I try to make money infrequently, as infrequently as possible simply because I believe that rare events are not fairly valued, and that the rarer the event, the more undervalued it will be in price.
About this quote
- What does it mean?
- Rare events are often mispriced by the market, becoming more undervalued as they become rarer.
- In plain terms
- Make money only when opportunities are very rare because rare things are priced too low.
- What can you take from it?
- Seek out extremely rare events for investment opportunities.
Where it applies
Putting it to work
Questions to consider
- What rare events are you ignoring?
- How do you price uncertainty?
Another view
Rare events can be impossible to predict or value accurately.
More from Nassim Nicholas Taleb
I always remind myself that what one observes is at best a combination of variance and returns, not just returns.
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