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How To Become Unstoppable, Invincible, And Staggeringly Successful With The Barbell Strategy
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In the best-selling book Antifragile, author Nassim Taleb defines the barbell strategy as “pursuing both extremes and avoiding the middle solution.”
The reason is because of extreme events called Black Swans. They are unpredictable, with enormous positive or negative impacts. The barbell strategy allows you to take full advantage of the positive events while avoiding the negative ones.
The classic example is personal finance. Some investments are riskier than others, from safe hyper-conservative assets such as government bonds to highly volatile ones such as IPOs and cryptocurrencies. When using the barbell strategy, you invest only at the extremes, i e the government bonds and cryptocurrencies.
With this distribution, you have now decided how much you can maximally lose, which is only 10%. Conversely, the amount you can gain is infinite. You are now unstoppable and want as much volatility as possible, protected from the downside. You can adjust the distribution between the extremes depending on your risk tolerance.
