not just me. When I look back, I see people who have survived, same attitude. So these people make tabla raza. And I remember writing comments.

I think my friend Tom Holland who said the Romans had no cult of the youth, and that was we have a cult of the youth, and they have a cult for themselves. And to me, being young and finance is necessarily right bad thing. Ye, simply because of lack of experience, but also that culture. So in the world they thought that if they understood the blockchain, they did not need to understand finance, and so that's the root

of the problem. The root of the problem is they think that finances computer program finance has vastly more picture than that requires a lot more as the introspection when you when you when you will pick a decision to consider many many, many more factors. Finances, as you know, very complicated. This is like what say science is hard, to say finance is harder. And there's a fortunate cookie approach to finance simplified fortune Qikieff. And it will channelize

tons of people. And you know, many of them became like him, paper billionaires, and now they're going will end up like him, living in the basement because they have no skills programming whose TRAGEDYDP is a skill that's not longer going to be in high demand. So such a tragedy. It's a tragedy. It's much more general than than what he mists the general approach. We don't need this. I mean,

they're elementary mistakes these people make. When looking at time series, for example, you look at the point if you bought it four years ago, that these returns. Yet that's not how we look at investments. We look at big two valued drawdowns, the structure of drawdown, because you're not going to go back in a time machine and buy four years ago. You're buying now and you have to worry about the next four years. Not the past four years. So they don't understand how to present returns, how to

compare returns, how to discuss inflation. Basic things about monetary policy are missed. Talking about someone you know, that age group, educated, supposedly educated and making mistakes that I think a clerk who you know, or trainee you know and you know trainees, that's their main function is to serve often in the training room that trainees you know would would would we would know immediately mistake. So the world has lost in some kind of sophistication and we're going to get it

back this evolution. These guys will go bust, and those trains and was more respective for historical understanding will prevail. So in the end the guys who last word and the oldest investors around, like one buff It and Charlie Lander. How is universal position nowadays? Talk to us about you know all these ideas, how are you putting them into practice? Okay?

The only the thing I would say about universa is that in twenty twenty three, the position in this donal to the one in twenty thirteen and identical to the one will have in twenty fifty one. Okay, So it's my cycling allows me to survive that long. So in other words, we are providing a structural service with portfolios to prevent blow ups, to eliminate that tail and for us, just like blocking noisy people on Twitter and has a Twitter, eliminating your tail risk allow you to make any mistakes

you want for your investments. A lot of people seem to intuitively like the idea of tail risk funds buying protection and you know, for the probably for the reason you like. It's like, yeah, we're all going to make mistakes, but I want to sleep at night, and so I want to have some sort of hedge or something like that, and you know, buyputs or whatever it is. But that

doesn't seem obviously like that's that's costly in the short term. Yeah, and there's no free lunch, right And there's no free lunch right because no no, no, no, no, no, no. That's our Our problem is that if you buy what we call the suffers, but you might go give your money to charities. And I can give you some charities. There's one on level opally these money. I can give you the name. The problem Taylor is scheduling is that just like Sam Banking Street thought pay finance was easy

because he figured us with technical things. They had experient let's do it. The devil is the new execution, very very complicated, very very complicated, and it requires a lot of experience. Conceptually though, setting a conceptually conceptually, how is it? Yeah, it's a hugely difference because the return you're going to have when you I mean, I'm not supposed to top return. Okay,

we don't have to. I'm going to say conceptually that you can look at everything, but there is a huge difference between the naive Dale Hedger and the Experiencedale heager. And leave it at that. Because sizing there as a lot of things involved, particular liquidity, that what how you buy because a difference between lived and ask for options. This bosphorus just practically you know, you mentioned the difference

between experienced and naive tail risk catchers. But practically is it easier or harder, or cheaper or more expensive to buy you know, really big tail risk insurance nowadays? Like how has that process actually evolved since the nineteen eighties? For instance, I think that people are even more naive today than they were in native eighties or not. The people are even more naive than that they were after stuff market crash. I don't think that we have enough

financial certification. Maybe short term arbitragers disappear, but things are more structural, like how the price tail risks. People are very naive. Plus they quite don't quite people also don't spend the following argument, it's your own money. You understand very well that you don't want to you want to sleep at night, and there's some things that we don't want to lose all their money. And it's like white people never buy a house unless they can have insurance

on it. To clip the house represents three four times their networks. You don't buy a house you know before making sure that if it's there's a fire, you're not going to have a husual alability. And actually very often when you drive, you're probably needed to have a tail insurance. But then when it comes to portfolios, those who crede their own money or who invest their own money will find it natural to say I'm not going to invest on this, and a stail risk is expensive vestment. I'm

not going to invest in that. And then you have a second category. People are paid to invest and you say, oh, well, this is expensive. I'm going to do that. Of course, it's not your money, and that's that's the skill of

to be a problem. Speaking of tail risk, this week that we're recording, several people sound an open letter saying that we should halt development of technologies along the lines of AI, and that there is an imminent risk, at least some people believe of these computers becoming so powerful that they wipe out all living things on Earth. Sounds like the ultimate tail risk. I'm not going to ask you how you would hedge against that, because I doubt that would be a scenario worth hedging for. But is

that a tail risk in your view? Are are we on track to develop computers that will eliminate life as we know it? I don't think so. Number One is people are worried that ship will put them out of business. That's why to issue these calls. I'm worried about that. Yeah, well, I mean GP is not running red lights, traffic lights, it's not running things that are consequential. And when AI starts running these things, and we'll talk about it, but

for the time being, we'll talking about development. And it looks like it's a problistic machine no more nor less with the defects of probabilistic machines. And the reason I talk a little bit about AI because as the statistician,

it's just nothing but nonlinear statistics. That's what is right, and it's the statistical device, and it worked a statistical device, but we know the shortcomings and statistical machineries and it has all the so I'm not even away nobody's going to use that I for things beyond automated searches or it just automates a lot of things that can be automated. And unfortunately a lot of people feel threatened because they see the discourse by by by the chat GDP very

similar to their own, because it's a bullshit. I think this would be so far. I don't see anything as far as society, I don't see It's not like with the pandemic way to see something spreading. What's the tail

risk that you think investors are most underestimating nowadays? Okay, that's the fact that zero interest rates are very unnatural and if you raise rates to a normal level, and what's normal levels, say between forms six percent said, you know would like to have higher interest rates, but there are some pressures you like to have a higher base because if you're at four percent interest rate, then lower it. If you have a crisis, you can you can go down,

you can go up. But if you interestrate at zero and you have further crisis, you don't know what to do. So or at least you can play with interest rates, we have to look for something else suggesting on measures. So I think that if you look at interest rates higher than three percent of term as a discount rate, then equities aren't trouble because I'm not priced for that. So this is where where you're gonna look at it.

You can look at structurally, the equities aren't trouble. But I think that many things will you know, the equity would be the last you're all say, there's a lot of things that would be in trouble. First, I have two final questions. One is very short, do you still eat squid ink pasta? And where's the best squid in pasta? These are the important question. Where's the best important? Yeah? Yeah, if you want good squil in pasta. If you want good squitt in no pasta, you'll go Lebanon. There's no

the major recipes are the best. And if you want a good squilling pasta. You got to go to sat okay if you want squilling results though northern Italy. And then if you you know, then I would say lower on the list of Spain, you go for the arrows, the bay. You know, the black so the Black rides so so I New York yere I you know, I don't recommend too much, but I can cook. I'm learning

to cook it. And it was in two three years to produce the Descent dish Well, Tracy, and I would love to do a live video episode coming over to your house sometime and having you prepare us a squid in dish in three years twenty see times. Yeah. Well, so then one one last question, and I really appreciate the time I have to say if I'm if I'm

being just like totally blunt. I know that you say that many of your readers of Anti Fragile and some of your other works misunderstood your work, and I get that, but I also think, I mean, if I'm just being blunt, I think like your tone has changed. You seem a little less bombastic than previous times we have chatted. You yourself have gotten let me no, maybe, but it's because you agree with more because there's always a spile us.

If you agree with the message, all right, that's fair to see you you you you give a lot of flag to the messenger. And yeah, we're enough fair enough that no perfect question. So that's what one thing is that I had. Let it to go back to antifragile, it's just a brief summary. You know what it means. I means that we need stressors, we need low grade a lot of low grade stresses, let's see. And and the companies need to encounter a few problems because you

up regulate and you get stronger after that. But it doesn't mean that we should tolerate tailor risk. It's all conditional on a volume tail risk. And and and if you get stronger jumping, you know, one foot Howard leaders are going to kill you. So just just don't take the idea too far. It's very local. That's the idea of anti fragile. And an antifragial investment is now something

called antifragile by some web thinker. You know. Antifrassial investment is something that we acts very well to the misfortunes in the market. And then definitely a lot bitcoins, let's see Sam Nicholas till This was a thrill. Thank you so much for coming on. And I'm looking forward to dinner at your house in twenty twenty six and another episode in Yeah, and we'll come anywhere, Tracy, and I think, Tracy and I would you would love to visit you

in Lebanon. We'll bring a crew, we'll film it. It'll be great, and then we'll have you back on again in fifteen years, you know, assuming the AI hasn't killed us all. But uh, thank you so much. This was a real, uh real pleasure. Thanks, thanks very much, very much, Thank you. Thanks the same. I appreciate it so Tracy. The big question is did the seam change or just suddenly he says things that flatter our biases, so suddenly we perceive him to have changed. I mean, I imagine

it's a bit of both. But I think my first of all, I enjoyed that that was so fun a lot. But secondly, I think my big like how I learned to stop worrying and love the teleb moment, is you kind of have to realize that a lot of the criticisms and things he says about others kind of apply to himself. Which doesn't necessarily which doesn't necessarily make them untrue. They're still very valuable insights. But it's either you know, you grasp that and it frustrates you enormously, or you

just roll with it and appreciate the insights nonetheless. And I think I'm in the stage of my life where I'm just going to roll with it. That's so funny, especially because he specifically is like, no, no, no, I published in academic journals. I am not a all purpose bullshit or you know. One thing that I think throughout and I have to say for years a point of his that I've always whatever cycle he's in, whoever hates him at a given moment, that I've always respected of

that I've always thought it was true. It is a point about the difference between a plumber and an economist, or the difference between a doctor and an epidemiologist, which I think is like a really like insightful true point that like, you know, a plumber is an expert on plumbing. They they've fixed a pipe or a toilet, or a sewer system or a shower system thousands and thousands of times.

There is very little new that you can ever show a plumber that they haven't seen, and there is a certain level of skill set and ability to solve things that one can only get after having fixed a lot of toilets or pipes, which and that's why there's the whole apprenticeship thing. And I think that is like a really useful heuristic to talking to anyone, which is like, are they really an expert, have they done something that's built up deep expertise, or are they just sort of

like kind of winging it right. I think that's a completely valid point, and there's only so much expertise that I think one person and can really have. You know, you can't expect people to be an expert in everything. But on the other hand, you know, he talked a lot about the world becoming more complex, and I think this is where the instinct comes to try to understand more and more things, because yes, a plumber, he's seen many many clog toilets and he can probably fix them

in his sleep. But then when something unexpected happens, like for instance, COVID and a supply chain crisis, that impacts his ability to get I don't know, those little like toilet pump things that seems to like that's where the instinct to try to understand the whole comes from, and the irony and all of this is that, like, that's a lot of what Teleb spends his time doing, right, is trying to identify and presumably positioned for these sort

of unexpected risks. You know, it is interesting the difference between in his view of the vaccine and GMOs, one being systemic one bit, the other being the trials of thousands and thousands of people. Is of course and intuitively there's you know, statistics, but just a is a substitute for time in the way that GMO crops. There's no way to shortcut the process of like, well, what is going to happen to the entire ecosystem of agriculture over the next one hundred or a thousand years, because we

just literally haven't there's no way to substitute that time yet. Anyway, I really liked that conversation. I was sad during that period when to let block me and I'm glad we are both I'm glad we are both unblocked because I am very enjoying I'm watching I'm enjoying watching him his cycling journey. I'm enjoying watching his fights, and I just think he's an interesting guy absolutely, And I guess I'm looking forward to having squid inc Yessa in three years time.

All I can say is there's gonna be a lot of pressure though, because it better be good after three years of study. Well, you know, the thing is he's been talking about squidding forever and so the fact that he himself says it's going to be another three years before he's ready to like cook it, it's like, uh, you know, he's a he's a journeyman. It sounds like he is himself an apprentice or journeyman squid ink chef

who is not there yet. Maybe we should do a come Dine with Me style cook off each of us, each of us attempts to cook squid ink pasta in a different location, and then we rate each other. All right, I'm getting ahead of myself. Shall we leave it there? Let's leave it there. This has been another episode of the Odd Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Wisent'tal. You can follow me on Twitter at the Stalwart. Follow

our guest on Twitter if you're not blocked. His handle is at n nd taleb. Follow our producers Kermen Rodriguez at kerman Ermine and dash Bennett at dashbot. And check out all of our podcasts under the handle at podcasts. And if you want more odd Lots content, go to Bloomberg dot com slash odd Lots, where you can find

trans scripts of blog newsletter. And if you want even more, we have a really fun community online on discord where a bunch of listeners hang out twenty four seven in chat about things like markets, finance, economics, energy, water, AI and all the things we talk about. Go check that out discord dot gg slash oblocks of the invite link. It's really fun. I've been spending a lot of time there. Go hang out. Thanks for listening.