(This is application the minority rule: it takes only a few very very
intolerant and tenacious people to make the system more honest.)
Background: Noah Smith has a
long documented track record of writing critiques
of books he hasn’t seen, and discussing papers he hasn't read. Here you
have authors spending 10 years writing a book, and some troll with a
megaphone critiquing it on things that have nothing to do with the
content. I first became aware of it when he previously commented on my
skin-in-the-game without realizing there was the expression of a
mathematical theorem, when it was on page 2.
Summary of Breaches of Journalistic Ethics & Logic in
Noah Smith’s Bloomberg View Article on The Black Swan of April 16,
2016
Ethical Flaw
Taleb in The Black Swan is clear the Black Swan is about unpredictability in the tails, not underestimation: "The are two
varieties of rare events: a) the narrated Black Swans, those that are
present in the current discourse and that you are likely to hear about
on television, and b) those nobody talks about, since they escape
models—those that you would feel ashamed discussing in public because
they do not seem plausible. I can safely say that it is entirely
compatible with human nature that the incidences of Black Swans would
be overestimated in the first case, but severely underestimated in the
second one. [...] This miscalculation problem is a little more
subtle. In truth, outliers are not as sensitive to underestimation
since they are fragile to estimation errors, which can go in both
directions. As we saw in Chapter 6, there are conditions under which
people overestimate the unusual or some specific unusual event (say
when sensational images come to their minds)—which, we have seen, is
how insurance companies thrive. So my general point is that these
events are very fragile to miscalculation, with a general severe
underestimation mixed with an occasional severe overestimation."
Noah Smith in Bloomberg View: [goes on and on unethically presenting the Black Swan
as only overestimating market crashes]... "In other words, Taleb might be wrong
-- people might be overestimating, rather than underestimating, the
risk of market crashes."
So visibly Noah Smith is not familiar with
the book that he is discussing, not even by an inch. This led to an incoherent response when I contacted them:
Noah Smith said he “agrees
with points above” (not explaining then his Taleb
is "wrong” other than to create hype and defame Taleb), and his editor, James Grieff
contradiction Smith by saying “He read the book but
disagrees with it”. His
editor claims that "he read the book"is like someone claiming he read War and Peace, it takes place in
Venezuela.
Logical Fiasco
The editor has to have a problem to miss the severe asynchrony. Noah Smith
takes a book published in April 2007 (before
the last crisis), discussing events until
2006, then says “Taleb is wrong” from inference on market
estimation of probability between
2007-2016 and
what decision to take today based on prices today, 2016. Perhaps
the participants adjusted to events of 2007, the book, or something
else. The claim by Noah Smith about the Black Swan concerns the
market value of risk, not the structure of risk, which is something
subsequent to the book. That his editor missed the asynchrony is very,
very strange...
Ethical Breaches
Background: After being called
a BS vendor
by Taleb (for reasons that are now obvious) in the past, Smith in a
vendetta, has written 4 articles with similar attempts at discrediting
and distorting... without the
slightest familiarity with the subjects at hand. More on these, later, as
this is not the end.
Rule 1: You shall not
use a media company such as Bloomberg to troll people you hate.
Rule 2: You shall
not use the credibility of an academic position to troll people,
particularly when you have failed academia and are concealing that you
were ("voluntarily") separated and have not been there for a while. The article makes sure we know that Noah Smith is an
assistant professor at Stony Brooks. Except that I was told in January
that he either resigned or had been “resigned” for not meeting academic standards
and was
not coming back for the Jan 2016 semester, in fact "never coming back".
[Apparently, Smith failed to publish anything during his tenure there,
except of course for BS on the internet.] Smith claimed a sabbatical
which conflicts with what I was told by
faculty members (a sabbatical is something one return to). Smith should not be using sham affiliations for
positions he doesn’t have so he can talk about a subject he knows
nothing about.
Other Violations of Professionalism
Noah Smith has no familiarity with finance. In early 2010 I made a
statement in Moscow about 4 trades to do. I was not aware of being
filmed and used trader language. One of them was short T Bonds. After I
communicated to Noah Smith that he was a BS vendor, he advertised in
2014 my claim of short bonds ... in 2010 as a way to wreck my
credibility in every way possible.
Did he report on the other
trades in the ensemble? No.
Did it hit him that trades are something
that don't last 4 years? No. D
id it hit him that bonds collapsed
after the talk? (markets happen to go up and down). No.
Does he understand that a trade is not a binary forecast?
Did he realize that I have several hundred thousand
trades in my career and no self respecting scientist would play the
media megaphone to select one, particularly 5 years later without
knowing the true outcome?
This is why he couldn't write an academic paper: his
mind has a defect in its logical wiring. No finance academic would
commit the lack of professionalism of cherry-picking a trade in a
portfolio, and, worse, not realizing that a dynamic trader buys and
sells and there is low correlation between the trade and the fate of
the market. How can someone that ignorant about finance write
about finance?