A Day With SFI Learning “Optimality vs Fragility”

A day with SFI learning “Optimality vs Fragility” by Elliott Turner, Compounding My Interests

Recently I had the privilege of attending Santa Fe Institute’s latest joint conference with Morgan Stanley. This time, the topic was “Optimality vs Fragility: Are Optimality and Efficiency the Enemies of Robustness and Resilience?” The topic was both intriguing and timely, and the speakers were interesting, informative and a little bit more controversial than in years past. This made for an outstanding day. The audience in the room included some big names in finance and science alike, setting the stage for fascinating Q&As and stimulating conversations during the breaks.

This year, rather than writing one big post covering all of the lectures, I will break each down into its own entry. Here are the subsequent posts in order (and their respective links). Let this serve as your guide in navigating through the day:

Cris Moore–Optimization from Mt. Fuji to the Rockies

Warren Buffett: If You Own A Good Business, Keep It

Berkshire Hathaway Warren BuffettBuying private businesses is easier than acquiring public firms, and investors should avoid selling good investments at all costs, according to the Oracle of Omaha, Warren Buffett. Q2 2020 hedge fund letters, conferences and more In an interview with CNBC in March 2013, Buffett was asked if he was looking at any businesses, in particular, Read More


Nassim Taleb–Defining and Mapping Fragility

John Doyle–Universal Laws and Architectures for Robust Efficiency in Nets, Grids, Bugs, Hearts and Minds

Rob Park–Logic and Intent: Shaping Today’s Financial Markets

Juan Enriquez–Are Humans Optimal?

Dan Geer–Optimality and Fragility of the Internet

I like to think about are how the lectures relate to what I do in markets and where there is overlap and dissention between the speakers. Further, I like to analyze how some of these lectures fit (or don’t) with my preexisting views. I would love to hear what others think. Here are a few of my observations to get you all started:

  • Cris Moore’s point that “best” is not necessarily optimal, and a confluence of models (what he calls data clusters) can yield better outcomes is extremely important in financial markets.
  • Nassim Taleb’s suggestion that stress tests should focus on accelerating pain, rather than spot analysis is a powerful one that all risk managers should think about.
  • John Doyle’s observation about the tradeoffs between robustness and efficiency is directly applicable to portfolio construction.
  • Rob Park’s explanation of how algorithms are designed to express human intent, and the areas in which that can go has me rethinking my understanding of the risks from HFT.
  • Juan Enriquez opened everyone’s eyes to how big the advances are in life science and the consequences this holds for the “secular stagnation” debate.
  • Dan Geer’s explanation for why we have a choice between two of “security, convenience and freedom” online is both an enlightening and frightening call to action.

Again I will caution that these are my notes from the sessions. There is no guarantee of accuracy or completeness. I specifically focused on points that were intriguing to me, and purposely left out areas where the subject matter and terminology were too far removed from my competency.

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Elliot Turner is a Managing Director at RGA Investment Advisors, LLC and founder of Compounding My Interests. Prior to joining RGA, Mr. Turner was a Principal and Managing Director at AustinWeston Asset Management LLC, a value-driven investment management firm, where he specialized in discovering and analyzing long-term investment opportunities and strategic portfolio management. Mr. Turner’s professional asset management career began as a Proprietary Equities Trader at Chimera Securities, LLC, where he developed his own unique trading strategy integrating both fundamental and technical analysis. Mr. Turner then joined T3 Capital Management, LLC to continue his trading career on T3?s Equities Desk and to develop the T3Live Blog. From T3, Mr. Turner joined the Wall St. Cheat Sheet, a financial media website specializing in news and analysis on events in the investment and entrepreneurship space. As Managing Editor at the Wall St. Cheat Sheet, Mr. Turner authored numerous columns on investment ideas and philosophies, macroeconomic policies, and trends in technology and innovation. His works and opinions have been published on Yahoo! Finance, TheStreet.com, Marketwatch, Business Insider, and Seeking Alpha. While still at the Wall St. Cheat Sheet, Mr. Turner rejoined Chimera Securities, LLC to manage the firm’s first long/short investment portfolio. Mr. Turner holds a Juris Doctor from Brooklyn Law School, and is admitted to practice law in New York State. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.