One of Taleb's points is to avoid overconfidence in your opinions. Here you say "it was pure chance" rather than "it may have been pure chance" or "luck may have played some role" or "many people predicted the crisis, but luck separated those who made a bit from those who made 500%+". It seems like you didn't understand Taleb's thinking much after all, not surprising given your "savant" and distinctly non-Fat Tony background. People who actually trade their own capital for 10 years+ as a living don't have the luxury of relying on chance to pay the bills, or capriciously asserting strong views unsupported by any facts and logical reasoning. For no reason at all, I will pass on one tip that may help you profit in future. You never, never bet so much capital on an idea that you would go belly up, or even miss the move, just because your timing was off. It is very, very hard to time the collapse of bubbles (or anything else) with precision. Therefore the optimal approach is to wager small portions of capital, over a reasonable period of time, and wait for certain timing signals of real excess and ideally break-down before putting on your bets. Limited risk is essential to avoid the wipeout. For busts, the optimal strategy is to wait for real excess, then start putting 1 or 2% of capital into long-dated (1-2 years) puts. Then wait for the asset price (e.g. S&P index, real-estate ETF, financials ETF etc) to go into a confirmed downtrend e.g. fall below its 200 day moving average (or some other objective trend-following indicator). Once that happens, you can get more aggressive because in most bubbles this does not occur until the bubble is over (hence low chance of whipsaw on false signals). The other key point to remember is that the bust is always much deeper and longer than most expect. One can easily be 1 year late to a post-bubble bust, and still make great returns by shorting or put-buying as the bust continues. Bubbles don't go from insane overvaluation to fair value. They go to extreme undervaluation, and normally take 1.5-3 years to play out, not 6-12 months like a typical medium bear market. Be aware that major bear markets have insane volatility and huge sharp rallies. When fear hits front page headlines and the VIX spikes hard and fast, you will want to book some profits on your shorts, or at least use short-dated OTM calls to hedge your positions. These can be unwound as the market rises 10-20% in the subsequent days or weeks, re-establishing your full short. Only someone who does not know how to trade properly would ever say that being off on the timing stops you playing a guaranteed move (as near to guaranteed as possible in the markets). Timing difficulties are what stop you betting the ranch and consistently making 1000% each year there's a boom or bust. But even with poor timing, 30-100% is definitely possible during years where bubbles unwind and blow up. Even a novice can do well by exiting all assets exposed to the bubble and moving to cash or 5 year government bonds. Keep the risk limited and less dependent on exact timing, and wait for a breakdown in price over 3-6 months or more before upping the ante. If you study 2000-2002, and early 2007-Feb 09, there is a lot to learn about the art of trading post-bubble collapses.
Outstanding point. BTW: I've always considered you one of the few truly brilliant members on this site. Us middle aged lads have witnessed the metamorphosis of American savers from the bygone era of Passport Savings accounts to higher yielding "Cash Management" accounts to a point now with fully developed and electronically traded debt markets where a savvy investor can just about be his own investment bank. Recent principal drawdowns just may entice a few folks back into the "free parking" safety of the FDIC umbrella. Particularly if we see an uptick in yields. My guess is that much of last fall's flight to quality buying in Treasuries was from banks who are suddenly flush with "insured" deposits. Think about it. The reflex from risk to safety is just another way the public sector will crowd out the private in the quest for capital. Not to worry though. The Treasury has more than enough supply in the pipeline for everyone.....
If the actual risks of your 11% example are going to continue being hidden and/or subsidized, then answer may well be...no. In fact it should be no, as that's the rational market response. But my experience with people chasing yield is they were quite willing to be convinced the investment was "practically" risk free. Pull the curtain back on the actual risk and I suspect many more dollars would be happy with a government-backed 3%. Whether the taxpayer should be backstopping any of this is, of course, a separate question.