The Black Swan challenge.
Interesting comments by Nicholas Nassim Taleb, author of “The Black Swan”.
If I adhere to what he says, I should exit equities except for pure punting plays and to invest in “hard assets” – metals or commodities as well as agricultural land.
Also to avoid long-term US Government bonds like the plague.
Interesting.
Be well and prosper.
Category: Investments
Lawrence says:
On the contrary, because of “Black swan” one then can have the opportunity to buy low and sell high. Having said this, of course one has to always have some “reserve fund” beside those already in the market. Are September 11 2001 & 2008/2009 sub-prime meltdown considered as “Black Swan”? And all the other market’s “bubbles” too?
To me in life “Black Swans” are always present (hiding somewhere waiting to pounce). Fortunately for us, “White Swans” are so much more common and numerous.So,we enjoy the “white Swan” while we can and always make allowance for the sudden “Black Swan” to appear.
Maybe this concept belongs to Simple Simon.
But I have been practicing his concept for 22 years already.
And still survive with not to bad “$$$ Returns”.
NB: Sometimes, I have very little fund in the market. Why? Of course, waiting for the “Black Swan” to appear. But you must be able to have the spare($) and patience to wait.Is this “Market Timing”? If it is, so be it.
THANK YOU.
Panzer says:
Hi Lawrence
Yes, one needs to put aside spare cash for that black swan event. But the issue is how do we predict or recognise it when it comes and do we dare to put a large bet on that event?
For example, during the financial crisis in 2008, stock markets were at very low points. If I had bought UOB for instance then at S$8-9, and held for 1 year, I would have made 100% return in 1 year! The issue is that I didn’t have that much set aside and couldn’t afford to bet all my $ on UOB for that 1 year as it may have gone lower.
That is the challenge of investing in markets and trying to be financially free using it as the main vehicle!
Be well and prosper.
.-= Panzer´s last blog ..CIMB Starsavers Account =-.
Lawrence says:
Hi Panzer,
Sorry for this late response.
I agree Everyone is unique.
We all know no one can time the market successfully most of the time.
But after the market has crashed, we can usually see it.
The problem is no one knows how low can it goes.
So I usually enter the market too early using “DCA” for my watched stocks until this reserved sum money which I have parked somewhere runs out.
Then I am prepare to wait up to 5 years or more for the market to allow me to take profit.
The market always surprise me.
This time the market “turn around” in less then 2 years.
To tell the truth, at one time my portfolio was down by about 40 %
Now I have sold about 30 % of my portfolio.
God Bless.
Lawrence