Black Swans

Recently, Nassim Taleb, author of Fooled by Randomness, just finished a new book The Black Swan. He was on WealthTrack talking about his theory as applied to investing, and, I must say, it is both astonishing and insightful. His main concern is people take too much risk. So, he thinks people should hold about 90% of their investments in extemely safe short-term treasuries (from a diversified set of stable countries). That is an amazingly conservative stance, at first glance (but read on...). This protects the investor from downside risk. And, the remaining 10% should be in very risky investments (think biotech, technology, etc) which have a chance of a major positive black swan event. So, low risk stable base, and small amounts in high risk investments for profiting from black swan events. It's a very interesting theory.