Don't let your baby grow up to be an investment banker....Nassim Taleb – the man behind the term "black
swan" – just published a new paper taking aim at Wall Street titled Why It
is No Longer a Good Idea to Be in The Investment Industry.
Taleb explains how as funds have become more and more
concentrated among a growing group of investment managers he calls the
"spurious tail," it has basically become impossible to be successful
in the industry by putting in the work.
You just have to get lucky.
The reason for this is that the track records of successful managers are
increasingly characterized by huge wins resulting from "spurious
performance," according to Taleb, which has allowed them to "rise to
the top for no reasons other than mere luck, with subsequent rationalizations,
analyses, explanations, and attributions."
Those winning managers, in turn, attract more investments to
their funds, increasing their allocations based on past performance, making
them difficult for other managers to compete with as the winners grow their
market share.
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