In the May/June 2011 issue of Foreign Affairs Mr. Taleb and Mr. Blyth writean article titled The Black Swan of Cairo. The thrust of the piece is that complex systems must be allowed variability. Suppressing it in the pursuit of stability inevitably leads to larger variability later, often in catastrophicform.
We have been applauding Mr. Taleb for some time now for pushing theissues of control midst complexity through the media clutter. Theoretically,there is little to disagree with the article. Picture an anthill artificially fed by a kind picnicker for several months; when she leaves, the colony’s bloated size alone will force a hardship unbecoming, not to mention theoutsized pain of adjustment and relocation that otherwise would haveoccurred earlier and more often.
As EU leaders attempt to delay the contractions of nation restructuring, thearticle is receiving renewed attention. Bail-outs and money printing onlyexacerbate the ferocity of the inevitable societal adjustments to come. Ultimately there is no monetary answer to avoid the glacier of unfundedliabilities which approaches western governments.
Many value investors have given up on their strategy over the last 15 years amid concerns that value investing no longer worked. However, some made small adjustments to their strategy but remained value investors to the core. Now all of the value investors who held fast to their investment philosophy are being rewarded as value Read More
Full report embedded below:
Black Swans and Complexity
H/T: Zero Hedge