nntaleb: The Bed of Procrustes: Philosophical & Practical Aphorisms”, N N Taleb (of Amioun), c. Jan 2011 www.fooledbyrandomness.com/aphorisms.pdf
Shared by JohnH
HatTip to Dave Lull WSJ is behind a paywall unless you search for the story and connect to it through Google. For now.
Prof. Nassim Nicholas Taleb was in his native northern Lebanon last week, thinking about instability in the pricing of goods and services. He also was shopping for olive orchards.
The mathematical finance scholar who lectures at New York University and wrote the 2007 book “The Black Swan” said he is as pessimistic as ever about the prospects for sustained global economic recovery. He suggests that investors around the world strap in for a wild ride of deflation and inflation. And, therefore, he said, it makes sense for him to pour money into farming, especially olives, which are indispensable to the Mediterranean world.
Just as no monkey is as attractive as the ugliest of humans, no academic is worthier than the worst of the creators.
At this point I think it would be helpful to illuminate what I’ve been doing both in reaction to the economic data and to be proactive to what I think is still to come.As you may have read already on my Portfolio page, I do employ black swan protection protocols rather consistently month to month.What this means is, each month I purchase the following months’ put options on the SPY (the underlying investment symbol for the S&P500 stock index).These put options, which reflect a bearish outlook on the underlying investment, are bought “out of the money,” meaning the anticipated price (or strike price) that I’m purchasing is below the actual price of SPY as it stands today.So for example, SPY closed around 107 today, and my September puts have a strike price of 100.If the SPY were to make a sharp move downward below 100 before September 18 (the day my options expire), I would profit handsomely.If the puts expire out of the money I’ll lose my entire initial investment sum.
HatTip to Dave Lull
Nassim Nicholas Taleb is the author of The Black Swan. He is at work on a paper called “Why Did the Crisis of 2008 Happen?” (Links to NNT pdf)
“The captain goes down with the ship…”
Time to realize that capitalism is not about free options. The captain goes down with the ship — all captains and all ships — making everyone involved in risk-bearing accountable, no exception, none. Morally, legally, whatever can be done. That includes the Nobel (Bank of Sweden), the academic establishment, the rating agencies, forecasters, bank managers, etc.