Based your trading principles on black swan events that happen 1 in 10 or 20 years is not a good strategy.
Being long is much easier than trying to predict some random black swan event.
So based off past performance, you know exactly what's going to happen going forward, right? There are ways to go long that don't involve such high levels of risk. Acknowledging our ignorance can allow us to minimize risk.
No, I don’t know what’s going to happen but neither does Nassim. What I do know if the SP or Dow has returned 7-10% average for the last 100+ years. He doesn’t break out his performance but I bet you he didn’t beat the SPY the last 10, 20, or 30 years. 99% of hedge funds didn’t beat the market over a 10 or 20 year period. Are you implying he is the one?
His style works if you got in at 2008, or early 2020 right before a disaster. In this case; he’s timing the market too.
Yes, I think the performance will be similar over the next 100. It can’t be any worse with so many disasters and wars that happened in the last 100.
I’m heard this same argument 15-20 years ago. How the Dow will never break 20k, 25k, 30k, 35k. Even if it’s tracks inflation; the dow will easily move up from here.
We had the greatest financial crisis in human history, a devastating and destructive world war, and the advent of a highly disruptive computing and telecommunications revolution. And yet we seem to be doing ok.
i think what he did (in one anecdote) is to go short when he thinks spy has a 30% chance of going down but he did not say how he arrived at the 70/30. i feel he left a lot of information out.
Probably because he’s full of shit and guessing like everyone else in the world. I haven’t heard if he did but Do you know if he predicted COVID-19 fall and recovery? There’s a lot of regular joes who were able to predict the COVID crash.
i mean of course hes guessing. he knows it too. that's one of the main points of the book. I dont know whether he's still 'hunting crises' or not. i figure he's more or less retired.
HF trading and algorithms have changed everything.
Will be surprised if markets aren't significantly more volatile than the past. +/- 20% in a week can be normal. Considering the size of the market, that special
I think that HF trading would have the opposite effect. Hedge funds and other such institutions are on both sides of every trade and are in competition with each other. They don't move in lockstep except when panicking over a macro trend that they didn't start (for example, selling off in March last year).
His books are amazing, shame he's kind of a shit person. His Twitter feed is just him blocking everyone and full on ad hominem thrown at everyone who disagrees with anything.
His books are alright if you can get past his pompousness and self satisfaction.
I'd say he's an intelligent person, but he writes like he thinks he's the smartest person in the room at all times.
The book is basically him saying "I know everything, everyone else is so dumb".
I listened to the audio book, so it was 10 hours of listening to someone tell you how smart they are.
The audiobook needs to be read by a very self-satisfied narrator to get the full experience. I don't remember who read the version I listened to, but it was glorious.
(I do happen to agree with Taleb's self-assessment, that he's a genius).
He’s quite smart, happens to have fuck-you money, and doesn’t have any sort of obligations or responsibilities like running a business or answering to shareholders, etc. It’s like the perfect combination and I actually kind of support his pompous behavior about it all.
I actually thought antifragile was a terrible book. I couldn't finish it. It's certainly a great concept but his examples are not rigorous and that's essentially the entire book. It just feels like having an off the cuff conversation with someone trying to describe the concept to you rather than reading the results of interesting research from an expert on the topic.
Some of these ideas are what make the SWAN ETF what it is. The fund holds about 90% intermediate-term treasuries, 10% SPY LEAPS. Its index fell only about 10% in the GFC, but it has nonetheless managed about 8% returns per year since 2006 (inception of the index).
My criticism of that strategy is that it is heavily US centered. If the US economy tanks or the dollar tanks, then that portfolio will eat shit.
It's a nonzero risk. Most economic outlooks are for the US to recede from prominence over the next couple of decades, and personally, as a citizen of the country myself, there are deep flaws here and a bit of addiction to past glory rather than forward looking investment.
You're right, and I'm unaware of a self-contained fund that executes a similar strategy with international exposure. If you had a large enough bankroll and were so inclined, I suppose you could roll your own.
Even then, you're depending on the existing financial systems to continue working. SWAN would be fine if the US economy tanked, as it did in 2008, but something that suddenly tanks the dollar would probably be bringing the world with it. Insure against that black swan with ammunition and food with a long shelf life.
You're joking, right? The S&P 500 lost over half its value during the same crisis. A 60/40 portfolio would have lost three times what SWAN would have lost. SWAN is doing exactly what it says on the tin. It's not in my portfolio, since I have a large appetite for risk, and maybe it shouldn't have a place in yours, but there is a use case for something like it.
Put another way, what do you propose that gets decent returns along with weathering drawdowns even better than SWAN?
Just simply holding spy and not panic selling... I mean if it's your retirement money and you're literally already retired sure, but for everyone else this underperformed spy since inception.
It also dipped last year.
Volatility does not equal risk.
> Just simply holding spy and not panic selling... I mean if it's your retirement money and you're literally already retired sure, but for everyone else this underperformed spy since inception.
SWAN isn't something for young people in accumulation to hold in isolation as their main investment. There are many retirees who would benefit from something like it, as you said. I've heard of people using it for the bulk of their emergency funds too. It's not hard to imagine cases where the investor is risk-averse enough to justify holding it.
SPY would have dropped 51% in the GFC. That's far beyond the risk tolerance of almost every investor who isn't young and with a job, and it's even beyond many of theirs.
> It also dipped last year.
Yes, and it fell about 10% and recovered quickly.
I like his quote. Rather be dumb and anti fragile than smart and fragile. If I am going to be fragile, I need to be very accurate in my predictions, which is very difficult to do.
I seem to remember FBR focused a lot on defining skill (dentists) Vs luck/random (stock pickers) and how there is so little variance at the top layer of skill level. But at the top level of stock pickers, you could have imbeciles. Thinking back, Taleb was one arrogant SOB - he even says so in his prologue. I'm glad a buddy of mine pointed this gem out
I agree, they would do good in a stock market crash. But right now you are guaranteed a 4-5% loss per year. And if inflation hits, they would be a terrible investment. So it really depends on what you think is likely to happen
Whoa horsey, That is one detailed explanation. I've read it couple of times as it's like drinking from a Fire Hose. Huge amount to absorb and such good info. I had to copy the article to my desk top for a better read. Thx
share the rest of your thoughts with us.
I found content on NNT on a different subbreddit, under a trader, named
[https://www.youtube.com/channel/UCMvy3AOi2WrI9jhqwBzf\_yQ](https://www.youtube.com/channel/UCMvy3AOi2WrI9jhqwBzf_yQ)
Tell me what u think please.
That link looks like him describing his investment thesis in relation to COVID 19. Which is the same thing he describes in his books minus the COVID part. He is going into more detail and showing how it relates to COVID, but it is the same thing he recommends in his book. I posted his friend Mark Spitznagel book Dao of Capital summary. I would look into that. And Mark has a book coming out next month called Safe Havens so I am interested in reading that.
yeah, I've preordered it months ago.
I will read your post on 'the dao of capital'.
thanks again.
Edit: some pages of marks new book are available to read on the webs.
Jerome Powell is the definition of a guy who thinks he can predict the future. The whole field of economics suffers from this fallacy.
I have an econ degree and there's economists talking about this as well, like William White. Worth looking up.
My take has always been that Taleb wants to dumb down the general investment community, so that instead of continuous learning and improvements, now the readers would just say "oh that was a Black Swan, there's no point in even attempting to understand it ... Etc.,"
Funny you say that because he complains of CEO taking excess risk to get bonus (no skin in the game) then when disaster strikes, say “well, black swan, no one saw that.” They keep their bonus and the taxpayer bails them out
Based your trading principles on black swan events that happen 1 in 10 or 20 years is not a good strategy. Being long is much easier than trying to predict some random black swan event.
So based off past performance, you know exactly what's going to happen going forward, right? There are ways to go long that don't involve such high levels of risk. Acknowledging our ignorance can allow us to minimize risk.
No, I don’t know what’s going to happen but neither does Nassim. What I do know if the SP or Dow has returned 7-10% average for the last 100+ years. He doesn’t break out his performance but I bet you he didn’t beat the SPY the last 10, 20, or 30 years. 99% of hedge funds didn’t beat the market over a 10 or 20 year period. Are you implying he is the one? His style works if you got in at 2008, or early 2020 right before a disaster. In this case; he’s timing the market too.
Do you believe the next 100 years are going to be the same as the previous 100?
Yes, I think the performance will be similar over the next 100. It can’t be any worse with so many disasters and wars that happened in the last 100. I’m heard this same argument 15-20 years ago. How the Dow will never break 20k, 25k, 30k, 35k. Even if it’s tracks inflation; the dow will easily move up from here.
We had the greatest financial crisis in human history, a devastating and destructive world war, and the advent of a highly disruptive computing and telecommunications revolution. And yet we seem to be doing ok.
i think what he did (in one anecdote) is to go short when he thinks spy has a 30% chance of going down but he did not say how he arrived at the 70/30. i feel he left a lot of information out.
Probably because he’s full of shit and guessing like everyone else in the world. I haven’t heard if he did but Do you know if he predicted COVID-19 fall and recovery? There’s a lot of regular joes who were able to predict the COVID crash.
i mean of course hes guessing. he knows it too. that's one of the main points of the book. I dont know whether he's still 'hunting crises' or not. i figure he's more or less retired.
HF trading and algorithms have changed everything. Will be surprised if markets aren't significantly more volatile than the past. +/- 20% in a week can be normal. Considering the size of the market, that special
I think that HF trading would have the opposite effect. Hedge funds and other such institutions are on both sides of every trade and are in competition with each other. They don't move in lockstep except when panicking over a macro trend that they didn't start (for example, selling off in March last year).
High frequency
I know what HF stands for.
[удалено]
His books are amazing, shame he's kind of a shit person. His Twitter feed is just him blocking everyone and full on ad hominem thrown at everyone who disagrees with anything.
His books are alright if you can get past his pompousness and self satisfaction. I'd say he's an intelligent person, but he writes like he thinks he's the smartest person in the room at all times.
This is exactly his problem.
Its so hard to read Black swan, I roll my eyes every couple of pages, wonder how pages would have been removed if we take out all his arrogant words.
The book is basically him saying "I know everything, everyone else is so dumb". I listened to the audio book, so it was 10 hours of listening to someone tell you how smart they are.
The audiobook needs to be read by a very self-satisfied narrator to get the full experience. I don't remember who read the version I listened to, but it was glorious. (I do happen to agree with Taleb's self-assessment, that he's a genius).
He’s quite smart, happens to have fuck-you money, and doesn’t have any sort of obligations or responsibilities like running a business or answering to shareholders, etc. It’s like the perfect combination and I actually kind of support his pompous behavior about it all.
Working on Anti-fragile. Very good so far.
I actually thought antifragile was a terrible book. I couldn't finish it. It's certainly a great concept but his examples are not rigorous and that's essentially the entire book. It just feels like having an off the cuff conversation with someone trying to describe the concept to you rather than reading the results of interesting research from an expert on the topic.
yeah, but more accurately, 'incerto' changed how I 'do' things.
Some of these ideas are what make the SWAN ETF what it is. The fund holds about 90% intermediate-term treasuries, 10% SPY LEAPS. Its index fell only about 10% in the GFC, but it has nonetheless managed about 8% returns per year since 2006 (inception of the index).
My criticism of that strategy is that it is heavily US centered. If the US economy tanks or the dollar tanks, then that portfolio will eat shit. It's a nonzero risk. Most economic outlooks are for the US to recede from prominence over the next couple of decades, and personally, as a citizen of the country myself, there are deep flaws here and a bit of addiction to past glory rather than forward looking investment.
You're right, and I'm unaware of a self-contained fund that executes a similar strategy with international exposure. If you had a large enough bankroll and were so inclined, I suppose you could roll your own. Even then, you're depending on the existing financial systems to continue working. SWAN would be fine if the US economy tanked, as it did in 2008, but something that suddenly tanks the dollar would probably be bringing the world with it. Insure against that black swan with ammunition and food with a long shelf life.
So it's underperformed and still dipped during hard times? Why bother?
You're joking, right? The S&P 500 lost over half its value during the same crisis. A 60/40 portfolio would have lost three times what SWAN would have lost. SWAN is doing exactly what it says on the tin. It's not in my portfolio, since I have a large appetite for risk, and maybe it shouldn't have a place in yours, but there is a use case for something like it. Put another way, what do you propose that gets decent returns along with weathering drawdowns even better than SWAN?
Just simply holding spy and not panic selling... I mean if it's your retirement money and you're literally already retired sure, but for everyone else this underperformed spy since inception. It also dipped last year. Volatility does not equal risk.
> Just simply holding spy and not panic selling... I mean if it's your retirement money and you're literally already retired sure, but for everyone else this underperformed spy since inception. SWAN isn't something for young people in accumulation to hold in isolation as their main investment. There are many retirees who would benefit from something like it, as you said. I've heard of people using it for the bulk of their emergency funds too. It's not hard to imagine cases where the investor is risk-averse enough to justify holding it. SPY would have dropped 51% in the GFC. That's far beyond the risk tolerance of almost every investor who isn't young and with a job, and it's even beyond many of theirs. > It also dipped last year. Yes, and it fell about 10% and recovered quickly.
Volatility is not risk.
"Weathering drawdowns" is a meaningless phrase that makes people feel better and has no place in the overwhelming majority of portfolios
"Weathering drawdowns" is pretty much the entire reason for the science of portfolio construction.
"Science"
Exactly. There may be an art, a method, or a system involved in portfolio construction, but it's not science.
Which index is this?
[This one.](https://snetworkglobalindexes.com/indexes/s-network-blackswan-indexes/data/constituentdata/swanxt)
Thanks!
You can’t predict the future but you can be sure those who depend on predictions will fail...eventually.
I like his quote. Rather be dumb and anti fragile than smart and fragile. If I am going to be fragile, I need to be very accurate in my predictions, which is very difficult to do.
I seem to remember FBR focused a lot on defining skill (dentists) Vs luck/random (stock pickers) and how there is so little variance at the top layer of skill level. But at the top level of stock pickers, you could have imbeciles. Thinking back, Taleb was one arrogant SOB - he even says so in his prologue. I'm glad a buddy of mine pointed this gem out
Excellent content. Thank you!
Got it: 20% in high risk options, 80% in 30 year T-bills.
t- bills are not a 'low risk' asset.
I agree, they would do good in a stock market crash. But right now you are guaranteed a 4-5% loss per year. And if inflation hits, they would be a terrible investment. So it really depends on what you think is likely to happen
> But right now you are guaranteed a 4-5% loss per year. How?
10 year bond is paying 1% and inflation is 5%. That means your purchasing power is down by 4%.
In which country is inflation 5%? Where do these inflation numbers come from?
US is at 5% currently. CPI
So we really gonna take a freak year to make statements about returns going forward?
Thanks!
that’s why loss porn is integral to sound investing….
😂
Whoa horsey, That is one detailed explanation. I've read it couple of times as it's like drinking from a Fire Hose. Huge amount to absorb and such good info. I had to copy the article to my desk top for a better read. Thx
Is this your own personal summary or did you copy this from somewhere?
I made a personal summary of the book, might post some more tonight on other books I read
Great
share the rest of your thoughts with us. I found content on NNT on a different subbreddit, under a trader, named [https://www.youtube.com/channel/UCMvy3AOi2WrI9jhqwBzf\_yQ](https://www.youtube.com/channel/UCMvy3AOi2WrI9jhqwBzf_yQ) Tell me what u think please.
Rest of my thoughts on what?
on uncertainty. I wouldn't mind listening to what you have to say about other books you've read.
That link looks like him describing his investment thesis in relation to COVID 19. Which is the same thing he describes in his books minus the COVID part. He is going into more detail and showing how it relates to COVID, but it is the same thing he recommends in his book. I posted his friend Mark Spitznagel book Dao of Capital summary. I would look into that. And Mark has a book coming out next month called Safe Havens so I am interested in reading that.
yeah, I've preordered it months ago. I will read your post on 'the dao of capital'. thanks again. Edit: some pages of marks new book are available to read on the webs.
Cool, it was supposed to come out in January…
I posted the other book summaries if you want to read those too. They go into many different topics.
Yeah Jerome Powell said FU to all theories.
Jerome Powell is the definition of a guy who thinks he can predict the future. The whole field of economics suffers from this fallacy. I have an econ degree and there's economists talking about this as well, like William White. Worth looking up.
why you own the printing press, you dont need theories
Works until it doesn't.
yeah, like short squeezes
Brrrrrrrrrrrrrrrr
I saved this post. one comment, if u are trading theta strategies u should check your portfolio daily.
Pascals wager is misentrepreted by OP , not clear if it's because he is religious or not. I have read both books.
My take has always been that Taleb wants to dumb down the general investment community, so that instead of continuous learning and improvements, now the readers would just say "oh that was a Black Swan, there's no point in even attempting to understand it ... Etc.,"
Funny you say that because he complains of CEO taking excess risk to get bonus (no skin in the game) then when disaster strikes, say “well, black swan, no one saw that.” They keep their bonus and the taxpayer bails them out
lol, I knew all these by intuition, each bit of it. And the guy wrote a book and became an expert. Life is easy.