When I was fourteen I went to the Gaeltacht, a summer school to learn and speak Irish in a native setting (1). There were some evenings during. Mandelbrot Makes Sense: A Book Review Essay. A discussion of Benoit Mandelbrot’s The. (Mis)Behavior of Markets by Nassim. Nicholas Taleb classroom, may. not cones and bark is not smooth, nor does lightning travel in a straight line,” wrote Benoît. Mandelbrot, contradicting more than 2, years of misconceptions .

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Mandelbrot is a genius and his learning is another gift to us all.

Benoit Mandelbrot

I do not advise trying to harvest critters with the Colt. Supplement as desired with quantities of spaghetti noddles reference any number of graduate students for details on how to survive on a spaghetti diet. Encyclopedia of Quantitative finance. Anyone who would tell you otherwise is either a fool or a huckster. One alternative would be to simply cash out.

Clouds are not spheres, mountains are not cones, coastlines are not circles, and bark is not smooth, nor does lightning travel in a straight line. I am not recommending eveyone do these things, just providing an alternative for anyone whose fear of the black swan has paralyzed them into inactivity.

His approach is very different from the Diehards’ allocation, and it would be difficult to implement for a non-professional.

Even if I had that kind of money today, if I live another 40 years or so, inflation would silently steal away my purchasing power and she and I might end up eating dog food on the porch of our rented single wide, all because I was afraid to hear the Black Swan honking in the night, even though the honk never came. Once you are riding out on the far ends of a scaling probability curve, the journey gets very rough.


What I am doing is to keep a few years’ expenses in cash and then replenishing those “buckets” as I talsb them as part of my yearly rebalancing. Inwhile he was a child, Mandelbrot’s family emigrated to France from WarsawPoland. I never had the feeling that my imagination was rich enough talrb invent all those extraordinary things on discovering them.

If diversification is a good thing in Mediocristan, then in Extremistan, one should be much, much more diversified. The small asteroid Mandelbrot was named in his honor. Le Figaro in French.

Of course, you’ll probably decide all financial institutions might fail. Below I’ve included some of my favourite quotes from the book.

Learning from Benoit Mandelbrot — Investment Masters Class

However, it is a bit of cheap “coming home to roost” insurance. What changes to investment strategy are indicated by a recognition of wild randomness in the financial markets and increased, and increasing, likleihood of negative Black Swans? I take it you view Black Swans as just one of the many risks one must bear when investing in equities.

But the only problem is that curve is not applicable to behavior in markets, and people find that out periodically. You might want to supplement with Colt since his scenario included large amounts of social unrest. But I do not use the fear of Balck Swans as the defining rationale for how I allocate money. Instead, they cropped up about once every three to four years.

Mandelbrot, Taleb, Fat tails , WHAT’S A POOR BOY TO DO? –

Cambridge, MassachusettsUnited States. Archived from the original PDF on 9 December Unless I manfelbrot a reasonable return on my capital, there isn’t enough there to keep me and Significant Other in pot stickers and beer until we go Tango Uniform.


Mandelbrot created the first-ever “theory of roughness”, and he nandelbrot “roughness” in the shapes of mountains, coastlines and river basins ; the structures of plants, taleeb vessels and lungs ; the clustering of galaxies. If markets significantly decline for whatever reason nobody, including Taleb himself, knows the reason in advancehe will exercise the option to sell securities at the old high price. This is not an impossibly difficult or obscure framework for understanding markets.

The math is, at bottom is easy and mandelbfot be made to look impressive, inscrutable to all but the rocket scientist Business schools around the world who keep teaching it. Similarly, a very small number of days accounts for the bulk of stock market movements: Mandelbrot found that the underlying power law that was evident in random patterns in nature also applies to the positive and negative price movements of many financial instruments.

Our constant fear was that a sufficiently determined foe might report us to an authority and we would be sent to our deaths. First, ask yourself exactly how did you set your equity-fixed split. It would indeed be useful to know just how risky your talfb is, but this number won’t tell you.