money jungle

Taleb: “anything in finance that has equations is suspicious”

Posted in nassim-nicholas-taleb, nnt by moneyjungle on December 10, 2008

The latest McKinsey Quarterly has another interview with Nassim Nicholas Taleb, with some great quotes concerning the dangers of modern finance:

“The Quarterly: You question many of the underpinnings of modern financial theory. If you were the dean of a business school, how would you overhaul the curriculum?

Nassim Nicholas Taleb: I would tell people to learn more accounting, more computer science, more business history, more financial history. And I would ban portfolio theory immediately. It’s what caused the problems. Frankly, anything in finance that has equations is suspicious. I would also ban the use of statistics because unless you know statistics very, very well, it’s a dangerous, double-edged sword. And I would ban linear regression. All these things don’t work.”


One Response

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  1. oblomst said, on May 14, 2010 at 3:17 am

    Taleb is amazingly perceptive. The guys is spot on — skip equations, be careful with narrative, learn practical skills, and dabble with non-linear return possibilities.

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