You completely misunderstood Taleb's point. In fact, you're arguing in favor of it without even noticing, but more on that at the end.
Your basic misunderstanding is that the barbell strategy is not about finding something that's completely safe; it's about dealing with our inability of estimating the real risk behind things that are presented as medium-risk investments.
With low-volatility assets, we need to use plenty of leverage for the portfolio to move at all. However, if we don't know the real volatility (and we never do, contrary to what portfolio-theory people say), it will result in a blowup. LTCM did exactly this: they over-leveraged their investments based on an incorrect model that suggested... (read more)
You completely misunderstood Taleb's point. In fact, you're arguing in favor of it without even noticing, but more on that at the end.
Your basic misunderstanding is that the barbell strategy is not about finding something that's completely safe; it's about dealing with our inability of estimating the real risk behind things that are presented as medium-risk investments.
With low-volatility assets, we need to use plenty of leverage for the portfolio to move at all. However, if we don't know the real volatility (and we never do, contrary to what portfolio-theory people say), it will result in a blowup. LTCM did exactly this: they over-leveraged their investments based on an incorrect model that suggested... (read more)