Sep

25

 Thus spake Taleb:

Conclude, if you are starting a career, move away from investment management and performance related lotteries as you will be competing with a swelling future spurious tail. Pick a less commoditized business or a niche where there is a small number of direct competitors. Or, if you stay in trading, become a market-maker.

Well, making markets seems to be doomed, too. It has mostly been supplanted by the 'bots, and the pockets of fleshly franchise remaining are a diminishing and endangered species.

Taleb is wrong. Investment management and advisory is, always has been, and always will be a confidence game. There will always be men who can inspire confidence, and there will always be men who lack it and are willing to pay for it. This rule trumps the ability of the confidence man to provide investment performance– as long as he can inspire confidence, his AUM will runneth over. This basic voltage imbalance among men is an immutable characteristic of the human condition, and can never be replaced by computerized automation. It will remain the driving force behind this so-called "industry".

It reminds me of this H.L Mencken quote:

Perhaps the most valuable asset that any man can have in this world is a naturally superior air, a talent for sniffishness and reserve. The generality of men are always greatly impressed by it, and accept it freely as a proof of genuine merit. One need but disdain them to gain their respect. Their congenital stupidity and timorousness make them turn to any leader who offers, and the sign of leadership that they recognize most readily is that which shows itself in external manner. This the true explanation of the survival of monarchism, which always lives through its perennial deaths.

As always,

Gibbons Burke


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