Nassim Nicholas Taleb: If You Read An Investment Proposal That Looks Like An Investment – Don’t Invest!

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Here is Nassim Nicholas Taleb being interviewed about his book Skin in the Game, by author and journalist Katrine Marçal. He explains the concepts of Skin in the Game and Soul in the Game. He also talks about rationality and honour. Taleb is not a fan of economists Paul Krugman, Richard Thaler and behavioral economics. In this interview he explains why. One of our favorite excerpts from the interview is when Taleb is asked:

Marçal: Why should you never hire a well-dressed trader?

Here’s his response:

Taleb: I wrote that in Dynamic Hedging 21 years ago, my first first book, which was a technical textbook and later on I figured out the idea was a metaphor. When you have two people, the same rank professionally, one of them looks the part and the other does not. The one who doesn’t look the part must have more skills.

Marçal: Why?

Taleb: Because an environment where you have skin in the game, the cosmetic doesn’t matter much. The example I give is that of a surgeon that looks like a surgeon, the other one looks like a butcher. One surgeon looks refined, the other one looks rough, course, Now who is more likely to be a better surgeon if they’re the same rank at a hospital and you have both options presented as being equivalent. You should take the one who doesn’t look like a surgeon because that person had to fight a lot to reach that level.

Taleb: This is a financial conversation so translated into finance, if you read a investment proposal that looks like an investment – don’t invest! Odds are someone… a business plan or a proposal or term sheet, that someone is taking advantage of you. Because if it’s narrated in a crisp way, odds are it’s not gonna work.

You can watch the entire interview here (The short introduction is in Swedish):

(Source: YouTube)

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