Black Hamsa?

I named this blog - Black Hamsa which will become translated as Black Swan in English. The Black Swan theory , made famous by Nicholas Taleb's book, says that a lot of happenings in this world were undirected and unpredicted.


In applying this to financial markets, I think there can be both positive black swan events or negative ones.For example, the Indian markets touching 21000 in January 2008 was a positive black swan event as nobody could justify the valuations of the market at that time.


The subsequent crash could be termed as negative black swan event as some analysts were predicting BSE index to rise to 45000.


I think we should try to exploit the positive black swan events to our advantage by making profits to protect against negative black swan events. My brother told me that Taleb recommends 85% of our portfolio in safe debt instruments and only 15% in equity markets.He recommends that we should be prepared to lose all of the 15% in equities but if a positive black swan event happens, make the most of it.


Personally, I missed booking profits at 21K and rued it when my portfolio went into the red by nearly 35%.Now, since the markets are up again, i am trying to take some profits of the table.
I think the sensex is over valued now and believe that it will crash 1 year down the line.