Nassim Taleb, Wall Street Oracle

Growing up in a war-torn country and contracting a very rare type of cancer, Nassim Taleb became fixed on the idea that catastrophe is more common than most people think—an idea which made him a fortune on Wall Street.
  • Transcript


Malcolm Gladwell:  I wrote about him years ago and he has since become quite famous because basically before the financial crash he was one of those people saying it’s all going to come down.  He was a guy on Wall Street and he ran a hedge fund and his obsession was with the notion that extreme events are more likely than you think. People on Wall Street all had a kind of expectation of how often there would be a catastrophe; they would say it’s a once in a lifetime event, it’s a once in a thousand year event and they had models built on that probability and Nassim would always say—this was back in 2006—it’s not a one in thousand year event, it’s a one in a 10 year event. He was very interested in the sort of on a psychological notion: why is it that human beings are so eager to pretend in the face of all evidence to the contrary that catastrophes are infrequent.

This was something that grew out of his personal background.  His family came from Lebanon, a country that was routinely visited by catastrophe over and over again. He'd had some close brush with death from some weird, rare kind of cancer that he should never have gotten. All these things kind of familiarized himself with the notion that catastrophe was common. Out of that he kind of developed a sort of business model for this.  He began to build a hedge fund, which made money when the unlikely happened. On most days, it would lose money and then when there was a market crash it would make hundreds of millions, even billions. Sure enough when the stock market crashed Nassim made some astonishing amount of money for himself and his investors.

He compelled himself to live in the least pleasant of all worlds. 

Recorded December 16, 2010
Interviewed by Max Miller
Directed by Jonathan Fowler
Produced by Elizabeth Rodd