Sunday, April 5, 2009

Black Swan Makes Sense

Here's Nassim Taleb making sense, as usual. On mark-to-market:
mark-to-market makes banks look more dangerous, exactly like a thermometer makes a patient look more sick. Eliminating the mark-to-market is exactly like putting your head in the sand.
On retirement investing:
Have a dual strategy. The first one is hyperconservative. As much as you can - whatever you don't want to lose, don't lose. Don't trust the market with what you cannot afford to lose. Whether 80%, 90%, 20%, whatever it is that you need for your retirement, and the rest is play money....We're going to de-financialize the economy, to what we had in the '50s, '60s, and '70s. People will be fed up with the stock market, and will realize that they cannot rely on financial assets, neither as a reservoir of value, nor as a means to earn a living.
If Taleb is right, and the public does sour on stocks for the long run, putting their money into ultrasafe Treasuries instead, then we could face a secular shift in market activity and salaries. The retirement of the Baby Boomers will certainly exacerbate this problem for stock brokers, as a generation cashes out whatever they have left. It could be a long time before we get back to the October 2007 highs.

No comments:

Post a Comment


Wikinvest Wire