Barbell strategy

Please don’t take this title too literally; this is not about weightlifting or high-rep barbell cycling as we see in CrossFit and Functional Fitness. This is about a strategy to limit risks and take any limits off possible benefits.

Taleb suggests a very defensive attitude towards protecting most of your assets against any uncertainty or risk. Remember, this comes from the guy who wrote a book highlighting unforeseen significant changes (“Black Swans”), so you will never 100% succeed in banishing all risk and being completely safe.

At the same time, Taleb suggests taking a very aggressive standpoint with a small portion of your assets. Call this a wildcard or a high-risk/high-reward potential. Let me give you an example to clarify:

When running your business, set your expenses up so that very few of them are fixed costs (you have to make them to be in business), and many are flexible costs (you only have to pay them after you have generated revenue). This barbell strategy would limit your risk of bankruptcy and guarantee you can stay in the game for years.

This strategy places the proper value on all forms of insurance.

Wear your seatbelt, have a fire extinguisher, diversify your assets, take the minimum effective dose, eat simple nutrition, and pay attention to prevention.

While simultaneously putting proper limits but not completely ruling out joining a lottery, investing in BitCoins, joining a start-up, and trying that new flashy shiny thing.