Our newsletter for the week is up, and it’s obvious that we have one thing on the brain: Thanksgiving dinner. That’s right- with Thanksgiving coming up this Thursday (where has the time gone this year?), many of us are finding our dreams peppered with the smells of creamy mashed potatoes, green bean casseroles, pumpkin pie, and, of course, a golden-brown turkey cooked to perfection. But this time of year doesn’t just bring up thoughts of delicious feasts, being the managed futures nerds that we are; this time of year also makes us think of Nassim Taleb’s wonderful turkey analogy from his book The Black Swan.
Taleb points out that, for the unsuspecting Thanksgiving turkey, life seems good. They’re well-fed and kept for days on end. They’re living the life. Each day of feeding boosts their confidence in being fed tomorrow. The problem, of course, is that all that fattening and making the turkey happy are a means to an end – the end being THE END for the turkey.
What in the world does this have to do with managed futures? Well, this turkey believes they have it pretty good, right up until the days before Thanksgiving, when they are slaughtered in order to be served up at the feast. To us, this complacency with positive results is strikingly similar to investors who live a pretty good life right up until they are served up unexpectedly to a market correction- particularly those invested in option selling programs. To find out how we advise averting meeting an end similar to that of the turkey with your option selling investments, read on.
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