Comments on: Black swan funds have their day in the sun http://blogs.reuters.com/felix-salmon/2011/08/11/black-swan-funds-have-their-day-in-the-sun/ A slice of lime in the soda Wed, 22 May 2013 12:59:50 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: TurtleBay http://blogs.reuters.com/felix-salmon/2011/08/11/black-swan-funds-have-their-day-in-the-sun/comment-page-1/#comment-29501 TurtleBay Sat, 13 Aug 2011 00:25:45 +0000 http://blogs.reuters.com/felix-salmon/?p=9295#comment-29501 Talebs whole point is that nothing in the future can be taken for granted. These guys may hedge a lot of types of risk, but a failure of the Options Clearing Corp (which would be a true black swan) would ruin them just like most other derivatives participant. Talebs whole point is that nothing in the future can be taken for granted. These guys may hedge a lot of types of risk, but a failure of the Options Clearing Corp (which would be a true black swan) would ruin them just like most other derivatives participant.

]]> By: dblob http://blogs.reuters.com/felix-salmon/2011/08/11/black-swan-funds-have-their-day-in-the-sun/comment-page-1/#comment-29487 dblob Fri, 12 Aug 2011 15:25:16 +0000 http://blogs.reuters.com/felix-salmon/?p=9295#comment-29487 Check the numbers - up on 5.5x on premium paid does not sound to me like 5.5x on AUM (they dont pay the entire capital of the fund each year). Check the numbers – up on 5.5x on premium paid does not sound to me like 5.5x on AUM (they dont pay the entire capital of the fund each year).

]]> By: wpw http://blogs.reuters.com/felix-salmon/2011/08/11/black-swan-funds-have-their-day-in-the-sun/comment-page-1/#comment-29482 wpw Thu, 11 Aug 2011 16:30:28 +0000 http://blogs.reuters.com/felix-salmon/?p=9295#comment-29482 More like an off-white swan to me but otherwise I agree. Probably because I misspent too much of my youth studying epistemology I am fascinated with how market types interpret this concept of a black swan. Most of what I see is a search for some mathematical solution to intellectual sloppiness, because to really grasp what a black swan is means admitting to the limits of one's knowledge and the alpha males who dominate markets are not good at admitting to any limits on their ability. They would be better off reading Fooled by Randomness, a far superior book but humbling for any successful investor who can at least be honest with himself. More like an off-white swan to me but otherwise I agree. Probably because I misspent too much of my youth studying epistemology I am fascinated with how market types interpret this concept of a black swan. Most of what I see is a search for some mathematical solution to intellectual sloppiness, because to really grasp what a black swan is means admitting to the limits of one’s knowledge and the alpha males who dominate markets are not good at admitting to any limits on their ability. They would be better off reading Fooled by Randomness, a far superior book but humbling for any successful investor who can at least be honest with himself.

]]> By: MarkWolfinger http://blogs.reuters.com/felix-salmon/2011/08/11/black-swan-funds-have-their-day-in-the-sun/comment-page-1/#comment-29474 MarkWolfinger Thu, 11 Aug 2011 12:55:19 +0000 http://blogs.reuters.com/felix-salmon/?p=9295#comment-29474 Felix, I don't agree. Because these funds own options, if a true market meltdown occurs, they will outperform in a spectacular manner and provide all the hedge that any investor needs. If properly managed (unlimited gain strategies), there is no chance of blowing up. That comment does not translate into a recommendation to invest in those funds - at least not now. Not when put prices are sky high. Options provide an intelligent hedge. Regards Mark http://bit.ly/kQG0C9 Felix,

I don’t agree. Because these funds own options, if a true market meltdown occurs, they will outperform in a spectacular manner and provide all the hedge that any investor needs.

If properly managed (unlimited gain strategies), there is no chance of blowing up.

That comment does not translate into a recommendation to invest in those funds – at least not now. Not when put prices are sky high.

Options provide an intelligent hedge.

Regards
Mark
http://bit.ly/kQG0C9

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