Tuesday, October 7, 2008

"How to Live in a World of Black Swans: Nassim Nicholas Taleb's Take on the Financial Crisis"

What do a turkey being fattened up for Thanksgiving and Federal Reserve Board Chairman Ben Bernanke have in common?

According to Nassim Nicholas Taleb, author of the best-selling The Black Swan: The Impact of the Highly Improbable, both mistakenly act as if the past predicts the future. 

The turkey, getting fed for 1,000 days, expected only food from the farmer until the ax fell just prior to the holiday. Bernanke, author of “The Great Moderation,” mistook a lack of volatility for a lack of risk. 

They both failed to consider the potential for a “black swan,” the focus of Taleb’s speech on “How to Live in a World of Black Swans,” delivered to the Financial Planning Association’s annual conference in Boston on October 4. Taleb reviewed some of the concepts discussed in his book, and then concluded with a call for investing in robust “barbell” portfolios.

Continue reading my article, "How to Live in a World of Black Swans."


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Susan B. Weiner, CFA

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2008 by Susan B. Weiner All rights reserved

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