Even Taleb Predicts Sometimes

Nassim Nicholas Taleb is known for many things, but mostly he is known for pointing out just how stupid it is to try to predict the future.  The future is full of so many unknowns at every level that predictions are just bound to be worthless.

And if your prediction happens to come true anyway, Taleb will kindly point out how some predictions are going to be right once it a while – but don’t think that means you were right in your predicting.  About the only thing that Taleb feels comfortable predicting is that really big important things will happen that no one predicted.

But curious things do happen sometimes.  One of them seems to have happened earlier this month, when Taleb made a rather uncharacteristic statement.  He said it in such strong language that it’s difficult to dismiss. He said, in fact, that every single human should be betting against US treasuries.

Now, to be fair, he didn’t actually predict the future – but as you can see from this Bloomberg snippet, the uppity Taleb  wasn’t holding any punches either:

It’s “a no brainer” to sell short Treasuries, Taleb, a principal at Universa Investments LP in Santa Monica, California, said at a conference in Moscow today. “Every single human being should have that trade.”

Taleb said investors should bet on a rise in long-term U.S. Treasury yields, which move inversely to prices, as long as Bernanke and White House economic adviser Lawrence Summers are in office, without being more specific.

Bloomberg

One wonders just how many connotations “without being more specific” carries here… but obviously Taleb is no fan of the “bailouts and stimulus” crowd.  Still, for Taleb to predict anything should be raising eyebrows across the economic world.

And yet, as far as predictions go – which is perhaps not very far – predicting rising long term rates certainly does seem like something that must happen.  In honor, then, of Nassim Nicholas Taleb’s seemingly obvious yet surprising prediction, I am now adding TBF to the “Long Term Recommendations” list.

This is the first change to the recommended listing since the beginning of the blog, and I look forward to reviewing the past performance of the recommendations.  In addition, TBF will well compliment the other recommendations.  If you haven’t yet heard of TBF, it is TBT’s younger and less leveraged cousin, and it’s a new vehicle through which investors can bet against the value of the debt of the United States.