The Barbell Strategy - Concentrated bets - Diversification

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[1] The Barbell strategy,

Inspired by Taleb, this strategy suggests... "Instead of having medium risk, you have high risk on one side and no risk on the other. The average will be medium risk but constitutes a positive exposure to the Black Swan."

Positive Black swans are low probability but high impact events. For an IAS aspirant, it might mean acing the fiercely competitive exam, while a startup could see it as landing a major client or securing substantial VC funding round.

The aim of the barbell strategy is to be able to capitalize on upsides while capping what you lose from downsides.

Corollary: Once you have safe fallback options ,whether in the form of having an employable profile or strong education pedigree, aim for positive Black swans.

In my experience, this meant having the fallback options of returning to a computer science career if I didn’t capture the elusive Black Swan of UPSC success.

[2] Concentrated bets

Just an abridged version of the previous post.

Once you are sure of one side of the barbell, concentration of resources and efforts towards your aim is the next step.

Without concentrated efforts, it's almost impossible to achieve anything significant. Give your best without over-diversification.

[3] Diversification for preservation

Conversely, while concentrated bets are about creation and offensive mechanism, diversification serves as a protective mechanism - it aims at preservation.

It is also the time for stochastic tinkering. A time to experiment, unwind and explore uncharted territories.

Travel the country, trek to the Himalayas, become a philosopher or perhaps start writing on LinkedIn!