1 00:00:02,480 --> 00:00:16,600 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:18,000 --> 00:00:21,800 Speaker 2: Hello, Odd Lags listeners, You are listening to another episode 3 00:00:21,840 --> 00:00:24,920 Speaker 2: that was recorded live in New York City at our 4 00:00:25,040 --> 00:00:28,200 Speaker 2: event on June twenty sixth. This time it's with the 5 00:00:28,240 --> 00:00:32,920 Speaker 2: one and only Nassim Nicholas Taleb, distinguished Scientists and advisor 6 00:00:33,000 --> 00:00:34,360 Speaker 2: at Universa Investments. 7 00:00:34,680 --> 00:00:37,199 Speaker 3: Yep, we talked to him about how to live a 8 00:00:37,240 --> 00:00:41,960 Speaker 3: good life in a time of immense volatility. Take a listen, Nasseine, 9 00:00:42,000 --> 00:00:44,239 Speaker 3: what's your definition of a good life? What should we 10 00:00:44,280 --> 00:00:45,240 Speaker 3: be aiming for? 11 00:00:45,440 --> 00:00:45,599 Speaker 2: Uh? 12 00:00:47,560 --> 00:00:51,720 Speaker 4: I mean a lot of people think that we're programmed 13 00:00:51,720 --> 00:00:54,000 Speaker 4: to be happy and stuff like that. In fact, we're 14 00:00:54,080 --> 00:00:58,960 Speaker 4: programmed to feel useful. That's a good life. Or I mean, 15 00:00:59,000 --> 00:01:01,760 Speaker 4: you don't have to be march to feel useful. As 16 00:01:01,800 --> 00:01:05,040 Speaker 4: a matter of fact, martyrs go too far and if 17 00:01:05,080 --> 00:01:08,720 Speaker 4: you look at their death typically in history, you realize 18 00:01:08,720 --> 00:01:11,560 Speaker 4: it could have waited a decade and the problem was 19 00:01:11,720 --> 00:01:15,720 Speaker 4: solved the self myself, right, So think of all the 20 00:01:15,760 --> 00:01:20,040 Speaker 4: wars and hey, but the Vietnam War to care itself 21 00:01:20,720 --> 00:01:24,319 Speaker 4: or the rether so whatever. So let's forget about martyrdom, 22 00:01:24,400 --> 00:01:26,759 Speaker 4: except of course, in narrow cases where you save someone. 23 00:01:27,160 --> 00:01:29,840 Speaker 4: So the ideas to be useful to others. And then 24 00:01:29,840 --> 00:01:34,440 Speaker 4: the idea is, you know, to share your mistakes as 25 00:01:34,480 --> 00:01:37,920 Speaker 4: you grow an age, to share your mistakes with society 26 00:01:38,480 --> 00:01:41,760 Speaker 4: so they can build on it. That's my idea of 27 00:01:41,800 --> 00:01:44,039 Speaker 4: a good life. For a lot of people, good life 28 00:01:44,120 --> 00:01:46,039 Speaker 4: is headonic in the sense that they have a chef 29 00:01:46,080 --> 00:01:50,200 Speaker 4: flown in from Europe to eat some complicated food that 30 00:01:50,320 --> 00:01:54,840 Speaker 4: our friend here you know, would not approve be you know, 31 00:01:55,040 --> 00:01:59,880 Speaker 4: not nonstakes and complicated things with bland names. And so 32 00:02:00,160 --> 00:02:04,160 Speaker 4: that's that's a hedonic approach to things. Mine is you 33 00:02:04,200 --> 00:02:06,960 Speaker 4: feel useful, So whether you have a family and you're 34 00:02:06,960 --> 00:02:09,200 Speaker 4: providing for them, or if for a lot of people 35 00:02:09,240 --> 00:02:11,800 Speaker 4: who don't have a family yet or may not have 36 00:02:11,840 --> 00:02:15,440 Speaker 4: a family, because in the past most people didn't have 37 00:02:15,440 --> 00:02:18,480 Speaker 4: a family. A lot of people were orphans, a lot 38 00:02:18,480 --> 00:02:22,080 Speaker 4: of people were had had children who then survive. So 39 00:02:22,639 --> 00:02:26,000 Speaker 4: the idea is to be useful to the community in general. 40 00:02:26,800 --> 00:02:29,480 Speaker 2: So we talked about this in the market context at 41 00:02:29,480 --> 00:02:32,760 Speaker 2: the very beginning, But does you know I feel this 42 00:02:32,880 --> 00:02:37,520 Speaker 2: poll to basically always look at my phone to monitor 43 00:02:37,520 --> 00:02:40,400 Speaker 2: the latest headlines. Sometimes I don't think like I'm the 44 00:02:40,440 --> 00:02:42,480 Speaker 2: best parent because I'm looking at my phone and I 45 00:02:42,480 --> 00:02:45,600 Speaker 2: should be with my family. As you mentioned, how do 46 00:02:45,680 --> 00:02:51,040 Speaker 2: we be useful? We're you're bombarded any time. We're just 47 00:02:51,080 --> 00:02:54,280 Speaker 2: being bombarded with events beyond our control. 48 00:02:54,400 --> 00:02:57,560 Speaker 4: Okay, yeah, but but you're we're better off than we 49 00:02:57,560 --> 00:03:03,600 Speaker 4: were today forty years fifty years ago before many were born, 50 00:03:03,720 --> 00:03:07,960 Speaker 4: may perhaps even new right, So you don't realize that 51 00:03:08,000 --> 00:03:11,520 Speaker 4: we spent about a century in front of a TV 52 00:03:11,600 --> 00:03:17,720 Speaker 4: set or reading papers, where you're receiving end but not 53 00:03:18,160 --> 00:03:21,400 Speaker 4: providing anything in return. So it was a centralized information 54 00:03:22,480 --> 00:03:27,720 Speaker 4: era that started, you know, was modernity, and you realize 55 00:03:28,080 --> 00:03:30,400 Speaker 4: you succeed the families eating their dinner in front of 56 00:03:30,400 --> 00:03:34,360 Speaker 4: the tea set. Basically you're receiving information, whereas organically in 57 00:03:34,400 --> 00:03:37,760 Speaker 4: the past, the way we dealt with information was by 58 00:03:37,800 --> 00:03:42,480 Speaker 4: trading it. It's like Twitter. You you give information, you 59 00:03:42,560 --> 00:03:46,960 Speaker 4: receive information. So you go to the barber, someone gives 60 00:03:47,000 --> 00:03:49,560 Speaker 4: you information, and then you go to buy fish. You 61 00:03:49,600 --> 00:03:53,240 Speaker 4: give the fish smonger information and then rumors start going. 62 00:03:53,360 --> 00:03:56,080 Speaker 4: So and now we're close to that period because you're 63 00:03:56,120 --> 00:03:59,720 Speaker 4: not just receiving stuff, you're also tweeting. You knows, although 64 00:03:59,720 --> 00:04:03,800 Speaker 4: you're piles I'm sure tells you not to tweet. That's correct, 65 00:04:03,960 --> 00:04:06,040 Speaker 4: that's okay, it's true. 66 00:04:06,080 --> 00:04:08,600 Speaker 3: When we're trying to get Joe's attention, send a d 67 00:04:08,840 --> 00:04:10,840 Speaker 3: M respond. 68 00:04:10,720 --> 00:04:13,080 Speaker 4: I'm sure he's tweeting. So you're feeling you're not just 69 00:04:13,200 --> 00:04:17,159 Speaker 4: receiving noise, but you're crazy. I'm contributing. I'm exactly to 70 00:04:17,240 --> 00:04:17,599 Speaker 4: the noise. 71 00:04:17,680 --> 00:04:19,520 Speaker 2: Thank you so very validated. 72 00:04:19,720 --> 00:04:22,920 Speaker 3: Wait, but do you personally enjoy being on Twitter? Because 73 00:04:22,920 --> 00:04:25,359 Speaker 3: I read some of your tweets, and you know, sometimes 74 00:04:25,400 --> 00:04:26,360 Speaker 3: you seem a little angry. 75 00:04:26,839 --> 00:04:29,960 Speaker 4: No, a little I we're tweeting now in front of 76 00:04:30,000 --> 00:04:37,400 Speaker 4: all of you, the tweets would look angry, but my face. Wait, 77 00:04:38,120 --> 00:04:41,600 Speaker 4: I'm often giggling when I'm tweeting. All right, I'm often giggling. 78 00:04:41,800 --> 00:04:47,560 Speaker 4: So the idea is to separate your your public persona 79 00:04:47,720 --> 00:04:49,239 Speaker 4: from your private life. 80 00:04:49,320 --> 00:04:51,640 Speaker 2: By the way, before we forget, before you leave tonight, 81 00:04:51,760 --> 00:04:54,160 Speaker 2: someone DM me and said can you please ask? And 82 00:04:54,200 --> 00:04:55,800 Speaker 2: the seem to unblock me on Twitter. 83 00:04:56,160 --> 00:04:59,120 Speaker 4: So I got these all the time, probably. 84 00:04:58,760 --> 00:05:02,320 Speaker 2: The remind me before you it seemed like a nice guy. 85 00:05:03,080 --> 00:05:05,479 Speaker 4: They all say, oh sorry, I had a drink or 86 00:05:06,360 --> 00:05:09,560 Speaker 4: wish to actually because of bitcoin, because I chained blocked. 87 00:05:09,839 --> 00:05:13,200 Speaker 4: When you have a smear campaign, you chain block, so 88 00:05:13,279 --> 00:05:19,080 Speaker 4: the friends if someone bullies you, or block the friends 89 00:05:19,680 --> 00:05:22,640 Speaker 4: as well. It was possible at the time. 90 00:05:22,880 --> 00:05:26,680 Speaker 3: Wait, how many people here have been personally blocked? Find 91 00:05:26,680 --> 00:05:27,599 Speaker 3: the seemed to lab. 92 00:05:30,200 --> 00:05:36,400 Speaker 4: Not that many, not that many, A small number. Because no, no, no, 93 00:05:36,440 --> 00:05:39,400 Speaker 4: because I stopped I stopped a couple of years ago 94 00:05:39,480 --> 00:05:43,360 Speaker 4: from using the chain blocker one because it had a 95 00:05:43,360 --> 00:05:47,880 Speaker 4: lot of type to error that the false positives. And 96 00:05:48,560 --> 00:05:52,960 Speaker 4: the other reason is because when Elon took Twitter, he 97 00:05:53,120 --> 00:05:58,440 Speaker 4: banned these uh bots, so so they can't operate anymore. 98 00:05:58,440 --> 00:06:01,359 Speaker 4: You got to manage like the third party. Yeah, exactly 99 00:06:01,400 --> 00:06:04,359 Speaker 4: if I could use to block someone their friends, the 100 00:06:04,400 --> 00:06:06,120 Speaker 4: friends of their friends, the friends and friends of the 101 00:06:06,200 --> 00:06:07,479 Speaker 4: friends and all of that. 102 00:06:07,960 --> 00:06:26,480 Speaker 2: So are you surprised that in a year of just 103 00:06:26,520 --> 00:06:30,880 Speaker 2: like unbelievable headlines seemingly day after day, multiple wars going on, 104 00:06:31,200 --> 00:06:33,560 Speaker 2: not to mention the trade war and all of that 105 00:06:33,800 --> 00:06:37,360 Speaker 2: everything else, doge et cetera, that the markets are not. 106 00:06:38,839 --> 00:06:42,039 Speaker 4: There. Let me compose a tweet that maybe I'll post. 107 00:06:42,800 --> 00:06:50,240 Speaker 4: Is for Trump one. Okay, Trump one was taken literally 108 00:06:50,520 --> 00:06:56,640 Speaker 4: by his enemies, by his uh and metaphorically by his friends. Okay, 109 00:06:57,000 --> 00:07:01,120 Speaker 4: Trump too is taken metaphorically by his enemies and literally 110 00:07:01,120 --> 00:07:05,279 Speaker 4: why his friends explained. So whatever he's saying now he's 111 00:07:05,279 --> 00:07:08,720 Speaker 4: pretty much doing. Did you believe that he was gonna 112 00:07:08,839 --> 00:07:12,000 Speaker 4: start these tariffs? They make no sense. I mean, it 113 00:07:12,160 --> 00:07:15,600 Speaker 4: makes sense to get elected in Pennsylvania. But but I mean, 114 00:07:16,120 --> 00:07:18,520 Speaker 4: but it's not the kind of thing you do really 115 00:07:19,080 --> 00:07:21,120 Speaker 4: And and it turned out he meant it. It was 116 00:07:21,160 --> 00:07:27,240 Speaker 4: not just you know, a vague, it's really an order metaphor. 117 00:07:27,280 --> 00:07:30,560 Speaker 4: It was real. He wants tariffs. So maybe he wants 118 00:07:30,560 --> 00:07:34,760 Speaker 4: to destroy the American economy. Maybe that's his wish, and 119 00:07:34,800 --> 00:07:39,040 Speaker 4: you can probably put a dent and yeah, but at 120 00:07:39,080 --> 00:07:41,800 Speaker 4: all time, sorry the stock market. First of all, you 121 00:07:41,880 --> 00:07:44,840 Speaker 4: have to separate the health of American company. I get 122 00:07:44,880 --> 00:07:49,520 Speaker 4: that from the income of the American who went to 123 00:07:50,080 --> 00:07:53,119 Speaker 4: stop and shop or is the thing in your area 124 00:07:54,040 --> 00:07:56,000 Speaker 4: that whole food? You guys go to Whole Food, but 125 00:07:56,080 --> 00:07:59,080 Speaker 4: normal people go to Costco whatever. And then you look 126 00:07:59,120 --> 00:08:02,440 Speaker 4: at your bill, right, and the bill went up practically 127 00:08:02,520 --> 00:08:06,760 Speaker 4: for everything, and their income did not. And text breaks 128 00:08:06,760 --> 00:08:09,480 Speaker 4: to come are not going to help those who don't 129 00:08:09,480 --> 00:08:13,560 Speaker 4: shop at hole food because it's the the poor people. 130 00:08:13,840 --> 00:08:16,280 Speaker 4: You don't pay taxes anyway. So you're not going to 131 00:08:16,320 --> 00:08:19,400 Speaker 4: get a break from that. So the idea is there's 132 00:08:19,400 --> 00:08:23,120 Speaker 4: a lunacy in these terairs. I can understand that we 133 00:08:23,160 --> 00:08:28,360 Speaker 4: need to protect pharma. We have some strategic interest in this. Okay, 134 00:08:28,360 --> 00:08:30,040 Speaker 4: we'll protect the industry. You want to make sure it 135 00:08:30,080 --> 00:08:33,559 Speaker 4: don't depend on China for other things. But it's a 136 00:08:33,640 --> 00:08:39,400 Speaker 4: lunacy to try to switch with four percent unemployment in 137 00:08:39,440 --> 00:08:46,680 Speaker 4: America plus or minus from high margin. You guys are 138 00:08:46,720 --> 00:08:49,959 Speaker 4: all hard margin, all right, to low margin or high 139 00:08:50,000 --> 00:08:52,760 Speaker 4: margin audience. Yeah, we have a high margin audience to 140 00:08:52,880 --> 00:08:56,880 Speaker 4: low margin, right occupations. So now we're going to make socks. 141 00:08:57,559 --> 00:09:01,720 Speaker 4: You mentioned the high margin, so it's making making films. 142 00:09:02,320 --> 00:09:05,800 Speaker 4: You're gonna make socks. And and then also misperception, the 143 00:09:05,840 --> 00:09:11,440 Speaker 4: whole process, a lot of things in basic you know, 144 00:09:12,640 --> 00:09:17,640 Speaker 4: trade accounting, like they SAP, they're ripping us off. I mean, 145 00:09:17,679 --> 00:09:21,520 Speaker 4: I'm a dentist, all right, and I go buy my bread. 146 00:09:22,000 --> 00:09:24,160 Speaker 4: It's ripping me off, all right, I should make my 147 00:09:24,160 --> 00:09:27,360 Speaker 4: own bread. And then the pressure for the bakers should 148 00:09:27,360 --> 00:09:30,640 Speaker 4: be a dentist. So the whole, the whole idea not 149 00:09:31,880 --> 00:09:34,880 Speaker 4: it doesn't stand on. And then plus they have you know, 150 00:09:35,080 --> 00:09:39,040 Speaker 4: someone is not very intelligent or not very skilled, and 151 00:09:39,080 --> 00:09:42,000 Speaker 4: you can detect that at it's like arbitrages. You guys 152 00:09:42,000 --> 00:09:45,600 Speaker 4: are from financial audience, and we call that trading against themselves. 153 00:09:46,040 --> 00:09:48,280 Speaker 4: They do a series of trades that end up being 154 00:09:48,320 --> 00:09:51,200 Speaker 4: closing a loop in circular but was a loss, all right. 155 00:09:51,600 --> 00:09:53,560 Speaker 4: They used to call that Texas trades. But I think 156 00:09:53,600 --> 00:09:58,480 Speaker 4: that the state of Texas has been unfairly you know, 157 00:09:59,760 --> 00:10:03,079 Speaker 4: the saying, yeah, Texas trade in general. One of them 158 00:10:03,120 --> 00:10:07,240 Speaker 4: is Texas heads. Right. So the so, for example, they 159 00:10:07,240 --> 00:10:12,160 Speaker 4: have terriffs on components that you would use to build 160 00:10:12,320 --> 00:10:16,400 Speaker 4: a computer in your basement in New York. Okay, but 161 00:10:16,480 --> 00:10:21,960 Speaker 4: if you bought an Apple products, then there's no tariff 162 00:10:22,000 --> 00:10:26,600 Speaker 4: although that's made them. Everything's made overseas manufacturers. Okay, So 163 00:10:26,679 --> 00:10:29,719 Speaker 4: this is an inconsistency. So there are plenty like that. 164 00:10:30,280 --> 00:10:34,000 Speaker 4: And that's also what's his name? The Secretary of Treasury 165 00:10:34,080 --> 00:10:37,920 Speaker 4: is like the Secretary of not treasury, secretary of commerce 166 00:10:38,720 --> 00:10:42,040 Speaker 4: is Yeah. He definitely someone should hire him for comedy 167 00:10:42,120 --> 00:10:45,959 Speaker 4: because he was saying, first of all, you want he 168 00:10:46,520 --> 00:10:49,640 Speaker 4: he doesn't inconsistency. He didn't realize he said, oh, we're 169 00:10:49,640 --> 00:10:52,520 Speaker 4: going to raise so much money from tariffs and and 170 00:10:52,520 --> 00:10:54,880 Speaker 4: and then when you ask him, you mean that the 171 00:10:54,960 --> 00:10:59,280 Speaker 4: economy will not adapt to your tariffs by by replacement. 172 00:10:59,440 --> 00:11:02,760 Speaker 4: He didn't take it. And he wants us to produce 173 00:11:02,800 --> 00:11:06,880 Speaker 4: to pay teris on bananas, so we don't have substitutes. 174 00:11:07,000 --> 00:11:09,840 Speaker 4: Or he spoke about wine. He said, Oh, people buy 175 00:11:09,840 --> 00:11:12,760 Speaker 4: American wine. But what happens if French the price of 176 00:11:12,800 --> 00:11:17,760 Speaker 4: French wine goes up? Okay, there's something called substitution. I 177 00:11:17,760 --> 00:11:21,360 Speaker 4: don't know if people do that. In Europe, they teach 178 00:11:21,600 --> 00:11:24,680 Speaker 4: high school economics. I mean for children where they teach 179 00:11:24,679 --> 00:11:27,760 Speaker 4: from substitution. All right, so it's elementary me. I mean, 180 00:11:27,920 --> 00:11:31,680 Speaker 4: I'm saying that he Trump should have hired if you 181 00:11:31,679 --> 00:11:35,360 Speaker 4: could find people who have some skills. All right. 182 00:11:36,000 --> 00:11:38,960 Speaker 5: I can't wait to develop my skills growing my own bananas. 183 00:11:39,080 --> 00:11:42,880 Speaker 5: Banana are TARKI are our tarky. Sorry, I can't talk tonight. 184 00:11:43,080 --> 00:11:43,920 Speaker 4: Okay. 185 00:11:44,679 --> 00:11:47,360 Speaker 3: I was going to ask you always preach skin in 186 00:11:47,440 --> 00:11:51,079 Speaker 3: the game, yes, unlike US journalists. 187 00:11:51,720 --> 00:11:55,280 Speaker 5: So I got to ask, you're still an advisor to Universa. 188 00:11:55,720 --> 00:11:57,680 Speaker 3: What's been going on there? What are your returns? 189 00:11:57,800 --> 00:11:57,920 Speaker 4: Like? 190 00:11:58,120 --> 00:11:59,160 Speaker 3: Give us all the numbers? 191 00:11:59,679 --> 00:12:02,560 Speaker 4: Okay? No, I so this is not the place to 192 00:12:02,679 --> 00:12:08,360 Speaker 4: discuss numbers you won't get all right, but you can 193 00:12:08,400 --> 00:12:12,720 Speaker 4: get a general approach and philosophy that I have now 194 00:12:12,720 --> 00:12:18,080 Speaker 4: to describe and in a format, compressed format of what 195 00:12:18,120 --> 00:12:22,319 Speaker 4: we do and how we do it, we can safely 196 00:12:22,360 --> 00:12:27,360 Speaker 4: say that as usual, whatever we're doing work okay in 197 00:12:27,400 --> 00:12:30,560 Speaker 4: the sense that the idea, the idea, and I mean 198 00:12:30,720 --> 00:12:33,160 Speaker 4: seri the idea. The idea is that you got to 199 00:12:33,160 --> 00:12:36,679 Speaker 4: look at the return of that hedge. You got a 200 00:12:36,720 --> 00:12:39,520 Speaker 4: return of the portfolio that was hedged, because sort of 201 00:12:39,600 --> 00:12:42,960 Speaker 4: like when you when you have an insurance on your house, 202 00:12:43,640 --> 00:12:47,200 Speaker 4: all right, you look at the package house plus insurance. 203 00:12:47,320 --> 00:12:50,320 Speaker 4: You don't look at insurance as a tradable thing today, 204 00:12:50,320 --> 00:12:51,960 Speaker 4: I'm not going to have insurance tomorrow I will have 205 00:12:52,160 --> 00:12:55,240 Speaker 4: or how is that pain on? You? Look at the package? Okay, 206 00:12:56,000 --> 00:12:59,680 Speaker 4: insurance allows you to buy bigger house because you know 207 00:12:59,720 --> 00:13:02,440 Speaker 4: you're your total risk is lower in case of stuff 208 00:13:02,480 --> 00:13:05,920 Speaker 4: like that. So it's the same situation. And the stock 209 00:13:05,960 --> 00:13:10,160 Speaker 4: market rallies, which means that not only did the hedge 210 00:13:10,880 --> 00:13:14,640 Speaker 4: do okay, but it wasn't needed, so you like making 211 00:13:14,640 --> 00:13:18,920 Speaker 4: money on your insurance. So net that story continued, and 212 00:13:18,960 --> 00:13:24,440 Speaker 4: we've been doing it now for time flies, we're twenty 213 00:13:24,520 --> 00:13:28,640 Speaker 4: twenty five. That's twenty five minus. Oh it's a lot, 214 00:13:28,800 --> 00:13:32,880 Speaker 4: all right, So doing it for eighteen years nine eighteen 215 00:13:32,920 --> 00:13:35,960 Speaker 4: nineteen years, directly it was universe and then before of 216 00:13:36,000 --> 00:13:41,200 Speaker 4: course the iteration before and it is, it's the same story. 217 00:13:41,280 --> 00:13:46,040 Speaker 4: We didn't change strategy for a second, and we will 218 00:13:46,080 --> 00:13:48,480 Speaker 4: not change strategy. So basically that's what we do is 219 00:13:48,720 --> 00:13:51,440 Speaker 4: the same thing. It's just a's getting bigger. That's it. 220 00:13:51,640 --> 00:13:55,400 Speaker 3: Well, wait, there are a lot more volatility events nowadays. 221 00:13:55,440 --> 00:13:57,600 Speaker 3: Do you not adapt to that at all? 222 00:13:57,760 --> 00:14:00,840 Speaker 4: Or so let me tell you if you look, first 223 00:14:00,880 --> 00:14:04,120 Speaker 4: of all, I don't look at volatilely as volatiley and 224 00:14:04,160 --> 00:14:07,360 Speaker 4: in my technical work and universa doesn't look at you 225 00:14:07,360 --> 00:14:10,959 Speaker 4: look at for example, you can have a tail event 226 00:14:12,120 --> 00:14:14,160 Speaker 4: and then you can have or you can have regular volatively. 227 00:14:14,720 --> 00:14:17,640 Speaker 4: So a lot of people are overall by regular volatily 228 00:14:17,720 --> 00:14:20,560 Speaker 4: and typically what they call regular volatility is I learned 229 00:14:20,960 --> 00:14:24,720 Speaker 4: the linguistics of that business is when the market goes down, 230 00:14:24,960 --> 00:14:27,040 Speaker 4: they don't And in the old days of losing money, 231 00:14:27,120 --> 00:14:30,160 Speaker 4: I would say, well, the markets are volatile. Voltale doesn't 232 00:14:30,160 --> 00:14:34,080 Speaker 4: mean it's going up. Volato is not an absolute, uh 233 00:14:34,400 --> 00:14:38,480 Speaker 4: mean deviation voltle is negatively recerned, all right, So so 234 00:14:38,520 --> 00:14:42,000 Speaker 4: a lot of perception of things of volatility by exactly 235 00:14:42,080 --> 00:14:45,560 Speaker 4: I mean your professional journalists. Of course very important that 236 00:14:45,600 --> 00:14:49,600 Speaker 4: way you can reveal uh, bad stuff when it's made 237 00:14:49,720 --> 00:14:51,080 Speaker 4: and things like that. 238 00:14:51,440 --> 00:14:54,720 Speaker 3: But but didn't it seem to say something nice about journalis. 239 00:14:54,480 --> 00:14:55,800 Speaker 4: Yeah, no, no, there are a lot of things. That's 240 00:14:55,840 --> 00:15:01,480 Speaker 4: an important vision. But but but very often there's the 241 00:15:01,520 --> 00:15:07,320 Speaker 4: scaling doesn't doesn't quite match, like for example, people in journalism, 242 00:15:07,320 --> 00:15:10,680 Speaker 4: and this I wrote about in full by randomness, you 243 00:15:10,680 --> 00:15:14,040 Speaker 4: should have newspapers, and the lengths of newspapers. Now you 244 00:15:14,080 --> 00:15:15,880 Speaker 4: don't have new paper, but you understand what I mean. 245 00:15:16,560 --> 00:15:19,480 Speaker 4: There should be on days like the stock market crash 246 00:15:19,720 --> 00:15:22,480 Speaker 4: or on the last couple of weeks, newspapers should be 247 00:15:22,480 --> 00:15:24,680 Speaker 4: that big and the rest of the time should be 248 00:15:24,720 --> 00:15:28,160 Speaker 4: half a page. But they have the same length, all right, 249 00:15:28,320 --> 00:15:32,280 Speaker 4: So that's the scaling problem in journalism. In other words, 250 00:15:33,000 --> 00:15:35,720 Speaker 4: you have the news fourteen and a half minutes plus 251 00:15:35,760 --> 00:15:38,440 Speaker 4: you know, of course the bloomberg at in the middle. 252 00:15:38,880 --> 00:15:43,200 Speaker 4: So the I mean that news bulletin should be variable 253 00:15:43,280 --> 00:15:46,160 Speaker 4: with with with the events. You see. The idea the 254 00:15:46,200 --> 00:15:48,720 Speaker 4: same thing with market movement. So I don't think that 255 00:15:48,800 --> 00:15:52,320 Speaker 4: we are experiencing the read vaulty compared to what could 256 00:15:52,400 --> 00:15:56,160 Speaker 4: have happened and what we have seen with explosive markets. 257 00:15:56,280 --> 00:16:03,080 Speaker 2: Yes, so as mentioned multiple wars going on. We had 258 00:16:03,240 --> 00:16:06,200 Speaker 2: the COVID shock, we had the inflation shock. We have 259 00:16:06,720 --> 00:16:12,280 Speaker 2: massive changes happening in the political landscape, including right here 260 00:16:12,320 --> 00:16:15,760 Speaker 2: in New York City. Is there an underlying reason in 261 00:16:15,800 --> 00:16:20,240 Speaker 2: your view why it feels as though big things are happening. 262 00:16:20,520 --> 00:16:26,080 Speaker 4: No. My whole point is that to go back to tail, 263 00:16:26,680 --> 00:16:28,960 Speaker 4: to what we call about fat tail fat tales means 264 00:16:29,000 --> 00:16:35,560 Speaker 4: the smallest number of events explains the largest number of deviations. 265 00:16:35,640 --> 00:16:38,800 Speaker 4: For example, if you take a thousand people and you 266 00:16:38,880 --> 00:16:42,760 Speaker 4: have inequality, one person will have most of the money. Likewise. 267 00:16:43,400 --> 00:16:48,600 Speaker 4: Few historical days have most of the information likewise, So 268 00:16:48,640 --> 00:16:50,840 Speaker 4: this is entirely normal. But the point is you can't 269 00:16:50,840 --> 00:16:53,640 Speaker 4: you can predict ahead of time that you're going to 270 00:16:53,720 --> 00:16:55,400 Speaker 4: have when you're going to have these days, or you're 271 00:16:55,400 --> 00:16:58,080 Speaker 4: going to have the structure of it is though very 272 00:16:58,200 --> 00:17:02,240 Speaker 4: very stable. It is things followed them to follow a 273 00:17:02,320 --> 00:17:02,800 Speaker 4: power law. 274 00:17:04,000 --> 00:17:09,160 Speaker 5: So, oh, I'm going to ask a very basic question 275 00:17:09,240 --> 00:17:11,119 Speaker 5: that I'm sure you get asked all the time. But 276 00:17:11,480 --> 00:17:16,359 Speaker 5: we are all nevertheless very interested in your answer. By definition, 277 00:17:16,520 --> 00:17:20,240 Speaker 5: black swans, I guess are unpredictable and impossible to forecast. 278 00:17:20,320 --> 00:17:22,800 Speaker 5: But what black swans do you see on the horizon? 279 00:17:22,960 --> 00:17:30,080 Speaker 4: Okay, so yeah, leverty phrase lety phrases. Okay, there's something 280 00:17:30,480 --> 00:17:35,400 Speaker 4: called grace WANs. All right, So great pandemics were grace 281 00:17:35,440 --> 00:17:39,560 Speaker 4: wants or or you know, grace swans means events that 282 00:17:39,760 --> 00:17:44,840 Speaker 4: have these characteristics. A very small number of events determine 283 00:17:45,920 --> 00:17:50,200 Speaker 4: large part of the total effect, like small small number 284 00:17:50,200 --> 00:17:53,080 Speaker 4: of events, small number of wars, I've killed most of 285 00:17:53,119 --> 00:17:56,399 Speaker 4: the people, stuff like that, pandemics. So there's grace ones 286 00:17:56,440 --> 00:17:58,840 Speaker 4: and you can say they have a structure, you predict 287 00:17:58,880 --> 00:18:02,560 Speaker 4: them ahead of time. No, okay, but we do as 288 00:18:02,640 --> 00:18:05,000 Speaker 4: you can figure out if an environment is fragile or not. 289 00:18:06,200 --> 00:18:10,119 Speaker 4: And in fragile environments you can say, okay, this is 290 00:18:10,160 --> 00:18:12,640 Speaker 4: prone to break if there's a shot, Like in two 291 00:18:12,640 --> 00:18:15,080 Speaker 4: thousand and seven, we knew that the banks were fragile. 292 00:18:15,800 --> 00:18:18,919 Speaker 4: Why they were net short volatility. That's sort of my 293 00:18:19,000 --> 00:18:22,600 Speaker 4: fragility work in anti frasule. To answer your question, I 294 00:18:22,640 --> 00:18:26,080 Speaker 4: wrote anti fragile, which on its own became a monster right. 295 00:18:27,320 --> 00:18:31,280 Speaker 4: But the whole idea is to figure out what can 296 00:18:31,680 --> 00:18:38,520 Speaker 4: be have cascading effects from shocks. Okay. As I wrote 297 00:18:38,520 --> 00:18:41,680 Speaker 4: in The Black Swan, it's foolish to say what color 298 00:18:41,800 --> 00:18:45,280 Speaker 4: truck is going to break a fragile bridge, Okay, but 299 00:18:45,760 --> 00:18:48,120 Speaker 4: it is not foolish to say this bridge is fragile, 300 00:18:48,160 --> 00:18:50,960 Speaker 4: it's going to break one day, don't cross it, don't 301 00:18:51,040 --> 00:18:56,119 Speaker 4: don't or or or invite your enemies to Okay, Okay. 302 00:18:55,960 --> 00:18:58,480 Speaker 3: What areas of fragility do. 303 00:18:58,400 --> 00:18:59,160 Speaker 5: You see right now? 304 00:18:59,200 --> 00:19:05,280 Speaker 4: So? The first one? Okay, so the first Yeah, the 305 00:19:05,320 --> 00:19:08,919 Speaker 4: first one is we have a I don't know if 306 00:19:08,920 --> 00:19:11,560 Speaker 4: you're aware of it. Maybe people aren't aware yet that. 307 00:19:11,840 --> 00:19:14,239 Speaker 4: I don't know if we know have a deficit, right, 308 00:19:15,560 --> 00:19:18,959 Speaker 4: and you know that you have to borrow, you know, 309 00:19:19,640 --> 00:19:23,200 Speaker 4: to pay for the interest rates for the interest of 310 00:19:24,560 --> 00:19:28,760 Speaker 4: you know, the the the debt that you've had before. 311 00:19:29,440 --> 00:19:33,000 Speaker 4: And at four norse four percent interest rates, four to 312 00:19:33,040 --> 00:19:35,840 Speaker 4: five percent interest rate, this is significant. It means you 313 00:19:35,880 --> 00:19:38,679 Speaker 4: can have a snowballing effect. You have to borrow more 314 00:19:38,680 --> 00:19:41,679 Speaker 4: and more. And you know that they're not fixing the 315 00:19:41,680 --> 00:19:45,199 Speaker 4: budget problem except verbally, Hey, we're going to fix the budget. 316 00:19:45,800 --> 00:19:49,320 Speaker 4: It's all the same story. The structure of the political 317 00:19:49,359 --> 00:19:53,360 Speaker 4: system unfortunately is driving us there. Okay, So this is 318 00:19:53,640 --> 00:19:57,000 Speaker 4: one source of fragility. One main source of fragility, okay, 319 00:19:57,560 --> 00:19:59,920 Speaker 4: is that the political system is not adapted to the 320 00:20:00,040 --> 00:20:02,880 Speaker 4: that kind of thing. So what happened in the Western world, 321 00:20:02,960 --> 00:20:04,960 Speaker 4: it's not just a case of the United States. It's 322 00:20:05,000 --> 00:20:07,600 Speaker 4: a case of the Western world. Because you've got to 323 00:20:07,640 --> 00:20:10,240 Speaker 4: look at it, as are describing anti fragiles, think of 324 00:20:10,280 --> 00:20:14,360 Speaker 4: an escort, like China can have rapid growth because they're 325 00:20:14,400 --> 00:20:19,560 Speaker 4: pulling people out of their beautifully landscaped countryside to put 326 00:20:19,640 --> 00:20:22,359 Speaker 4: them in apartment blocks. That maybe it's not pleasant for 327 00:20:22,760 --> 00:20:26,919 Speaker 4: the people, you know, to live in in boxes, but 328 00:20:27,040 --> 00:20:29,679 Speaker 4: that greener is a huge amount of economic growth. Okay, 329 00:20:30,359 --> 00:20:34,080 Speaker 4: So a lot of people going up the so called 330 00:20:34,119 --> 00:20:38,840 Speaker 4: development scale. You're you're on the convex part of the escort, okay. 331 00:20:39,359 --> 00:20:41,520 Speaker 4: The West is on the concave part of the escort. 332 00:20:42,560 --> 00:20:46,760 Speaker 4: So which means that you mean you have two cargo 333 00:20:47,119 --> 00:20:50,640 Speaker 4: mostly except your New Yorkers live in small boxes like 334 00:20:50,640 --> 00:20:54,159 Speaker 4: like like poor people in middle ages, but outside New 335 00:20:54,240 --> 00:20:56,520 Speaker 4: York City and a really most people have two car 336 00:20:56,640 --> 00:21:00,199 Speaker 4: garages stuff like that. So you you we can't you 337 00:21:00,200 --> 00:21:02,879 Speaker 4: can't grow right, and you don't have poor people, so 338 00:21:02,920 --> 00:21:05,680 Speaker 4: you have to import them from El salvad or Panama 339 00:21:05,920 --> 00:21:08,919 Speaker 4: a lot of people. You don't have poor people, so 340 00:21:08,920 --> 00:21:11,800 Speaker 4: so you don't to create that kind of thing, and 341 00:21:11,800 --> 00:21:13,879 Speaker 4: and and even and now you don't want them anymore. 342 00:21:13,880 --> 00:21:17,239 Speaker 4: You know, they don't want everybody, you know. So so 343 00:21:17,400 --> 00:21:21,040 Speaker 4: we have a problem. Is that gross in America is 344 00:21:21,080 --> 00:21:27,040 Speaker 4: structurally declining. Well, at the same time, the dead burden 345 00:21:27,359 --> 00:21:32,960 Speaker 4: is structurally increasing. You see that that applies to the 346 00:21:32,960 --> 00:21:36,200 Speaker 4: rest of the developed woral Because you've developed your arriving 347 00:21:36,280 --> 00:21:39,439 Speaker 4: to the destination, why are still borrowing? The problem is 348 00:21:39,760 --> 00:21:43,520 Speaker 4: most countries tend to borrow when they're already rich, when 349 00:21:43,560 --> 00:21:46,040 Speaker 4: they don't need it anymore. Just like people see like 350 00:21:46,040 --> 00:21:47,919 Speaker 4: people on wall streets. These people are on wall streets, 351 00:21:47,960 --> 00:21:51,400 Speaker 4: they probably borrow a lot now that's already rich, all right, 352 00:21:51,760 --> 00:21:54,040 Speaker 4: whereas poor people don't borrow. So that's a big problem. 353 00:21:54,040 --> 00:21:57,760 Speaker 4: That's number one problem. The second one is China is 354 00:21:57,840 --> 00:22:00,800 Speaker 4: representing a larger larger share of GDP of the world, 355 00:22:01,720 --> 00:22:05,240 Speaker 4: and so you've got to think that geopolitics aren't got 356 00:22:05,200 --> 00:22:07,640 Speaker 4: to be the same. And you don't want to live 357 00:22:08,880 --> 00:22:11,760 Speaker 4: you know, in the wrong century. Thanks you this century 358 00:22:11,840 --> 00:22:13,080 Speaker 4: thinking of a different century. 359 00:22:14,359 --> 00:22:17,200 Speaker 3: All right, this seems to love. Yeah, thank you so much. 360 00:22:17,240 --> 00:22:19,960 Speaker 4: Thanks, Thanks, thanks to call me, and thanks for the stake. 361 00:22:20,600 --> 00:22:24,199 Speaker 4: So next time, let's make sure either have organ foods 362 00:22:24,920 --> 00:22:26,080 Speaker 4: or bring wines. 363 00:22:27,119 --> 00:22:29,640 Speaker 2: We'll definitely thank you so much. 364 00:22:32,760 --> 00:22:35,080 Speaker 3: This has been another episode of the All Thoughts podcast. 365 00:22:35,160 --> 00:22:38,440 Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway. 366 00:22:38,080 --> 00:22:40,320 Speaker 2: And I'm joll Wisenthal. 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