Scott Patterson's Chaos Kings, Part 1

In this podcast, Nassim Taleb joins Scott Alexander to discuss Taleb's latest book, which delves into his hedge fund, Universa, co-founded with Mark Spitznagel. The conversation highlights Universa's innovative investment approach, which acts as a form of insurance against "black swan" events—those rare and unpredictable market crashes. They examine the mathematical foundations of this strategy, Taleb's early insights regarding the COVID-19 pandemic, and how a "non-naive precautionary principle" can be applied to risk management across various sectors, such as public health and climate change. Additionally, they address the shortcomings of conventional risk management models and emphasize the crucial distinction between perceived risk and actual risk.

Outlines

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N N Taleb's Probability Moocs

Introduction and Book Overview: Scott's Chaos Kings

Universa's Success and the Myth of Market Timing

Universa's Strategy: Insurance Against Black Swans

Ruin Problems and the Precautionary Principle

Mandelbrot, Kahneman, and the Fat Tails of Wars and Pandemics

Refining the Precautionary Principle

Mitigating Tail Risks: Robustness over Optimization

The World According to Taleb: Models, Uncertainty, and the Limits of Empiricism

Taleb's Background and the Empirica Strategy

Scott Patterson's Chaos Kings, Part 1

N N Taleb's Probability Moocs

00:01Introduction and Book Overview: Scott's Chaos Kings

Introduction and Book Overview: Scott's Chaos Kings

04:27Universa's Success and the Myth of Market Timing

Universa's Success and the Myth of Market Timing

10:53Universa's Strategy: Insurance Against Black Swans

Universa's Strategy: Insurance Against Black Swans

16:48Ruin Problems and the Precautionary Principle

Ruin Problems and the Precautionary Principle

23:54Mandelbrot, Kahneman, and the Fat Tails of Wars and Pandemics

Mandelbrot, Kahneman, and the Fat Tails of Wars and Pandemics

30:05Refining the Precautionary Principle

Refining the Precautionary Principle

40:08Mitigating Tail Risks: Robustness over Optimization

Mitigating Tail Risks: Robustness over Optimization

51:46The World According to Taleb: Models, Uncertainty, and the Limits of Empiricism

The World According to Taleb: Models, Uncertainty, and the Limits of Empiricism

1:00:51Taleb's Background and the Empirica Strategy

Taleb's Background and the Empirica Strategy