Nassim Taleb On Belief and Investing

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May 11, 2015

In his website, www.fooledbyrandomness.com, Nassim Taleb shared a fragment of the 4th chapter of his book, named Is the Pope Atheist? In there, he tells the story of John Paul II in 1981, when he was shot and rushed to the emergency room at the Agostino Gemelli University Polyclinic.

Being a curious and deep minded person, Taleb asks the question: Why didn’t the Vatican decide to just pray and let the Lord heal his son?“The central idea of our difference between theory and practice is that at no point during the emergency period did the drivers of the ambulance consider taking JPII to a chapel for a prayer, or some equivalent form of intercession with the Lord, to give the sacred first right of refusal for treatment. And not one of his successors seemed to have considered giving precedence to dealing with the Lord with the hope of some miraculous intervention in place of the trappings of modern medicine.”

“That is not to say that the bishops, cardinals, priests and mere laypeople didn’t pray and ask the Lord for help, nor that they believed that prayers weren’t subsequently answered… But it remains that nobody in the Vatican seems to ever take chances by going first to the Lord, subsequently to the doctor, and, what is even more surprising, nobody seemed to see a conflict with such inversion of the logical sequence. In fact, the opposite course of action would be considered madness.”

Afterwards, Taleb touches on a very critical point, which is that belief can only be reflected through actions, not opinions. In the previous example, while prayers could be effective, the life of JPII was too much to leave at risk. The most logical action then, in spite of a vast amount of belief, was to take the Pope to the doctors.

The main point of the article is the following:

“There is a difference between beliefs that are decorative and a different sort of beliefs, those that map to action.”

“How much you truly “believe” in something can only be manifested through what you are willing to risk for it.”

In other words: Put your money where your mouth is. And, connecting to some of Warren Buffett’s principles, if you are truly believing in something (or knowing what you are doing) then it makes no sense to diversify broadly, but to bet heavily on your best ideas. I believe Taleb’s example plays a very critical role in helping our understanding on conviction, belief and the not-so-broad path that it has to critical action.

What are your thoughts about this?