Nassim Taleb: "We Made $ 20 Billion For Our Clients"

Hopefully, Nassim Taleb won't stop making various assertions like the following anytime soon.

Earlier this year, Taleb said there isn't enough evidence to show Buffett's five decades of investing success isn't just luck. Great stuff. I ran across this post on claims made by Taleb in a GQ article last year. In the GQ article, Taleb talks about "screwing these people" to teach them a lesson during the financial crisis.

From the article:

"I went for the jugular--we went for the max. I was interested in screwing these people--I'm not interested in money, but I wanted to teach them a lesson, and the only way you can do it is by trying to take it away from them. We didn't short the banks--there's not much to be gained there, these were all these complex instruments, options and so forth. We'd been building our positions for a while...when they went to the wall we made $20 bln for our clients, half a billion for the Black Swan fund."

So he said "we made $ 20 bln for our clients" but Janet Tavakoli, author of Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street, checked into these claims.

Tavakoli: $ 20 Billion Mythical Swan

She had the following to say about it:

I checked with Nassim Taleb regarding the $20 billion in gains and asked if he were misquoted. He responded via email: "The quote is inaccurate. THe [sic] 20 billion might correspond to the face value of positions." This response is both vague and different in character from the mythical $20 billion in gains inaccurately quoted in GQ's article. The total gains could be a tiny fraction of what Taleb loosely describes as "face value."

Why is GQ's mistake important? In my opinion, public claims of enormous private hedge fund gains require credible back up, and one would think that GQ would have known that before it inaccurately quoted Taleb as having made a bell ringing gain of $20 billion for clients. Presumably, the error referred to outside clients, not the black swan fund itself, but it could have the side effect of attracting investors to the black swan fund, similar to advertising or salesmanship. - Janet Tavakoli

Also, FT Alphaville has kept a history of this story on its site and had the following to say...

For whatever reason, it seems Self [the author of the GQ article] or GQ did not correct the story — perhaps because they stood by Taleb's quote.

In any case, if Taleb knew the number was incorrect he probably should have put up a note of some sort to accompany the article long before Tavakoli pointed it [sic] out the discrepancy.

Here's the letter Tavakoli sent out about this.

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Nassim Taleb: "We Made $ 20 Billion For Our Clients"
Nassim Taleb: "We Made $ 20 Billion For Our Clients"
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