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The Black Swan by Nassim Nicholas Taleb

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Salv
Frequent Contributor
Any one read this book? Any thoughts on his views?
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22 REPLIES 22
SimonPB
Valued Contributor
the first one was the real deal .. Black Swan was a bore, more a money spinner after the success of Fooled by Randomness ..
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DST
Super Contributor
There are no black swans. Nor any white ones. All Swans are Grey. Once you know this, you can start...
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klapka
Super Contributor
He is worth reading. I got a lot out of both books. His facetiousness appeals to me too. Black Swan is far too long. He could have saved half the paper.
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Not applicable
He could have saved half the paper in "Fooled" too. Not a very green fellow this ! All to intellectual and esoteric.
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royandroy
Contributor
..and greatly impressed with his own supposed brilliance. I think his success was one of those lucky breaks. Now he's sitting around with other people's money waiting for another lucky break.
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klapka
Super Contributor
Do you think his success was as a result of randomness or a black swam?
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royandroy
Contributor
He had a long apprenticeship as a trader and eventually hit a lucky streak with a lot of other people's money. It could easily have gone the other way as did LTCM and recently MF Global etc etc. The market is littered with intellectual failures who lost billions of other people's money. Refer Moneyweb's article on Dealstream http://www.moneyweb.co.za/mw/view/mw/en/page294690?hot_topic=Dealstream When you win you write a book and when you lose you put everything in your wife's name.
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royandroy
Contributor
He had a long apprenticeship as a trader and eventually hit a lucky streak with a lot of other people's money. It could easily have gone the other way as did LTCM and recently MF Global etc etc. The market is littered with intellectual failures who lost billions of other people's money. Refer Moneyweb's article on Dealstream http://www.moneyweb.co.za/mw/view/mw/en/page294690?hot_topic=Dealstream When you win you write a book and when you lose you put everything in your wife's name.
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royandroy
Contributor
He had a long apprenticeship as a trader and eventually hit a lucky streak with a lot of other people's money. It could easily have gone the other way as did LTCM and recently MF Global etc etc. The market is littered with intellectual failures who lost billions of other people's money. Refer Moneyweb's article on Dealstream http://www.moneyweb.co.za/mw/view/mw/en/page294690?hot_topic=Dealstream When you win you write a book and when you lose you put everything in your wife's name.
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Not applicable
I think you missed the point. That is exactly what he is saying. Random luck plays a large part in a lot of people's success. The real geniuses engineer their luck.
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richardw
Super Contributor
My main takeaway from his book comes right at the end. He says try to position yourself so that black swans work in your favour. So where a value has limited possibility to move in one direction, but semi-unlimited in the other, position yourself to minimise damage while availing yourself of 'randomness' that will sooner or later make itself felt.

How I try to use it is e.g. in our current market, when we're sneaking around the maximums, I'll start adding shorts. Sure we can go up 25%, but with the EU bumbling along we're more likely to drop 50% if they break up. No rating agency is going to pop Greece to AAA in some mad greek swan of drunkenness, so moves upward are very likely to be 'reasonable'. Down...well there's a lot of EU effort to stop troubles, but in the near term there's a lot of room for unpredictable outcomes.
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Preston
Super Contributor
Too much theory. Best investment by John F Carter Book, you will never go wrong. Practical, and the best of all it will bring you money. Random Luck is all bulldust. You need to position yourself early so that when the move happens, you can capitalise and when all the fools rush in, you can sell and profit from the upside.
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Preston
Super Contributor
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richardw
Super Contributor
30% YTD, hardly relying on random luck. How is it that everybody thinks their own favourite fairy is the only way to go?
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Preston
Super Contributor
30% YTD is excellent. What is the win ratio?
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richardw
Super Contributor
Not sure, but I think generally pretty high since I tend to position so I can wait it out if I need to, and I layer trades depending on how confident I am. I was actually about 37% up around July but a couple big moves where I was ignoring my rules hurt me, and once where I got un-nerved about Greece.
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Preston
Super Contributor
You still have an excellent percentage taking into all other factors. Most of my losses was on SSF - "SELL SSF" and more specifically shortening SHOPRITE.
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richardw
Super Contributor
Yessir. 2009, platinum. Lessons in pain learned :)
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richardw
Super Contributor
Rules, only apply to how I think, in case anybody cares. Note that I don't think it's a particularly killer set of rules, but they're important for fixing mistakes I've made:

Avoid SSF. Too many moving parts (rand/dollar/resources/flavour of the week/whatever) for me. Lost some good money in 2009. Index futures are significantly more predictable and rational.
Don't look for both longs and shorts, getting all cross-eyed about which way it could go. Focus on one direction, wait until the situation falls into your lap. Simplifies thinking and you don't second-guess yourself as much. Even when it does look about perfect, wait a bit longer, because it will surprise you and give you a better entry.
Long 80+% of the time this year. The market likes long. In the absence of news, the market will drift up. After a big drop, reversals move fast because much of the market is long-only. Even relief rallies are useful for this. The US market likes to make cash on the upside, especially when it shouldn't go up and everyone is expecting a reversal, so often overshoots.
Caveat to no-short: when it's really, really high and EU has obvious unresolved issues, grow a pair. Short it. There's a relative ceiling above you and huge chasm below. But generally wait until it's been rising for a while, all news flow is happy and people are talking about taking out the highs. I've lost more opportunities by not doing this enough. Not sure we'll see many opportunities for this, though.
Don't trade for the sake of doing something. When it's in the middle and you're not sure, do nothing. Set a couple alerts and leave the market alone.
When you're feeling confident and you've had a string of good moves, watch yourself. Take a break.
Don't be scared to take small profits, against all advice. Made good money with small 1-2k bites on 'random' days, which helps a lot with covering mistakes.
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