In this podcast, Nassim Taleb and Scott Patterson delve into Patterson's book, "Chaos Kings." They explore the contrast between Taleb's approach to preparing for extreme events, known as "Black Swans," and the predictive models proposed by econophysicist Didier Sornette, referred to as "Dragon Kings." Their discussion highlights the complacency in today's financial markets, the growing influence of China, and the shortcomings of quantitative models. They stress the importance of understanding "ruin problems" and the need for proper position sizing to prevent catastrophic losses. Taleb underscores that the focus should be on avoiding ruin rather than striving for flawless predictions, pointing out the limitations of current methods when faced with unpredictable events and systemic risks.
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