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What do people think of the Black Swan theory?
by joubert 17y ago
What do people think of the Black Swan theory?
- retube 17y agoI think it's a good concept. Taleb has built a career off of this one idea, and although I find him generally conceited and quite smug, he is definitely on to something with this. Just look at recent events: BP oil spill, the meteoric rise of twitter from nowhere, Iceland volcano etc. The trouble is, of course, that you never know when/where the spike event will occur. He made a lot of money by holding far out-of-the-money options. You bleed a small amount of cash in time-decay, but when the event happens, you make a lot back. You could do a lot worse than putting 5 - 10% of your portfolio into such a strategy. Edit: I believe taleb lost money several years running doing this. He made it all back and more when the market crashed in 87.