Mark Spitznagel - Safe Haven

1 Cover

2 Title Page SAFE HAVEN Investing for Financial Storms MARK SPITZNAGEL

3 Copyright Copyright © 2021 by Mark Spitznagel. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 750‐4470, or on the web at www.copyright.com . Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at http://www.wiley.com/go/permission . Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762‐2974, outside the United States at (317) 572‐3993 or fax (317) 572‐4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our website at www.wiley.com . Library of Congress Cataloging‐in‐Publication Data is Available: ISBN 9781119401797 (Hardback) ISBN 9781119402527 (Epdf) ISBN 9781119402510 (Epub) Cover Design: Paul McCarthy Cover Art: © Annabelle Breake / Getty Images Author Photo: Courtesy of the Author

4 Dedication I was burned out from exhaustion, buried in the hail Poisoned in the bushes an’ blown out on the trail Hunted like a crocodile, ravaged in the corn “Come in,” she said, “I'll give ya shelter from the storm” Bob Dylan

5 Foreword Foreword Nassim Nicholas Taleb SANTA MARINA SANTA MARINA In my ancestral village in the Northern Levant, on top of a hill, stands a church dedicated to Santa Marina. Marina is a local saint, though, characteristically, some other traditions claim her—such as Bithynia or other Anatolian provinces of the Eastern Roman Empire. Marina grew up in a wealthy family, in the fifth century of our era. After the death of her mother, her father decided to turn his back on civil existence and embrace a life of monasticism. His aim was to spend the rest of his life in a cell carved in the rocks, in the Connubium (Qannubin) valley, at the base of Mount Lebanon, about eight miles from my village. Marina insisted on joining him and faked being a boy, Marinos. About a decade later, after the death of her father, a visiting Roman soldier impregnated the daughter of a local innkeeper and instructed her to accuse the defenseless father Marinos of having committed the deed. The innkeeper's daughter and her family complied, fearing retaliation by the Roman soldiers. Marina took the blame—yet she did not need a tough litigator to prove her innocence. She refrained from revealing her biological gender, to remain true to her monkhood identity and what she perceived to be the holiness of her mission. So Marina was forced to raise the child, and to make penitence for an act she never committed, she lived for a decade the life of a beggar outside the walls of the monastery. Marina faced daily contempt from her peers and the local community. Yet she stood firm, never giving into the temptation to reveal the truth. After she died prematurely, her gender was revealed during the purification rituals. The iniquity of the accusers was exposed posthumously, and she was venerated into Greek Orthodox sainthood. The story of Hagia Marina shows us another variety of heroism. It is one thing to commit spontaneous grandiose acts of courage, risk one's life for the sake of a grand cause, become a hero in battle, drink the hemlock for the sake of the philosophical death, become a martyr by standing tall while being maimed by lions in the Roman Coliseum. But it is much, much harder to persevere with no promise of vindication, while living the daily grind of humiliation by one's peers. Acute pain goes away; dull pain is vastly harder to bear, and vastly more heroic. SPITZ MUTUA MULI COST‐EFFECTIVE RISK MITIGATION

6 Part One: What Comes First Chapter One: At War with Luck WRITTEN IN BLOOD PROBING BETS WHAT'S A SAFE HAVEN? THE GREAT DILEMMA FIRST PRINCIPLES MODUS TOLLENS DEDUCTIVE DICE Chapter Two: Nature's Admonition THE SWISS FAMILY BERNOULLI THE SAINT PETERSBURG PARADOX EMOLUMENTUM MEDIUM THE GEOMETRIC AVERAGE THE OTHER SAINT PETERSBURG PARADOX CONCAVITY OF CURVE THE LOGARITHMIC RHINE FALLS Chapter Three: The Eternal Return AN EXISTENTIAL IMPERATIVE INTO THE MULTIVERSE DICE WITH SCHRÖDINGER'S DEMON ( N = ∞) DICE WITH NIETZSCHE'S DEMON ( N = 1) THE HUSTLE OF NON‐ERGODICITY MAGIC TRICK OR MATH TRICK? SIDE BETS A GLIMPSE OF TREASURE

7 Part Two: What Comes After Chapter Four: A Taxonomy ESSENTIALISM MORE DIFFERENT THAN ALIKE PHENOTYPES RISK‐MITIGATION IRONY IMPOSTERS THE DOGMA OF DIVERSIFICATION INDUCTIVE DICE Chapter Five: Holism THE CUCKOO IN THE CLOCK KEEPING BOTH EYES CLINICAL TRIALS THE COST‐AND‐EFFECT RELATIONSHIP RESHUFFLING AGNOSTICISM OFFENSIVE DEFENSE A NARROW, BROKEN WINDOW FRAME LOOKING DOWN THE TRACK THE GREAT PIRATES Chapter Six: Bold Conjectures EPISTEMOLOGY NEPTUNE OR VULCAN? CASH IS KING GO WITH THE FLOW ALL THAT GLITTERS THE SAFE HAVEN FRONTIER WHISTLING PAST THE GRAVEYARD

8 Afterword LOOKING BACK THE ONE, AND ONLY ONE, PATH THE WILLIAM TELL SHOT PIRATE TREASURE A FORMULA FOR GREATNESS “I HAVE FORGOTTEN MY UMBRELLA.”

9 Acknowledgments

10 Index

11 End User License Agreement

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