You Are All Soft! Embrace Chaos! – New York Times 12-16-12

Salient to Investors:

Nassim Nicholas Taleb says:

  • Black Swan effects are necessarily increasing as a result of complexity, interdependence between parts, globalization, and the efficiency that makes people sail too close to the wind.
  • We must make our public and private lives less vulnerable to randomness and chaos, but also “antifragile” — positioned to benefit or take advantage of stress, errors and change.
  • We have been fragilizing the economy, our health, political life, education, almost everything, by suppressing randomness and volatility. Top-down efforts to eliminate volatility like neurotically overprotective parents or Greenspan’s trying to smooth out economic fluctuations by injecting cheap money into the system, end up making things more fragile, not less.
  • Putting, say, 90 percent in boring cash and 10 percent in maximally risky securities avoids the risk of total ruin by putting 100 percent in so-called ‘medium’ risk securities.
  • Contemporary society suffers from the love of the modern for its own sake.
  • We are moving into uneven distribution of 99/1 across many things that used to be 80/20: 99 percent of Internet traffic is attributable to less than 1 percent of sites, 99 percent of book sales come from less than 1 percent of authors.
  • Economic forecasts are offensive irritants.
  • The more data you get, the less you know what’s going on.

Read the full article at http://www.nytimes.com/2012/12/17/books/antifragile-by-nassim-nicholas-taleb.html?pagewanted=1&_r=1&.

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