Shared by JohnH

Don’t you love a great book review? HatTip to Dave Lull

It’s been roughly 20 years since I’ve purchased a book with the intention of gaining insight into life lived wisely. Like nearly everyone else, nearly all of the time, I have read for other reasons: as an engaging diversion, to reinforce things I already believed, to further my knowledge relevant to my career, to get some concrete piece of practical information, etc. 

I’m going with a Black Swan inspired ETF portfolio, where I put the portion of my money I’m not prepared to lose (in this case, 55%) in a safe ETF, and the rest I spread over a bunch of opportunities with a high return potential, as follows:

55% Bonds (BND)

This gives me a nice 3% per year and keeps me safe in case all the other stuff crashes.

15% ARM (ARMH)

In case ARM turns out to be another black swan of AAPL proportions.

15% Oil (DBO)

In case I’m right suspecting that peak oil will drive oil prices up. (Note that I used to reccommend a leveraged 2X fund here – changed thanks to feedback.)

15% Small-Cap Stocks (VB)

In case the stock market stays healthy and a bunch of the small companies make it big.

These are my current choices, but keep in mind that, at least for the risky portion, you should probably make your own. Don’t trust me, what do I know? For that matter, what does anyone know? Trust no one. Your choices are as good as anyone else’s.

Drawing on unprecedented access to these four number-crunching titans, Wall Street Journal reporter Patterson tells the inside story of what they thought and felt in the days and weeks when they helplessly watched much of their net worth vaporize – and wondered just how their mind-bending formulas and genius-level IQ’s had led them so wrong, so fast.  Had their years of success been dumb luck, fool’s gold, a good run that could come to an end on any given day?  What if The Truth they sought — the secret of the markets — wasn’t knowable? Worse, what if there wasn’t any Truth?

Patterson tells the story not just of these men, but of Jim Simons, the reclusive founder of the most successful hedge fund in history; Aaron Brown, the quant who used his math skills to humiliate Wall Street’s old guard at their trademark game of Liar’s Poker, and years later found himself with a front-row seat to the rapid emergence of mortgage-backed securities; and gadflies and dissenters such as Paul Wilmott, Nassim Taleb, and Benoit Mandelbrot.  

Unbending narcissism of ideas: With rare, very rare exceptions, what people call a “good book” is anything that confirms their beliefs, exposes ideas they thought they had.

September 10, NYC was the most dangerous place in the world; September 12, the safest. Today, I walked around a nervous & deserted Beirut trying to mentally replay events: anxiety is the mother of safety; I feel so much safer when people stop me to talk about “Black Swans”.