< back

Barbell Strategy

Nassin Nicholas Taleb, 2007, The Black Swan, Penguin Books: 371

If you know that you are vulnerable to prediction errors, and if you accept that most "risk measures" are flawed, because of the Black Swan, then your strategy is to be as hyperconservative and hyperaggresive as you can be instead of being mildly aggressive or conservative. (p205)

You are "clipping" your incomputable risk, the one that is harmful yo tou. Instead of having medium risk, you have high risk on one side and no risk on the other. The average will be medium risk but constitutes a positive exposure to the Black Swan. (p206)