Interview With Nassim Nicholas Taleb

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L.G.: Because it reduces something to—

N.N.T.: A burning building is going to be a lot more anecdotal than a statement about what happened—and a statement about what happened is going to be a lot more anecdotal than statistics of what happens in the world to put it in context. To give you an idea, I go to Beirut all the time. If I watched television, I couldn't—it would sort of convince me to not go. The risk of death is nothing, right? I mean, it's minor compared to the risk of being killed in a car accident, you see?

L.G.: So statistically it's more likely to have a car accident and injure yourself in a Westchester bedroom community than in—

N.N.T.: Than in Lebanon. Iraq is the only place where you're vastly much more likely to get hurt or killed, but if you count how many people die every year in the States by car versus how many people die violent deaths in Lebanon, it's minor.

L.G.: And why don't you read newspapers?

N.N.T.: Newspapers I stopped reading in the '80s. You know how I know a subject is worth it? If you hear about it in a social setting. That's the best filter.

L.G.: So if you go to a party, they're screeners for you?

N.N.T.: In a normal society, people talk about events. By not having much exposure to TV, I'm necessarily faced with having a contextual reality around me which corresponds a lot more to the normal one, the social fabric and stuff like that. I do go online. You want to minimize your exposure to very bad uncertainty, and maximize your exposure to small events. If you live in Iowa, and are locked up in your house, even if you have internet, you're not going to get exposure to the world of ideas. Most ideas came from serendipity, and you want to maximize serendipity. How do you maximize serendipity? You go to parties, okay?  

L.G.: But you know what the markets are doing.
 
N.N.T.: Same thing with the markets. I don't know what they're doing at any point in time except when they do a lot—because your brain cannot distinguish between small and big. We have so much evidence of that. Some events have massive consequences, and you should look at them. But if you look at the Dow and it moves a little, it's not even statistically significant, you cannot see it without some emotional reaction and some theorizing. So you want to theorize as little as possible. But today, I am interested in the market, because the euro had the biggest move in a long time. Today, I'm concerned. The euro moved a lot.
 
L.G.: Downward.
 
N.N.T.: Yeah, and I'm interested—so today it's information. When something is moving barely, it's not information. If you were to read the newspaper account of things, the discussion should be, because of the size of the move today, a billion times longer than the discussion you get on a regular day. It moved 3 cents. To $1.50-something. That is worth discussing when it happens once a year in the euro. If the stock market crashes, that's information. If it moves five points, it's not. So when you listen to radio, they're going to tell you in the same-length program whether it moved five points, or 23 percent. And the lengths of newspapers should be in proportion to the importance of the facts—and they're not.
 
L.G.: Is your interest in the movement of the euro today because you advise a hedge fund?
 
N.N.T.: It's too complicated, because I have—well, I can't talk about my investments. People are reading too much into what I say, so I'm not going to disclose everything I'm doing, see? People take a small piece of what I do and then read too much into it.
 
L.G.: That must be a weird phenomenon.
 
N.N.T: I know. But I'm a thinker about randomness and my ideas about randomness are the ones that matter, not what I ate for breakfast or whether I watch television.  

L.G.: And this "hating ties" business, and I know you're being funny, but you distrust people who wear ties?
 
N.N.T.: It correlates rather well with incompetence.
 
L.G.: You lambaste bankers as boring people in suits and ties who pretend that they're very prudent but are in fact taking reckless risks without even understanding them.
 
N.N.T.: Exactly. If they wear a tie they look conservative. The guy in Silicon Valley looks wild, but he's less risky than a banker. 
 
L.G.: So bankers are actually mad men in sane peoples' clothing?
 
N.N.T.: Exactly. One second. [Stares intensely into his BlackBerry.] Before we met, I was trying to do something...
 
L.G.: Are you trying to execute a trade? Are you losing money?
 
N.N.T.: I have receipts, I have a business. I get a lot of income from my books in Europe. I just want to make sure that I'm not bothered by that drop [in the euro]. I sell three times more in the U.K. than here. It sold 178,000 copies—115,000 in the last three months. But I've got income coming from different places, and I set up contracts where I'm paid in local currency.
 
L.G.: And the dollar is advancing against the pound.
 
N.N.T.: Not good for me. But what I do is, I allocate a portion of it, I keep it in pounds in the U.K.—I'm in London every month—and a portion of it in euros that I spend there, and then the rest I've got to hedge it...Have you read this book called The 4-Hour Workweek?
 
L.G.: No.
 
N.N.T.: It's similar to these concepts. I try to avoid drag-down work, so when I write, I don't write more than an hour in any given day. When I've done an hour, I make sure I don't write more. And I make sure I don't work hard because when you work hard, you sort of dilute yourself.
 
L.G.: You probably define "work" more narrowly than other people.
 
N.N.T.: Yeah, probably. Writing is not work for me.
 

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