Mediocristan vs Extremistan: In Extremistan, one single observation can disproportionately affect the outcome.
Universa, a hedge fund made to exploit black swans, made 3,612% in March 2020 amidst the coronavirus crisis. Taleb is an advisor on the fund. However, on a ’normal’ day, Universa is always losing money.
If finance were Gaussian, then the 2008 crash (more than 20 std) would take place every several billion lifetimes of the universe. In the last 50 years, the 10 most extreme days in finance markets represent half the returns.
Universa, a hedge fund made to exploit black swans, made 3,612% in March 2020 amidst the coronavirus crisis. Taleb is an advisor on the fund. However, on a ’normal’ day, Universa is always losing money.