Fooled by swans
Posted on November 30, 2007 by Richard Beddard
Filed Under Investing |
…A massive impact on long-term stock returns, and attempting to forecast which days is a fool’s errand.
Black swans are rare events of enormous magnitude - major moves in stock market terms - that are difficult to predict. Professor Nassim Taleb, who popularised the idea of black swans in his book of the same name, trades them.
Steve LeCompte of CXO is unconvinced now. And he was unconvinced when he wrote a review of Fooled By Randomness, precursor to Black Swans (aka the book I still haven’t read, aka the book we love to hate):
We did not find in the book any discussion of how to identify rare event opportunities, or any quantitative analysis showing that Nassim Taleb’s strategy/tactics of speculating on rare events generates excess returns.
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