The use of aircraft as weapons on 9/11 could be a Black Swan as defined by NT but the market itself was already in a downtrend. From that point of view, the subsequent drop in the Dow etc. was a downtrend continuation, and nobody should have been surprised that price went further down. That particular event and type of event was obviously a surprise, but it is part and parcel of downtrends that some event will occur that has a further negative effect on price. The reverse for uptrends as its also possible to have a positive Black Swan
I was thinking about Taleb all last week and today while trading. This is not Black Swan by any stretch of the imagination, but traders that practice his method had a good payout last week and today.
===Nassim Taleb: Ask Me Anything=== no questions to taleb overall i like the guy, but he is not a trader and never will be, but even if he would be a great trader, still no questions
Barbell strategy. Take no risk and extreme risk at the same time. One way to implement that would be to buy T-bills and use the interest income to buy far OTM puts.
Sounds like a horrible strategy - in another thread a study was shown regarding different options strategies and which ones were most and least profitable over the long term - selling puts was the best, so buying puts would generally be the worst. Combine that with limited profit T-bill interest...
Most studies don't go to the tails of the distribution, usually only out to about 10%-20% OTM, so normal distributions applied. Maybe when you are way out there, DOTM, normal probability distribution does not work and the payoff functions are through the roof once disaster hits? However, like buying lottery you may have to wait a long time? I am a non professional just speculating, so correct me if I am wrong.