l2-risk_barbell-strategy

The barbell strategy combines 85-90% maximally safe exposure with 10-15% highly speculative bets, eliminating all moderate-risk positions. It protects against negative Black Swans while capturing upside from positive ones.

Put roughly 90% in Treasury bills or equivalent safe instruments and 10% in speculative options or venture bets. Avoid investment-grade bonds, balanced portfolios, and any moderate-risk middle positions.

Moderate-risk positions expose you to model error without compensating optionality. The middle is concave, meaning volatility destroys value, while the barbell's convex structure benefits from volatility.

Yes, it applies to exercise (long walks plus sprints, no jogging), diet (feast and fast), education (classics plus cutting edge, no textbooks), and career (secure base plus audacious bets).

It is designed for Extremistan, where outcomes are dominated by rare extreme events. In Mediocristan, where outcomes cluster around averages and prediction is reliable, conventional moderate strategies can suffice.