Odd Lots - Nassim Taleb on Living a Good Life in an Age of Volatility

Episode Date: July 4, 2025

Every day we're inundated with headlines that are seemingly unbelievable. Multiple major wars are ongoing. Politics is erratic. Markets are scrambling everyone's brains. So how should we live and feel good? How should we think about the world around us, and the various perceived risks out there. In yet another episode from our live Odd Lots special in New York City last month, we speak with famed author Nassim Nicholas Taleb, the scientific advisor at Universa Investments, who shares his perspective on all things. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Thanks for listening to OddLots. Follow the show on Amazon Music for more future episodes or just ask Alexa play the podcast OddLots on Amazon Music. Bloomberg Audio Studios. Podcasts Radio News. Hello, OddLodz listeners. You are listening to another episode that was recorded live in New York City at our event on June 26th. This time it's with the one and only Nassim Nicholas. Haleb, distinguished scientists and advisor at Universal Investments. Yep, we talked to him about how to live a good life in a time of immense volatility. Take a listen. Nassim, what's your definition of a good life? What should we be aiming for? I mean, a lot of people think that we're programmed to be happy and stuff like that.

In fact, we're programmed to feel useful. That's a good life. or, I mean, you don't have to be a martyr to feel useful. As a matter of fact, martyrs go too far, and if you look at their deaths, typically in history, you realize it could have waited a decade and the problem was assault itself by itself, right? So think of all the wars and, hey, like a Vietnam War,

took care of itself or whatever. So let's forget about martyrdom, except, of course, in narrow cases where you save someone. So the idea is to be useful to others. And then the idea is, you know, to share your mistakes as you grow in age, to share your mistakes with society so they can build on it. That's my idea of a good life. For a lot of people, good life is hedonic in the sense that they have a chef flown in from Europe

to eat some complicated food that our friend here would not approve really, you know, non-stakes, complicated things, with long names. And so that's a hedonic approach to things. Mine is you feel useful. So whether you have a family and you're providing for them, or if a lot of people don't have a family yet or may not have a family, because in the past, most people didn't have a family. A lot of people were orphans.

A lot of people had children who didn't survive. So the idea is to be useful to the community in general. So we talked about this in the market context at the very beginning. But does, you know, I feel this poll to basically always look at my phone to monitor the latest headlines. Sometimes I don't think like I'm the best parent because I'm looking at my phone when I should be with my family. As you mentioned, how do we be useful? We're better off. I mean, you're talking.

In a time we're just being bombarded, in a time we're just being bombarded. with events beyond our control. Okay, yeah, but you're, we're better off than we were today. 40 years, 50 years ago, before many were born, maybe perhaps even you, right? Yeah, yeah. So you don't realize that we spent about a century in front of a TV set or reading papers where you're on a receiving end, but not providing anything in return.

So it was a centralized information. era that started, you know, was modernity. And you realize you should see the families eating the dinner in front of the TV set. Basically, you're receiving information. Whereas organically, in the past, the way we dealt with information was by trading it. It's like Twitter. You give information, you receive information. So you go to the barber, someone gives you information,

and then you go to buy fish, you give the fishmonger information. and then rumors start going. And now we're close to that period. Because you're not just receiving stuff. You're also tweeting, you know, although your spouse, I'm sure, tells you not to tweet from home. That's correct.

Yeah, that's correct. It is true when we're trying to get Joe's attention, we send a DM because he doesn't respond to anything else. So I'm sure he's tweeting. So you're feeling you're not just receiving noise, but you create the noise. So I'm contributing. I'm being useful by contributing to the noise.

Thank you. Very validating. Wait, but do you personally enjoy being on Twitter, because I read some of your tweets, and, you know, sometimes you seem a little angry. No, so I'm tweeting now in front of all of you. Yeah. The tweet would look angry, but my face... Wait, actually...

I'm often giggling when I'm tweeting, all right? I'm often giggling. So, the idea is to separate your public persona from your private life. By the way, before we forget, before you leave tonight, someone d-end me and said, can you please ask Nassim to unblock me on Twitter? So I get these all the time. That's probably the most frequent message. Yeah.

It's a, it seemed like a nice guy. They all say, oh, sorry, I had a drink or I don't know. Wait, we should actually ask. And typically because of Bitcoin, because I chain block. When you have a smear campaign, you chain block. Yeah, that's right. So the friends, if someone bullies you or block, their friends as well. It was possible at a time.

Wait, how many people here have been personally blocked by Nassim Taleb? Not that many. It's not that many. It's a small number. It's not none, though. No, no, no. A random room in New York. I stopped about a couple of years ago from using the chain blocker.

Yeah. One, because it had a lot of type two error, the false positives. And the other reason is, because when Elon took Twitter, he banned these bots. Yeah. So they can't operate anymore. You've got to do it manually. Like the third-party apps that you can do.

Yeah, yeah, exactly. They could use to block someone, their friends, the friends of their friends, the friends of their friends, the friends of the friends, and all of that to yourself. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy.

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Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, The Killing of Bob Lee, beginning April 16. What separates good leaders from transformational ones? I'm Jessica Chen, and in season two of Leading By Example, we'll sit down with executives like Grace Chen of Bertie Gray to find out. It's important to understand where you spike, but also really acknowledge where you don't and find people who can fill those gaps. Listen to leading by example, executives making an impact on the IHeart radio app, Apple Podcast, or wherever you get your podcasts. Are you surprised that in a year of just like unbelievable headlines seemingly day after day, multiple wars going on, not to mention the trade war and all of that, everything else, Doge, etc., that the markets are not crazier than they are? Let me compose a tweet that maybe I'll post.

is for Trump 1, okay, Trump 1 was taken literally by his enemies, by his, and metaphorically by his friends. Okay. Trump 2 is taken metaphorically by his enemies and literally by his friends. Explain. So whatever he's saying, now he's pretty much doing. Did you believe that he was going to start these tariffs? They make no sense. It makes sense to get elected in Pennsylvania, but it's not a kind of thing you do, really.

And it turned out he meant it. It was not just a vague thing. It's really an order to metaphor. It was real. He wants tariffs. So maybe he wants to destroy the American economy. Maybe that's his wish. And you could probably put a dent.

And yet, but it's on work. Where is stock market's at all time high? Sorry? The stock market is at all time high. To separate the health of American companies. No, I get that. From the income of the American who went to stop and shop, or what's the thing in your area?

Now, Whole Foods, you guys go to Whole Foods, but normal people go to Costco or whatever, and you look at your bill, right? And the bill went up practically for everything, and their income did not, and tax breaks to come are not going to help those who don't shop at Whole Food because the poor people don't pay taxes anyway.

So we're not going to get a break from that. So the idea is there's a lunacy in these tariffs. I can understand that we need to protect pharma. We have some strategic interest in this. Okay, you protect the industry. You want to make sure you don't depend on China for other things. But it's a lunacy to try to switch with 4% unemployment in America. plus or minus, from high margin.

You guys are all hard margin, all right? To low margin, right? The high margin audience. Yeah, we have a high margin audience. To low margin, right, occupations. Right. So now we're going to make socks. Can you imagine the high margin?

So making films, you're going to make socks. And then also misperception is the whole process of a lot of things. in basic, you know, trade accounting. Like the sales, they're ripping us off. I mean, I'm a dentist, right, and I go buy my bread. It's ripping me off, right? I should make my own bread, and then the baker should be a dentist. So the whole idea is not, it doesn't stand on it.

And plus they have, you know someone is not very intelligent or not very skilled, and you can detect that at, it's like arbitrages. You guys are from financial audience, and we call that trading against themselves. They do a series of trades that end up being closing a loop in circular, but was a loss, all right? They used to call that Texas trades, but I think that state of Texas has been unfairly, you know. The Texas hedge. Yeah, Texas trades in general. One of them is Texas hedge, right?

So, for example, they have tariffs on components that you would use to build a computer in your basement in New York. Okay. But if you bought an Apple products, then there's no tariff, although everything is made overseas. Manufacturers, okay? So this is an inconsistency. So there are plenty like that. And there's also, what's his name? the Secretary of Treasury is like Secretary of not Treasury,

Secretary of Commerce. Lottena. Yeah, he definitely, someone should hire him for comedy because he was saying, first of all, he doesn't, the inconsistency, he didn't realize, he said, oh, we're going to raise so much money from tariffs. And then when you ask him, you mean that the economy will not adapt to your tariffs

by a replacement? He didn't think about it. And he wants us to produce, to pay tariffs on bananas, so we're going to have substitutes. Or he spoke about wine. He said, oh, people will buy American wine. But what happens if the price of French wine goes up, okay? There's something called substitution. I don't know if people do that.

In Europe, they teach high school economics. I mean, for children where they teach them substitution, right? So it's elementary me. I mean, I'm saying that Trump should have hired. if you could find people who have some skills. All right. I can't wait to develop my skills growing my own bananas. Banana artarki.

Sorry, I can't talk tonight. Okay, I was going to ask, you always preach skin in the game, unlike us journalists. So I got to ask, you're still an advisor to Universa. What's been going on there? What are your returns like?

Give us all the numbers. Okay. So this is not the place to discuss numbers. You won't get, but you can get a general approach and philosophy that I have now to describe in a format, a compressed format of what we do and how we do it. We can safely say that, as usual, whatever we're doing work in a sense that the idea, the idea, And let me continue the idea. The idea is that you got to look at the return of that hedge. You've got a return of the portfolio that was hedged.

Because sort of like when you have an insurance on your house, all right, you look at the package, house plus insurance. You don't look at insurance as a tradable thing. Today, I'm not going to have insurance. Tomorrow I would have, or how is that paying on? You look at the package, okay? Insurance allows you to buy a bigger house because you know you're talking. risk is lower in case of stuff like that.

So it's the same situation. And the stock market rallied, which means that not only did the hedge do okay, but it wasn't needed. So you're like making money on your insurance. So net net, that story continued. And we've been doing it now for time flies. We're in 2025, 25 minus, oh, it's a lot, right?

So we've done it for 18 years, 18, 19 years, directly was universal and before, of course, an iteration before. And it's the same story. We didn't change strategy for a second. And we will not change strategy. So basically, that's what we do is the same thing. It's just that's getting bigger. That's it. Well, wait, there are a lot more volatility events nowadays.

Do you not adapt to that at all? Okay. So let me tell you. If you look net net, first of all, I don't look at volatility as volatility in my technical work. And Universal doesn't look at, you look at, for example, you can have a tail event, and then you can have, or you can have regular volatility. So a lot of people are overall by regular volatility. And typically what they call regular volatility, I learn the linguistics of that business,

is when the market goes down. In the old days, when they're losing money, they would say, oh, the markets are volatile. Volatile doesn't mean it's going up. Volatile is not an absolute mean deviation. Volatile is negative return, all right? So a lot of perception of things of volatility by exact. I mean, your professional journalist is, of course, very important. That way you can reveal bad stuff when it's made and things like that.

Wait, did Nassim just say something nice about journalists? Yeah, yeah. No, no, there are a lot of things. It's an important mission. but very often the scaling doesn't quite match. For example, people in journalism, and this I wrote about, in fooled by randomness,

you should have newspapers, as I say, lengths of newspapers. Now you don't have newspapers, but you understand what I mean. There should be on days like the stock market crash or on the last couple of weeks, newspapers should be that big and the rest of the time should be half a page.

But they have the same. length. So that's the scaling problem in journalism. In other words, you have the news 14 and a half minutes plus, you know, of course, the Bloomberg ad in the middle. So, I mean, that news bulletin should be variable with the events. You see the idea. So the same thing with market movement.

So I don't think that we are experiencing the real volatility compared to what could have happened and what we have seen with explosive markets. Yes. So, as mentioned, multiple wars going on. We had the COVID shock. We had the inflation shock. We have massive changes happening in the political landscape, including right here in New York City.

Is there an underlying reason in your view why it feels as though big things are happening a lot? No, my whole point is that to go back to, or it's just perception. I like to tell to what we call about fat tail. Fat tails means the smallest number of events explains the largest number of deviations. For example, if you take a thousand people and you have inequality, one person will have most of the money. Likewise, few historical days have most of the information. Likewise.

So this is entirely normal, but the point is you can't predict ahead of time that you're going to have when you're going to have these days, or you're going to have the structure of it is, though, very, very stable. It is, things tend to follow a power law. So, go ahead. I'm going to ask a very basic question that I'm sure you get asked all the time, but we are all nevertheless very interested in your answer. By definition, black swans, I guess, are unpredictable and impossible to forecast, but what black swans do you see on the horizon?

Okay, so let me love this question. I know, I know. Labby rephrase it, okay. There's something called gray swans, all right? So, pandemics were gray swans. Or, you know, gray swans means events that have these characteristics of a very small number of events determine large part of the total effect, like a small number of events, a small number of wars that killed most of those people, stuff like that, pandemics.

So there's grace warrants. And you can say they have a structure. You predict them ahead of time, you don't know. But what we do is you can figure out if an environment is fragile or not. And in a fragile environment, you can say, okay, this is prone to break if there's a shot. Like in 2007, we knew that banks were fragile. Why? They were net short volatility.

That's sort of my fragility work in antifragile. To answer your question, I wrote antifragile, which on its own became a very much. monster, right? But the whole idea is to figure out what can be have cascading effect from shocks. Okay. As I wrote to the Black Swan, it's foolish to say what color truck is going to break a fragile bridge, okay? But it is not foolish to say this bridge is fragile, it's going to break one day, don't cross it, or invite your enemies to, you know, Okay, okay. What areas of fragility do you see right now? Oh, okay. So the first one is...

I'm learning. Okay. So the first one, yeah. The first one is we have a... I don't know if you're aware of it. Maybe people aren't aware yet. I don't know if we don't have a deficit. Oh, I heard about this. And you know that you have to borrow, you know, to pay for the interest rates, for the interest, you know, the debt that you've had before.

And at north of 4% interest rates, 4 to 5% interest rate, this is significant. It means you can have a snowballing effect. You had to borrow more and more. And you know that they're not fixing the budget problem, except verbally. Hey, we're going to fix the budget.

It's all the same story. The structure of the political system, unfortunately, is driving us there. So this is one source of fragility one main source of fragility, is that the political system is not adapted to that kind of thing. So what happened in the Western world? It's not just the case of the United States.

It's a case of the Western world, because you've got to look at it, as I describe an antifragile, think of an S-curve. Like China can have rapid growth because they're pulling people out of their beautifully landscaped countryside to pull them in apartment blocks, that maybe it's not pleasant for the people, you know, to live in boxes,

but that generates a huge amount of economic growth, okay? So a lot of people going up the so-called development scale, you're on the convex part of the S-curve. Okay? The West is on the concave part of the S-Corp. So which means that you have two cars, most except New Yorkers live in small boxes like poor people in middle ages, but outside New York City and the real...

Most people have two car garages, stuff like that. So you can't grow, right? And you don't have poor people, so you have to import them from El Salvador, Fana Mado, a lot of people. You don't have poor people. So you don't... to create that kind of thing. And now you don't want them anymore.

They don't want everybody, you know. So they have a problem that gross in America is structurally... declining. Yeah. Well, at the same time, the debt burden is structurally increasing. You see that a version. And that applies to the rest of the developer because you develop. You're arriving to destination.

Why are still borrowing? The problem is most countries tend to borrow when they're already rich, when they don't need it anymore, just like people. See, like people on Wall Street. These people are on Wall Street. They probably borrow a lot. Now, they're already rich, all right? but as poor people don't borrow.

So that's a big problem. That's number one problem. The second one is China is representing a larger, larger share of GDP of the world. And so you're going to think that geopolitics aren't going to be the same. And you don't want to live, you know, in the wrong century.

Think you're living in this century, think you're a different century. All right, Nassim Taleb. Yeah, thank you so much. Thanks, thanks for inviting me. And thanks for the steak. Yeah. So next time,

Let's make sure either have all good food or bring wine. We'll definitely have wine. Thank you so much. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthall. You can follow me at the stalwart.

Follow our producers, Carmen Rodriguez, at Carmen Armin. Dashobenett at Dashbot and Kel Brooks at Kilbrooks. For more OddLots content, go to Bloomberg.com slash OddLots, where we have a daily newsletter and all of our episodes. and you can chat about these topics 24-7 in our Discord. Discord.g.g. slash oddlons. And if you enjoy oddlots, if you like it, when we do these live recordings, then please leave us a positive review on your favorite podcast platform.

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