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No more black swans

Posted in Finance by Pankaj Gudimella on April 8, 2009

Here are the ten principles for a black swan proof world from Nassim Taleb in FT.

1. What is fragile should break early while it is still small.
2. No socialisation of losses and privatisation of gains.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks.
5. Counter-balance complexity with simplicity.
6. Do not give children sticks of dynamite, even if they come with a warning.
7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.
8. Do not give an addict more drugs if he has withdrawl pains.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.
10. Make an omlette with the broken eggs.

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