Gold does not rust, spoil or otherwise decay. But to Nassim Taleb, it is not antifragile.
Gold may be physically durable and culturally indispensable as a store of value over the centuries. Yet the metal doesn’t itself thrive by becoming stronger as a result of the inherent and unpredictable variations in conditions that the world constantly presents.
Electron Capital Partners' flagship Electron Global Fund returned 5.1% in the first quarter of 2021, outperforming its benchmark, the MSCI World Utilities Index by 5.2%. Q1 2021 hedge fund letters, conferences and more According to a copy of the fund's first-quarter letter to investors, the average net exposure during the quarter was 43.0%. At the Read More
This distinction hints at the subtle but resonant concept that Taleb (left) explores in his new book, Antifragile: Things That Gain from Disorder the trader-philosopher-professor’s follow-up to the immensely timely and popular – if widely misconstrued – “Black Swan.”
A longtime options trader, Taleb links these ideas to how something behaves in relation to volatility. An antifragile investment or organization experiences very small losses most of the time yet huge payoffs in moments of disruption, like owning an option. Pursuing a strategy aimed at suppressing volatility or trying to offset natural variations in markets, weather or other conditions is necessarily doomed, in Taleb’s argument. Those interested and willing to dive into the mathematics behind his theories can look at this Google Doc file Taleb has circulated.
H/T Josh Brown