Taleb warned of the threat of "white swans" instead of "black swans". What should investors do?

The author of "Black Swan" Nassim Taleb advised investors to insure themselves against a stock market collapse due to the accumulated structural problems in the U.S. economy. According to Taleb, the market is now ignoring "white swans" - obvious risks, such as the U.S. debt load, which could derail the seemingly unstoppable rally, writes Bloomberg.

Despite the new records of U.S. indices and the growth of corporate profits, the real danger now comes not from the unexpected, but from quite visible risks - "white swans", said Nassim Taleb, honorary scientific adviser of hedge fund Universa Investments, speaking at the Economic Forum in Greenwich on Wednesday. Taleb's words were quoted by Bloomberg.

Most people ignore these "white swans" until it is too late. Thus, according to Taleb, the US is already facing an obvious and predictable crisis because of its growing debt. Only an unexpected event of extraordinary magnitude can turn the situation around, he believes.

"We're heading toward some point in the future - avoidable, though, unless a miracle happens - toward a debt problem. When debt service becomes the largest line item in the budget, you're in trouble. Whether you're an individual, a corporation or a government, it's a problem," Taleb said as quoted by Bloomberg.

Another obvious risk, according to Taleb, lies in the U.S. dependence on foreign professionals. In September, the administration of U.S. President Donald Trump increased more than tenfold, to $100,000, the fee for H-1B visas, a special type of work visa for highly skilled professionals. The main users of this type of visa are major technology companies. Taleb noted that Trump's tough stance on these visas could slow economic growth.

"It would be worth paying, on the contrary, for people to obtain such visas," he said. If migrant flows are reduced, he warned, the consequences for innovation and growth will show up very quickly.

A new "black swan" - a rare and unpredictable shock, the concept of which made Taleb famous after the publication of his book of the same name in 2007 - in the current situation can only be some positive event, the economist said.

"For me right now, the 'black swan' is a miracle that will suddenly get us out of this trap. A miracle that will make the debt problem irrelevant. But we don't see anything like that on the horizon," he said.

Asked whether artificial intelligence could be such a miracle, Taleb responded cautiously, "AI may be able to help with that," adding that technology also carries its own risks - the very rare but disruptive events that define the nature of "black swans."

"AI can cause problems. Technology used to be beneficial: it created dishwashers, and human labor moved to a higher level, adding value. Now the best jobs are at risk. Specialists are forced to downgrade their skills. So AI can help, but it can also hurt," he said.

Although hedge fund Universa Investments remains optimistic about equities, Taleb insists: confidence must go hand in hand with protection. "It's a combination of extreme bullishness in the market and a compulsive need to hedge," he noted.

For him, the very essence of risk management is this combination of "If you don't survive crises, you will never make money," Taleb summarized.

This article was AI-translated and verified by a human editor