Most people who have thought carefully about the risk-free interest rate realize that any real-world security provides merely an approximation to that ideal. The fact that people rarely describe t-bond rates using verbose but more accurate phrases such as “the nearest we can come to measuring the risk-free interest rate” doesn’t tell you much about how many fail to see that it’s more accurate.
I haven’t read Black Swan (but have read a prior book of Taleb’s). I doubt typical investors ought to follow the advice you’ve quoted, but it seems plausible that some investors ought to.
His description of treasury bills as extremely safe seems accurate enough for practical purposes. It only requires that investors be able to anticipate a U.S. government default / hyperinflation something like 90 days in advance (i.e. it’s a good deal more reasonable than describing 30-year bonds as extremely safe). Good investing is mostly about avoiding big mistakes, not about perfectly avoiding all errors, and Taleb’s advice would reduce one’s risk by a big factor compared to most competing advice.
Most people who have thought carefully about the risk-free interest rate realize that any real-world security provides merely an approximation to that ideal. The fact that people rarely describe t-bond rates using verbose but more accurate phrases such as “the nearest we can come to measuring the risk-free interest rate” doesn’t tell you much about how many fail to see that it’s more accurate. I haven’t read Black Swan (but have read a prior book of Taleb’s). I doubt typical investors ought to follow the advice you’ve quoted, but it seems plausible that some investors ought to. His description of treasury bills as extremely safe seems accurate enough for practical purposes. It only requires that investors be able to anticipate a U.S. government default / hyperinflation something like 90 days in advance (i.e. it’s a good deal more reasonable than describing 30-year bonds as extremely safe). Good investing is mostly about avoiding big mistakes, not about perfectly avoiding all errors, and Taleb’s advice would reduce one’s risk by a big factor compared to most competing advice.