And I am a firm believer of this theory .
When everyone stops believing , stops predicting a recovery , stops being optimistic
and becomes an hard core pessimist , that'll mark the begining of the next economic boom.
I dont mean a zero/negligible recovery , as is happening now , but a massive boom like the 2003-2007 period , or may be even bigger. And by the time we realize , we'll be right in the middle of one .
Because history has proven time and again that swings of such draconian magnitudes, on either side , be it the in the stock markets or the economy , always happen when least expected !
BTW, the "experts" are predicting recovery. Some as early as 2010. Based on your theory does this mean the recovery won't happen til much later, when the experts don't think we will recover? Or do you mean the boom will happen when the experts stops predicting recovery, because every thinks we have recovered?
Joined: Jul 13, 2005
IMHO, nobody has ever correctly predicted financial booms/crisis in the history of financial markets. These things don't work according to logic.
A logic can be drawn only after the event .
These are black swan events , very difficult to predicted, occurs when least expected and
made to look obvious by "experts" after its occurrance.
IMHO, the next boom will also tread on the borders of being a black swan , if not a full black swan . Maybe a grey swan .
A sector, completely unkown now, might take the charge and lead the next boom. Technology might not lead . You'll then have people scrambling to get into that sector,
like what happened in IT in the 90s. The boom might be of a magnitude unheard of before . Massive and enormous , dwarfing the previous booms .
May be a boom might never happen for a hundred years and we might suddenly find ourselves in the midst of a third world war . I am somehow convinced that its not going to be on the lines of the previous boom .
Anyone close to a correct prediction and taking steps accordingly (taking up work in correct sector or buying stocks which are dirt cheap now but might become another google later on) is going to very rich.
Given my limited mental capabilities, the supplied wikipedia article about Black Swan seems self-contradictory.
First it is said that the "Black Swan" event is something totally unpredicted.And then it is said:
...hence his idea is to "avoid being the turkey" by finding out where one may be exposed to being a turkey ...
The moment you predict and plan for its prevention, it is no more unpredicted.It is no more the so-called "Black Swan".
I mean how do you predict and prepare for something as unpredictable as the Personal Computer?
Joined: Jul 13, 2005
May be he means unpredictable for a vast majority .
Taleb reportedly earned an hedge millions in profit in the 2008 stock market crash,
as an advisor to the fund, using his black swan theory.
I have just got hold of that book "The Black Swan", and every line from the very first page just whizzes past over my head , like a 100 mph bullet . Its way too rich in langauge and content .
His earlier book , "Fooled by randomness" was just like a primer to the whole concept of randomness and biases, but black swan is way too rich in content, since it deals with the origins of taleb's thought process, how he became a probabilist and the events that influenced his thinking.
Taleb is a genius , one of his kind, transcending all boundaries !