Excellent reading from the Worldy Wise Web.
Once upon a time, Black Swans were rarer than golden geese. But then Nicholas Taleb wrote his bestseller The Black Swan [1]
I have nothing against Taleb’s dark tome, although I prefer his earlier Fooled by Randomness [3]
But I do object to the ceaseless reaching for the Black Swan metaphor whenever anything happens that someone doesn’t like the look of.
- “A nuclear reactor has blown up – it’s a Black Swan event!”
- “Reckitt Benckiser’s CEO resigns – another Black Swan!”
- “The market is down today – Black Swan! Black Swan!”
- “Why knew ISA rates would fall to 3%? Talk about Black Swans.”
No, please don’t talk about Black Swans, not until you can tell one from a duck.
Anyway, The Motley Fool ran such an excellent piece [4] on spotting Black Swans versus red herrings that I’m making it today’s post of the week.
The author, Vincent Scheurer, writes:
The rule that all swans are white was never logically provable. However, the first person to see a real black swan (in 1697) immediately knew that the rule that all swans are white was wrong.
The point about the “Black Swan” in the modern sense of the word — the unexpected event with terrible consequences — is that it cannot be predicted in advance, which means that we as a society must take steps to ensure that its impact is minimised rather than spending all of our resources trying to stop it from happening in the first place.
That, in a nutshell, is why most of the efforts going into financial re-regulation are a waste of time.
Something else will go wrong, anyway. And we don’t yet know what.
From the blogs
- What’s your number? – Simple Living in Suffolk [5]
- Considering Reckitt Benckiser – UK Value Investor [6]
- Michael Burry speech on shorting subprime – Vanderbilt University [7]
- Different investing styles – The Digerati Life [8]
- Should you add gold to your portfolio? – Swedroe/Moneywatch [9]
- Is Dave Ramsey optimistic, irresponsible, or motivating? – The Portfolioist [10]
- 10 things we can’t live without – Len Penzo [11]
- How much do top income earners earn? – Financial Samurai [12]
- Investing at the edge of reality – The Psy-Fi blog [13]
- Japanese stocks: 34% of my portfolio – Gannon on Investing [14]
Money Maven roundup
- Len Penzo explores the question should I pay off my mortgage? [15]
- Oblivious Investor asks how is social security taxed [16]? [US]
- Help Me Travel Cheap explores BA’s 100,000 air miles CC promotion [17]. [US]
- The Military Wallet lists the best military credit cards [18]. [US]
- Canadian Finance Blog on tax planning [19]. [US]
Mainstream media on money
- The real housewives of Wall Street… – Rolling Stone [20]
- …the author also takes on Wall Street in this CNN video – via Ian Fraser [21]
- Good news on UK jobs – Flanders/BBC [22]
- DRIP your way to wealth – Motley Fool [23]
- Investors urged to check they understand ETFs – FT [24]
- What shares are value investors buying? – FT [25]
- The bullish case for gold, again – Merryn/FT [26]
- Investors now have £860 billion in ETFs – Telegraph [27]
- Britons ignore debt until it hits £10,000 – Telegraph [28]
- Tweet your complaint to get a result – Telegraph [29]
- UK economy to be monitored by the IMF – Independent [30]
- New fund highlights opportunities in oil – Independent [31]
- A bank has the right to raid your cash – Independent [32]
- Is sugar toxic? [Not investing-related, but probably right] – NYT [33]
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