One can be inundated with
all the information in Taleb’s book, but there is no point if it cannot be
converted (or interconverted) into useful knowledge. Different readers of the
book, for example, can read the same facts and come up with diametrically
opposite and yet equally plausible conclusions. Who is right?
My opinion after reading the book is, investors should recognize that economic outcomes, like investing, is really a game of probabilities. There are not a lot of definite things that will happen in the future but that only depends on the interfragility, not antifragility. To me, investments do not gain from disorder but they gain from order. (Some confuse the disorder to price volatility. When I refer to order or stability I am not referring to the VIX….)
My opinion after reading the book is, investors should recognize that economic outcomes, like investing, is really a game of probabilities. There are not a lot of definite things that will happen in the future but that only depends on the interfragility, not antifragility. To me, investments do not gain from disorder but they gain from order. (Some confuse the disorder to price volatility. When I refer to order or stability I am not referring to the VIX….)
To be more clear, Taleb
basically claims that decisions like the decision to allow Lehman to fail, was
good for the system. But would a different
governmental response have generated a less favorable outcome? I don’t think so….
Let me try to illustrate this: Who are the strong players today? We are all finally agreeing that the stock market is mainly driven by Fed actions…..so why is the Fed the strongest?
Let me try to illustrate this: Who are the strong players today? We are all finally agreeing that the stock market is mainly driven by Fed actions…..so why is the Fed the strongest?
After letting Lehman fail,
the central banks were under popular pressure to save the world, so obviously
they had to apply stimulus in large enough quantities to replace dwindling
export demand. The remaining research to be done is then consisted of
identifying whether saving Lehman would have avoided the necessity to apply such
aggressive stimulus?
The recovery came through the
injection of stimulus packages, not the “antifragile” concept of letting Lehman
fail. The saving of Lehman would be the
best stimulus and the best multiplier effect that would avoid the concept of
quantitative easing. Saving Lehman would
have been a qualitative measure.
Indeed one of the most inevitable outcomes of 2008's subprime crisis, in retrospect, was the danger of collapse facing the financial system. Hence, the collapse of Lehman did not only affect banking stocks, but indeed all stocks. The Fed since then has tried to avoid making the same mistake because it knows we live in an interfragile economy, not an antifragile one….
Indeed one of the most inevitable outcomes of 2008's subprime crisis, in retrospect, was the danger of collapse facing the financial system. Hence, the collapse of Lehman did not only affect banking stocks, but indeed all stocks. The Fed since then has tried to avoid making the same mistake because it knows we live in an interfragile economy, not an antifragile one….
No comments:
Post a Comment