More on Black Swans

I am going to try to write about some of the concepts presented by Taleb in his thought-provoking book The Black Swan. I wish I would have read it before I went through my stock trading days, although that would not have been possible, since he wrote it in 2007, a few years after I squandered money in the stock market. He recommends having 85% of your money in extremely safe investments, and 15% of your money in risky bets.

The book is just chock full of prescient thoughts. For example, he writes about how Syria and Saudia Arabia are ripe for devasting chaos, and he writes about the global economic collapse that occured one year after he finished writing his book.

He points out that it is contagion that determines the spread of a theory, not its validity. One cannot help but think of the Obama contagion in that context.

Taleb has a doctorate in derivatives, and is an options trader. He points out that there have been ten days (Black Swans) in fifty years of trading that have accounted for one half the financial returns.

You and I are black swans, when you realize the extraordinary odds against our being alive. Like Donald Rumsfeld, Taleb writes about the importance of "unknown unknowns." He points out that our military leaders understand his concepts much better than any other professions. He asserts that models of contempory economics are fundamentally flawed, and modern financial theory is dangerous junk science.

He skewers the Nobel Prize (Obama and Gore are recipients; that is enough for me to be convinced it is a fraud). He points out that more people have been killed because of political, social and economic "sciences" than religion, although the left loves to skewer religion.

Taleb wants us to avoid being suckers, to think for ourselves, to be as much in control of our lives as possible. He warns us to avoid "mechanistic minds who don't want to deal with ambiguity," and likewise avoid "mind-closing certainties" induced by mathematical models such as the Bell curve.

More later. It's time to cook some corn on the cob and burgers for the kids.