Despite vast amounts of evidence that these genius returns are in a large part the product of luck rather than skill, investor cash flows toward these folks. Coupled with the outsized earnings, they become multi-billion behemoths. (Related: Whale Watch: What Big Funds Are Buying—And Selling)
Taleb describes these oversized, super-financiers as a “spurious tail,” which he defines as “persons who rise to the top for no reasons other than mere luck, with subsequent rationalizations, analyses, explanations and attributions.” (More: Wall Street Whale Watching: 13F Filings Flood Street)
What is happening recently, Taleb says, is that the power and influence of the spurious tail is becoming so large that there is no real chance for up-and-comers to win in the future.
A young financier starting today, “no matter his skill level, and ability to predict prices, will be outcompeted by the spurious tail."
Stay out of finance, he writes. Instead, the young and talented should pursue work in fields “less commoditized” and with less direct competition.
by CNBC.com senior editor John Carney
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