Yet markets worked before mortgage-backed securities were invented. Have you read Talib's books? He's not arguing against taking risks, he's arguing that we shouldn't take risks that might bankrupt us, based on some high-falutin' economic model that says that the payoff is slightly larger than the risk, because the calculation is likely to be wrong. And he's arguing that because we can never understand these single events (the Black Swans) we must absolutely never put all our eggs in one basket. Resiliency is more important than efficiency, because in the long run the efficiency is an illusion brought on by imperfect understanding.
Yes, I have read Taleb's books and numerous academic articles by him. My comment was not about Taleb. It was a direct response to the parent of my comment.
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Yet markets worked before mortgage-backed securities were invented. Have you read Talib's books? He's not arguing against taking risks, he's arguing that we shouldn't take risks that might bankrupt us, based on some high-falutin' economic model that says that the payoff is slightly larger than the risk, because the calculation is likely to be wrong. And he's arguing that because we can never understand these single events (the Black Swans) we must absolutely never put all our eggs in one basket. Resiliency is more important than efficiency, because in the long run the efficiency is an illusion brought on by imperfect understanding.
Yes, I have read Taleb's books and numerous academic articles by him. My comment was not about Taleb. It was a direct response to the parent of my comment.