W + X + Y – Z = A
Rule: If Z > Y, then A will be a negative integer, regardless of the values of W and X.

Of course, this does nothing for predicting box office results, since really great Diesel movies like the insanely awesome Pitch Black made far less than Fast & Furious.

But I think it holds up well when it comes to the various Diesel properties; xXx got infinitely better AFTER that horrible monologue into the camera early on; Riddick seldom talks, making Pitch Black, Chronicles of Riddick and the Butcher Bay video game instantly great; A Man Apart has the Diesel on a violent bender with, again, little talking; The Fast and the Furious and Fast & Furious both have Paul Walker chewing the screen, which normally would make a movie bad, but by keeping Diesel in mainly action-y moments actually has the reverse effect =)

See, I get skeptical when an armchair tycoon like Taleb starts talking about how an entire industry’s business model is dumb, and they should really be doing something completely different. Because Hollywood always makes money. A lot of money. Now admittedly, they will produce a huge flop and lose some money on that. But for the most part, studios do just fine. The studios do a lot better than, let’s say, investment banks, retail, real estate, etc.

And let’s keep in mind that the example that started this whole thing, Fast & Furious, was a movie that did way BETTER than it was supposed to, not a movie that lost them millions. It doesn’t prove that they don’t know what they’re doing, anymore than the surprise success of Tickle Me Elmo proves that Tyco should quit the children’s toy business, because their predictions are faulty.

So Pete, I’m curious if you agree with what you imagine Taleb would say about Hollywood. Is producing movies like Fast & Furious stupid? Should they never spend money on anything over 20 mil?

- Matt

“Things themselves cannot take the least hold of the Soul, nor have any access to her; but the Soul alone deflects and moves herself, and whatever judgments she deems it right to form, in conformity with them she fashions herself the things that submit themselves to her from without.”- _Meditations_, Book V, xix. And in Book VI, xvi, he says, “…Fluxes and changes perpetually renew the world… In this river of change, which of the things which swirl past him, whereon no foothold is possible, should a man prize so highly?”

So to be totally redundant, the stoic way of dealing with the weekend numbers is to go with it and accept the universe as it is. Don’t fight the current, let it carry you. The soul deals with things as they come, and she molds herself to fit what comes her way. A RETROACTIVE thing- she’s mutable, adaptable, so don’t try to root yourself down, since it’s impossible to do, anyway. And don’t get attached to stuff, because it’s all just shadows and dust.*

Here, “stuff” is our preconceived notions of how the market w/should work as according to the “common sense” explanations of pollsters. So the movie made a lot of money and we (meaning the masses, the public, the sheep) weren’t expecting it. Why should that *really* upset anybody? Unless you’ve got some personal grudge against Vin Diesel (or, I’d argue, anyone/thing involved in the production, from the company to the caterers) and thus a personal reason to want it to fail, there really isn’t much reason to get in a tizzy about it. And even then, this is rather un-stoic, too, since it makes you emotionally attached to the idea of their failure. The very idea of taking something “personal” is quite un-stoic.

Now, it can be argued that there are instances where running with a bad prediction leads to disaster (investments come to mind, as does bandwagonning with politicians that end up losing), so the idea of going with the flow and letting it fall off your shoulders is harder to swallow. After all, it’s human nature to get upset if taking bad advice leads to, say, bankruptcy or the death of a personal career; but the very attachment to these things is part of the (and thus your, whomever “you” may be) problem from a stoic perspective.

I’m not 100% sure what Aurelius, Epictetus, et. al. would think about pollsters. I venture to guess they’d say it’s okay to take advice from pollsters and predictions, but it’s NOT okay to let ourselves become undone if those predictions turn out incorrect. And we should be taking that advice in order to be better global citizens and work toward the Good (Virtue) and all that kinda jazz, not out of any material desire for ourselves (and if there *is* personal material gain, that should be put toward the Good or be a secondary benefit of some kind and NOT our main goal- the icing on the cake, if you will).

*The “[f]luxes and changes” part also relates to the shifts mentioned ^up there^ when an “unexpected outcome” or whatever occurs. Life is indeed a river of change, so we shouldn’t get attached to our current (HAH!) state- things will not be like this forever. We should accept whatever changes we find ourselves faced with and move on to the next bend. Also, implicit (first line) is the notion that outside forces only get to us (in the emotional sense) when we let them, that it’s up to us whether or not we get upset over something.

(That all probably sounded like a whole lotta nothin’, but I totally geeked out when I saw “Stoicism” as the first word in the title, and had to do something about it. Sorry.)

Also, Matt,

Taleb addresses one of the points you brought up – things you could concievably predict vs. things that you couldn’t – when he talks about randomness.

There’s pure randomness, where something doesn’t have a cause and is just totally out of the blue. This doesn’t _really_ exist, but we all sort of understand what it is.

Then, there’s randomness where there is a perfectly good reason for something, and from the right perspective it’s not random at all, but from _our_ perspective, we can’t or don’t spot the causes that make it happen, at least in advance.

Taleb basically says that, from the point of view of people actually living in the world, the randomness of these two different types of events is equivalent. It doesn’t matter whether there’s a good reason why the Vin Diesel movie outperformed all the others, if, within the framework we had before it happened, there wasn’t a reason to believe or expectation that this was going to happen, then it’s random.

It’s sort of like causes happen behind a curtain, and then the effects are revealed to us. We can retroactively explain the cause of something so that it is no longer random, but before it reveals itself, when we still can’t see what’s behind the curtain, there’s a lot more effective randomness in the world than our explanations let on.

When a forecast is right, not much happens.

When a forecast is wrong, there’s often a huge shift of one sort or another that you want to be in a position to take advantage of.

And he says that, for most things in the world, the effects of the latter are so huge as to render the former relatively worthless.

Taleb would probably have a problem with how the modern studio system makes movies – he’d probably much prefer either the old-school studio system or the porn industry. Picking 100 movies and sinking tens of millions into each one, including marketing, is stupid, because if any one of them fails, that’s a huge problem, and if one of them really succeeds, your limiting your upside with all that upfront cost.

He’d say the real money is in making movie like _The Blair Witch Project_ or _Slumdog Millionaire_ – movies that cost very very little, but make lots of money.

The proportion of money you make from a really expensive idea that catches on is so huge that you’d be dumb to put your money on movies that have a higher potential to lose money and can never really blow up.

He’d say if you’re investing in making movies, you should put most of your money in something super, super safe (like, say, restaurant equipment training videos, which you can sell for a reliable price), and then have a bunch of play money that you spend on long-shot bets.

In the long run, the long-shot movies will pull in better alpha than that same movie applied to tentpoles or blockbusters.

Unless, of course, the math doesn’t work out that way, in which he pretty much just makes porn.

And yes, if you took away (deeply flawed) forecasting, a lot of industries would grind to a halt. But a lot of industries grind to a halt anyway because of (deeply flawed) forecasting. So it’s tough to say whether changing tack in a larger sense would be a net positive or not.

One thing to remember about Taleb, though, is that he’s a trader – he doesn’t really care about what works for “everybody,” and a lot of his writing works under the assumption that the world is going to have big winners and a lot of losers.

So, yeah, getting rid of the forecasters makes a lot of people losers, but relative to the people who don’t rely on them, those people are big losers anyway – they’re just don’t put two and two together and realize how much they fail relative to people who take advantage of Black Swans.

Okay, so Taleb “would be saying that our attempts to RETRO-cast – to explain the success of Fast & Furious ex post facto – would be dumb.” But he doesn’t mean that there’s no point in discussing why Fast & Furious is so successful, right? Because clearly, there must be reasons; it didn’t make all that money by mistake.

What Taleb is saying is that we shouldn’t be too harsh on the forecasters, because the success of the movie was caused by a confluence of factors too complicated to predict ahead of time. Right? We can go ahead and figure out why it succeeded, but we should NOT assume that this was obvious at the time.

So while my impulse is, if our models had been better, we would have correctly predicted the box office, Taleb says that no matter how good your model is, there will be things that defy it.

I’m not sure I agree with this. I STILL say that if our models had been better, we would have correctly predicted the box office. Fast & Furious isn’t an earthquake out of the blue. It’s not an act of God. It’s a movie – if it surprised us, it’s just because our polls undersampled cellphones, or urban neighborhoods, or weighed the poor performance of Tokyo Drift too heavily.

I just don’t see WHY Fast & Furious COULDN’T have been predicted. Just because analysts got it wrong doesn’t make it a black swan, does it?

- Matt

Taleb’s point (or, of the several he makes in The Black Swan, the one I find interesting) is that the “just-so” stories we invent AFTER unpredicted events to rationalize them are largely B.S.

So, if Taleb were addressing the box-office success of Fast & Furious, he wouldn’t be saying that “all forecasting is dumb.” He would be saying that our attempts to RETRO-cast – to explain the success of Fast & Furious ex post facto – would be dumb.

All that being said, I remain pretty skeptical of the pop summations I’ve seen of Taleb’s theses. But I’ll have to check out The Black Swan myself to address them in more detail.