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Nassim Taleb warns never trust anyone who doesn’t have skin in the game

posted onFebruary 26, 2018
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Nassim Taleb, the author of The Black Swan, one of the twelve most influential books since World War II, according to The Sunday Times, is back. Skin in the Game: Hidden Asymmetries in Daily Life is his fifth book and he argues that if you have no skin in the game, you shouldn’t be in the game. 

“Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them” he writes. “Do not pay attention to what people say, only to what they do, and to how much of their necks they are putting on the line”. Never trust advice from experts who are not exposed to the consequences of their advice. “If you give an opinion, and someone follows it, you are morally obligated to be, yourself, exposed to its consequences.”  

The opinion of politicians, bankers, intellectuals and other members of the elite whose bad advice can backfire could be ignored “ because they never have to pay for the consequences of their actions”. The typical member of this elite can  “continue his practice from the comfort of his thermally regulated suburban house with a two-car garage, a dog, and a small play area with pesticide-free grass for his overprotected 2.2 children” according to the author. 

The phrase “skin in the game” is the backbone of risk management but as the author shows in this book, applies to all aspects of life, from financial markets to businesses and religion. 

Here are some of Taleb's insights as posted on nassimtaleb.org:

• For social justice, focus on symmetry and risk sharing. 
 Ethical rules aren’t universal. 
• Minorities, not majorities, run the world.  
• You can be an intellectual yet still be an idiot.  
• Beware of complicated solutions (that someone was paid to find). 
• True religion is commitment, not just faith. 

“Taleb has again put his finger on a flaw in how society operates, one that has damaging moral and financial results”John Gapper wrote at Financial Times, adding "Like Groucho Marx, Taleb is grandiose, tendentious and insulting but he knows how to entertain." 

Nasim Taleb

Nassim Taleb was born in 1960 in Amioun, Lebanon. He received his bachelor and master of science degrees from the University of Paris and holds an MBA from the Wharton School at the University of Pennsylvania (1983). He also holds a PhD in Management Science from the University of Paris (Dauphine) (1998). He spent 20 years as a derivatives trader and held senior positions with major financial institutions: Credit Suisse First Boston, UBS, BNP-Paribas, Indosuez (now Calyon), Bankers Trust (now Deutsche Bank).  In 2006, he changed career to become a scholar, mathematical researcher and philosophical essayist.

He is the author of the Incerto, a four volume philosophical essay on uncertainty which covers the following books: Fooled by Randomness (2001), The Black Swan (2007–2010), The Bed of Procrustes (2010), and Antifragile (2012). In 1997 we wrote Dynamic Hedging: Managing Vanilla and Exotic Options, a technical clinical book on derivatives. Taleb's books have more than 100 translations in 35 languages. In 2009 he was Included on the Forbes magazine list of "Most Influential Management Gurus” and in  2011, he was listed among the Bloomberg 50 most influential persons in the world (policy makers, bankers, corporate leaders) in Finance.

However, he refuses all honours and anything that "turns knowledge into a spectator sport".  Taleb is currently Distinguished Professor of Risk Engineering at New York University's Tandon School of Engineering and scientific advisor for Universa Investments.