The Achilles Heel of Capitalism

Taleb makes the point that the achilles heel of capitalism is that if you make corporations compete, it is sometimes the one that is most exposed to the negative Black Swan that will appear to be the most fit for survival.

I have made a similar point previously. Basically, those companies that appear to be "best in breed" are oftentimes those that are the rottenest, ie. they are cooking the books (eg. AIG).

Another Good Point - Seize the Opportunity

Seize any opportunity, or anything that looks like opportunity.

They are rare, much rarer than you think. Remember that positive Black Swans have a necessary first step: you need to be exposed to them.

Good Point from The Black Swan

Do not try to predict precise Black Swans - it tends to make you more vulnerable to the ones you did not predict.

Rather...

Invest in preparedness, not in prediction.

Hold Fast...Then Fade The Fading Seasonals

I am inclined to hold through to some ambiguous point in the first or second quarter 2013. I think the momentum and the seasonals are going to work in that favor. But I suspect resolution to the Fiscal Cliff and a burst of levity due to new year optimism will be worth fading.

It seems to me that the accumulation of obliviousness (classic market action - climbing the wall of worry) will peak and give way at some point to the weight of cumulative fears.

2012 has been a good year for the market. I don't think 2013 will be as good.

A Prayer of St Francis of Assisi

Lord, make me an instrument of your peace. Where there is hatred, let me sow love; where there is injury, pardon; where there is doubt, faith; where there is despair, hope; where there is sadness, joy; where there is darkness, light.

O Divine Master, grant that I may not so much seek to be consoled, as to console; not so much to be understood, as to understand; not so much to be loved, as to love. For it is in giving that we receive, it is in pardoning that we are pardoned, it is in dying that we are born again to eternal life.

Patience - One Of The Greatest Investment Skills

There are many skills an investor must have in order to be(come) a great investor. One of the greatest, and perhaps least appreciated, is the skill of patience. The ability to wait.

The structure of the markets and the nature of the investment management industry, in conjunction with our human essence, are predisposed against it.

The less I see of it in my own investment persona and its effects, the more I appreciate the value of patience.

I think the key with patience (and where its value lies) is that it allows you to pick your spot(s). To operate on your terms, when the conditions are most advantageous to you.

The Crux of the Matter

“If you can look into the seeds of time,
And say which grain will grow and which will not,
Speak then to me.”
– Macbeth, Act 1, Scene 3


Stole this quote from Crossing Wall Street this morning, but it reminded me of what I had been reading in Taleb's Black Swan.