Monday, December 17, 2007

Black Swans (or the pleasure of reading)

Finally finished a book (The Black Swan by Nassim Taleb) for the first time in what seems years. I prefer to read books in one sitting but that didn't quite happen, nonetheless it was so delicious to forget about cover letters and just spend every spare moment last week reading.

I am a big fan of Taleb. I read his Fooled by Randomness in 2003 when I was first getting started studying for the CFA and was working for an investment advisor. I was feeling very doubtful about the line between luck and skill in the business and just generally befuddled by the meaning of being a good investor and Taleb hit a nerve as I was facing all these silly theories on charting and momentum and other investing hocus pocus during my work day. (I was also really amazed that he took the time to reply to an email I sent to him.) I'm not sure that Black Swan is the best thing to read prior to recruiting since it inspires more doubt than confidence in me, and confidence is everything right now. I have to forget all those little nagging worries about the impossibility of succeeding in this game through pure skill ...

Because in the end, someone has to manage the money and it may as well be someone with some doubts than someone with excessive confidence. I hope at least being sensitive to the possibility of enormous failure will make me a better investor. The book confirmed for me the value of fundamental, bottom up analysis and the inherent silliness in definitive predictions and overly complex models. But more importantly, it's just so enjoyable to have some affirmation/reminder that true pleasure in life comes from great literature and philosophy and art - not a job title, maybe not even historical returns. In that sense, it was a great book to read before recruiting.

Well, I have many more thoughts on the book but it's back to cover letters now for me. (Reading When Genius Failed now ... ha.) Just wanted to mention Taleb's book is very worthwhile.

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