- “Black Swan” investor Nassim Taleb told CNBC no matter who wins the election, the coronavirus has permanently changed the economy and some businesses like corporate travel and commercial real estate will never recover.
- Taleb added that the denial of the Trump administration over the seriousness of the coronavirus and the false hope that a vaccine will quickly resolve the pandemic is weighing on GDP.
- The author and Universa Investments scientific advisor also cautioned investors against trying to predict who will win the presidency and how the stock market will react to the election.
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Investor Nassim Taleb told CNBC on Monday that the coronavirus has permanently changed the economy and certain types of businesses will never recover from the damage, no matter who wins the presidential election. While Taleb acknowledged that Joe Biden’s tax plans may cause market distortion, he said that irrespective of who wins the US election, the economy will “not go back to pre-COVID, because we’ve had changes in the economic structure that are permanent.”
Some businesses like salons and dental offices were temporarily harmed by the pandemic and will eventually recover, but other sectors like business travel and commercial real estate in New York City will “never be the same,” the author of ‘The Black Swan,’ said.
The current rise in employment numbers since the depths of the crash in March is largely thanks to technology companies that have adapted to the pandemic and are profiting right now, he added. It’s unlikely that airlines, for example, will re-hire employees that they laid off, Taleb said.
Leaked documents show Universa Investments made a 105% annual return on capital from 2008 to 2019. Here’s a behind-the-scenes look at its ‘tail-risk hedging’ strategy pioneered by ‘Black Swan’ investor Nassim Taleb.
“You have to think in terms of an economy that’s vastly different from the one before,” he said.
Taleb also said that the denial of the seriousness of the coronavirus and the false hope that a vaccine will quickly resolve the pandemic will continue to hurt the economy.
“I’m seeing a lot of denial in social life, everywhere, about this virus from the beginning. Now we’re 10 months into this virus, and people are still hoping for a vaccine, something that will cancel it,” Taleb said. “This kind of denial is what is causing us to incur such a high cost, in GDP, in many things, even social life.”
Taleb also told CNBC he’s concerned about the overconfidence of investors trying to predict the outcome of the election, especially after 2016. While the election won’t be a black swan event because the outcome will either be one candidate or the other, investors should treat the election as an “opaque system” where they don’t know what’s going to happen.
He also cautioned investors against trying to predict what the stock market will do in reaction to the election. According to Taleb, in 2016 investors said the stock market would collapse if Trump won, but the opposite happened.
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