Nassim Taleb on confusing the social science of economics with the physical sciences

It was confidently believed that the scientific successes of the industrial revolution could be carried through into the social sciences, particularly with such movements as Marxism.  Pseudoscience came with a collection of idealistic nerds who tried to create a tailor-made society, the epitome of which is the central planner.  Economics was the most likely candidate for such use of science; you can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. 108

Nassim Taleb on the illusion of stability of pegged currencies in Southeast Asia in 1997

[W]e are not sure that the world we live in is well charted.  We will see that the judgment derived from the analysis of these past attributes may on occasion mislead you and take you in the opposite direction.  Sometimes market data becomes a simple trap; it shows you the opposite of its nature, simply to get you to invest in the security or mismanage your risks.  Currencies that exhibit the largest historical stability, for example, are the most prone to crashes.  This was bitterly discovered in the summer of 1997 by investors who chose the safety of pegged currencies of Malaysia, Indonesia, and Thailand (they were pegged to the U.S. dollar in a manner to exhibit no volatility, until their sharp, sudden, and brutal devaluations.)

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. 102

Nassim Taleb on on survival of the least fit and their vulnerability to the rare event

Recall that someone with only casual knowledge about the problem of randomness would believe that an animal is at the maximum fitness for the conditions of its time. This is not what evolution means; on average, animals will be fit, but not every single one of them, and not at all times. Just as an animal could have survived because its sample path was lucky, the "best" operators in a given business can come from a subset of operators who survived because of over-fitness to a sample path - a sample path that was free of the evolutionary rare event. One vicious attribute is that the longer these animals can go without encountering the rare event, the more vulnerable they will be to it.

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. 92

Nassim Taleb on survival of the least fit traders

We tend to think that traders were successful because they are good. Perhaps we have turned causality on its head; we consider them good just because they make money. One can make money in the financial markets totally of out randomness.

Both Carlos (the economist) and John (the quant/statistician) belong to a class of people who benefited from a market cycle. It was not merely because they were involved in the right markets. It was because they had a bent in their style that closely fitted the properties of the rallies experienced in their market during the episode. They were dip buyers. That happened, in hindsight, to be the trait that was the most desirable between 1992 and the summer of 1998 in the specific markets in which the two men specialized. Most of those who happened to have that specific trait, over the course of that segment of history, dominated the market. Their score was higher and they replaced people who, perhaps, were better traders.

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, pp. 89-90

Nassim Taleb on evolution and continuous progress

One must be blind or foolish to reject the theories of Darwinian self-selection. However, the simplicity of the concept has drawn segments of amateurs (as well as a few professional scientists) into blindly believing in continuous and infallible Darwinism in all fields, which includes economics.

... Owing to the abrupt rare events, we do not live in a world where things "converge" continuously towards betterment. Nor do things in life move continuously at all.

~ Nassim Taleb, Fooled By Randomness, 2nd Edition, pp. 90-91

Nassim Taleb on treating the social science of economics like a physical science

It was confidently believed that the scientific successes of the industrial revolution could be carried through into the social sciences, particularly with such movements as Marxism. Psuedoscience came with a collection of idealistic nerds who tried to create a tailor-made society, the epitome of which is the central planner. Economics was the most likely candidate for such use of science; you can disguise charlatanism under the weight of equations, and nobody can catch you since there is no such thing as a controlled experiment.

~ Nassim Taleb, Fooled By Randomness, 2nd Edition, p. 108

Nassim Taleb on history

Learning from history does not come naturally for us humans, a fact that is so visible in the endless repetitions of identically configured booms and busts in modern markets.

~ Nassim Taleb, Fooled By Randomness, 2nd Edition, pp. 53-54

Nassim Taleb on journalists

Most journalists do not take things too seriously: After all this business of journalism is about pure entertainment not search for truth, particularly when it comes to radio and television. The trick is to stay away from those who do not seem to know that they are just entertainers (like George Will... ) and actually believe that they are thinkers.

~ Nassim Taleb, Fooled by Randomness, 2nd Edition, p. xxvii