The Black Swan: The Impact of the Highly Improbable

Barbell Strategy is a concept mostly used in the context of trading and investments, in which someone is simultaneously conservative and aggressive. Taleb explains that this investment strategy consists of placing the majority of the investment (85-90%) in safe investments while placing the remaining 10-15% in speculative investments that can potentially yield a higher gain but pose a greater risk. The average usually results in what Taleb calls "medium-risk." The strategy seems to take Black Swans into account, at least implicitly.

A "Black Swan" event is a highly improbable, virtually unpredictable event. Taleb argues that for an event to be considered a Black Swan it must meet the following criteria: it must be an outlier, it must have a heavy impact, and after the fact it must be explained in such a way that it later seems predictable or even preventable. The image of the Black Swan comes from the notion that at one time people believed that all swans were white; the sighting of a black swan challenged what was widely accepted as common knowledge. Taleb argues that people struggle to process the very possibility of Black Swan events.