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Taleb barbell 90/10

Barbell strategy (Nassim Nicholas Taleb), about 90 percent safe / 10 percent speculative

Nassim Nicholas Taleb · 2007 (The Black Swan); developed in Antifragile, 2012

Live account on this site. This portfolio is also tracked here with a virtual $100,000 since 21.10.2026. Live account on this site →

Where it stands today

Data through 2026-09. Updated every month.

Since January+4.2 %
Last 12 months+5.5 %
Last 5 years, per year+4.2 %
Now below the peak−0.4 %
Place by 12 months53 / 60

Our calculation, 1926-07 – 2026-09

Per year4.5 %
Real (after inflation)1.5 %
Volatility2.8 %
Worst drop−10.8 %
Worst year−4.7 % (1937)
Best year13.8 %
Worst 12 months−7.9 %
Positive years89 %

Growth of $10,000

$4,147$35,740$308,016$2,654,584$22,878,060$197,170,5081930194019501960197019801990200020102020
Taleb barbell 90/10: $821,252S&P 500: $196,488,890

Where it came from

Taleb spent about 21 years as a derivatives trader and options risk manager (UBS, Credit Suisse First Boston, Bankers Trust, BNP Paribas and others, per his published biography) before becoming a full-time writer and academic. His technical book Dynamic Hedging came out in 1997. In his trading he used a combination of very safe positions with a small number of cheap, far out-of-the-money options that pay off in rare crashes; one profile (Substack, not verified) says that on the 1987 crash such options made tens of millions for his bank.

The investment 'barbell' for ordinary investors was set out in The Black Swan (2007), where he discusses how to act when forecasting is unreliable. Taleb's own sentence, as repeated in secondary sources: be 'as hyperconservative and hyperaggressive as you can be' instead of mildly aggressive or conservative. Secondary summaries of the book put the safe side at 85 to 90 percent in extremely safe instruments such as Treasury bills and the speculative side at 10 to 15 percent in extremely risky bets, such as a diversified portfolio of venture-capital-type investments made in many small positions (Shortform, paraphrase; I could not verify the exact wording in the book). In another version in the book the whole portfolio could be put in speculative assets while the loss beyond 15 percent is insured, which again gives a floor of 85 percent.

Why. The safe part guarantees a floor: even in a collapse the portfolio should not lose more than the speculative part, i.e. roughly 10 to 15 percent; the speculative part is exposed to the 'positive Black Swan' with convex, open-ended payoffs (an option's cost is known in advance while its gain is unlimited). Taleb thinks that the middle (medium-risk assets, such as a typical 60/40 mix) looks safe but hides unmeasurable tail risk, because risk models assume a thin-tailed 'Mediocristan' world while finance lives in 'Extremistan'. Antifragile (November 2012) generalises this to a principle for all areas of life: avoid exposure to losses that can ruin you and collect many small cheap options on large gains.

Practice. Taleb's long-time partner Mark Spitznagel and Taleb ran Empirica Capital (a tail-risk hedge fund) and Taleb is now a scientific adviser to Universa Investments, which sells tail-risk hedging. In Universa's client letters a model portfolio with 96.67 percent in the S&P 500 and 3.33 percent in its tail hedge strategy is used to show how a small convex position can protect and even add to a stock portfolio; the letter states that this model portfolio returned a compound 0.4 percent in March 2020 while the index lost 12.4 percent (Institutional Investor, April 2020), and Bloomberg reported Universa's fund returned 3,612 percent in March 2020. Spitznagel's statement that tail hedging is costly and a bad strategy for retail investors (CNBC, 2020) shows that the barbell with options is not meant for small savers. The 85-90 / 10-15 version is a retail rule of thumb, whereas Universa's 3.33 percent hedge is a different, professional structure.

What is in it

Extremely safe instruments (Treasury bills, short-term)90%Taleb's range is 85 to 90 percent according to secondary summaries of The Black Swan; 90 is the upper end and the commonly quoted version
Extremely speculative bets (venture-capital style portfolio, deep out-of-the-money options, as leveraged as possible)10%Range 10 to 15 percent; many small positions

Source of the shares: The Black Swan (Taleb, 2007), as summarised by Shortform; further secondary descriptions in Antifragile summaries — www.shortform.com. Safe side 85-90 percent in extremely safe instruments (Treasury bills as example), speculative side 10-15 percent in extremely risky bets spread across many small positions; the page paraphrases and does not quote the book. The exact wording must be checked in the book.

How we model it

Cash (Treasury bills)90%
US small companies10%

The safe side maps well to cash (T-bills). The speculative side (venture capital, far out-of-the-money options) cannot be replicated with the series we have; the nearest long-only high-risk class available is small-cap US stocks (us_small), a convex-like, high-volatility equity sleeve. This is an approximation: a real barbell's speculative part has an option-like payoff (it can go to zero and pay many times) and it is chosen to be uncorrelated with the stock market, whereas us_small is a normal equity portfolio that typically falls in crashes. Alternatives considered: em or commodities (not chosen: no better argument; commodities hedge inflation but do not look like venture capital) and gold (a safe-haven rather than speculative). A mapping of 85/15 would be within Taleb's range; we use 90/10 as the commonly quoted midpoint-to-upper version. Results of the mapping therefore describe a 90 percent T-bill and 10 percent small-cap portfolio, not the actual strategy.

For a euro investor

The same portfolio bought with euros, without currency hedging: monthly returns converted at the end-of-month rate (German mark before 1999), inflation of the euro area. History in euros from 1953-10 to 2026-09.

Per year in euros4.0 %
After euro inflation1.2 %
Worst drop in euros−43.5 %
Worst year in euros−16.3 % (2002)
Safe withdrawal, 30 years, dollars2.75 % (1933-07)
Safe withdrawal, 30 years, euros2.80 % (1985-03)

The largest first-year withdrawal, then growing with inflation, that lasted 30 years from every monthly start. Test withdrawals for this portfolio →

How to build it with European funds

Examples of UCITS funds sold in the EU for each part of the portfolio. They track similar markets, not exactly the indices of our calculation.

PartShareExample funds (ISIN)
Cash (Treasury bills)90%Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C LU0290358497
iShares USD Treasury Bond 0-1yr UCITS ETF (Acc) IE00BGSF1X88
US small companies10%SPDR Russell 2000 U.S. Small Cap UCITS ETF IE00BJ38QD84
iShares MSCI USA Small Cap ESG Enhanced CTB UCITS ETF USD (Acc) IE00B3VWM098

These are examples, not recommendations. Check the fund's key information document, costs and taxes with your broker before buying. Names and ISINs checked on justETF on 4 November 2026; Udak receives nothing from these funds.

The idea

Do not rely on forecasts or on risk models that cannot measure rare events. Limit the loss you can suffer to a known small amount with a very safe core, and keep a small part in bets whose maximum loss is known and whose possible gain is large. Avoid assets that give a false feeling of safety in the middle of the risk range.

How people buy it

Safe side: short-term Treasury bills, T-bill ETFs (for example BIL, SHV) or money-market funds; the safe side is described by secondary sources as short-term Treasury bills. Speculative side: venture capital funds or startups for qualified investors, small positions in long-dated far out-of-the-money options, or concentrated small bets; commercial tail-hedge products such as Universa's strategy are institutional. For a retail investor, a simple version is 90 percent T-bills plus 10 percent in a small-cap or growth equity fund.

Rebalancing as published

No formula was found. The logic is to keep the safe core intact and to treat the speculative part as a budget: when speculative bets lose, do not replace losses from the safe part beyond the budget; when they win, the gains can be moved to the safe side. Check Antifragile for the exact advice.

Variants

Criticism

Through the eras

EraDatesTotalPer yearWorst dropS&P 500
Roaring Twenties boom1926-07 – 1929-08+18.3 %+5.5 %−0.7 %+153.7 %
Wall Street crash and Great Contraction1929-09 – 1932-07−7.1 %−2.5 %−10.8 %−78.2 %
New Deal recovery1932-08 – 1937-02+31.8 %+6.2 %−6.4 %+268.7 %
Recession within the Depression1937-03 – 1938-03−7.9 %−7.3 %−7.9 %−49.5 %
Rearmament and World War II1938-04 – 1945-09+25.0 %+3.0 %−3.4 %+205.8 %
Postwar expansion1945-10 – 1965-12+95.0 %+3.4 %−4.1 %+1212.9 %
Golden age of the 1950s1950-01 – 1959-12+45.0 %+3.8 %−1.0 %+438.8 %
Go-go years and nifty-fifty1966-01 – 1968-12+25.5 %+7.9 %−0.9 %+34.0 %
The Great Inflation (stagflation)1969-01 – 1982-07+180.7 %+7.9 %−2.0 %+84.6 %
1973-74 oil shock and bear market1973-01 – 1974-12+7.5 %+3.7 %−1.0 %−41.7 %
Second oil shock and the Volcker disinflation1979-01 – 1982-08+57.3 %+13.1 %−0.7 %+59.2 %
Great bull market in stocks and bonds1982-08 – 1999-12+235.2 %+7.2 %−3.1 %+2060.4 %
Black Monday1987-08 – 1987-12−1.2 %—−3.1 %−21.8 %
Savings-and-loan crisis and 1990 recession1990-07 – 1991-03+5.7 %—−0.8 %+7.4 %
1994 bond market massacre1994-02 – 1994-12+2.8 %—−0.3 %−3.2 %
Asian and Russian financial crises1997-07 – 1998-10+6.1 %+4.6 %−2.0 %+22.4 %
Dot-com bubble and crash2000-03 – 2002-10+6.9 %+2.5 %−2.3 %−37.2 %
Recovery and housing boom2002-11 – 2007-09+25.0 %+4.6 %−0.7 %+97.0 %
Global financial crisis2007-10 – 2009-03−3.2 %−2.1 %−5.1 %−44.7 %
The decade after the crisis2009-04 – 2019-12+25.2 %+2.1 %−2.8 %+411.2 %
Fourth-quarter 2018 sell-off2018-09 – 2018-12−2.0 %—−2.0 %−14.4 %
Covid crash and stimulus boom2020-02 – 2021-12+5.4 %+2.8 %−2.6 %+53.6 %
Inflation shock and rate hikes2022-01 – 2022-12−0.4 %−0.4 %−1.9 %−19.9 %

Calendar years

-5%14%1927: +5.9%1928: +7.3%1929: +0.4%1930: -1.7%19301931: -3.8%1932: +0.5%1933: +13.3%1934: +2.4%1935: +5.9%1936: +5.5%1937: -4.7%1938: +3.6%1939: +0.3%1940: -0.5%19401941: -1.1%1942: +2.9%1943: +6.7%1944: +4.7%1945: +6.9%1946: -0.6%1947: +0.3%1948: +0.1%1949: +3.3%1950: +4.9%19501951: +2.8%1952: +2.4%1953: +1.4%1954: +6.3%1955: +3.4%1956: +2.9%1957: +1.2%1958: +8.2%1959: +4.6%1960: +2.1%19601961: +4.8%1962: +1.0%1963: +4.6%1964: +4.8%1965: +7.2%1966: +3.7%1967: +11.4%1968: +8.7%1969: +3.5%1970: +5.1%19701971: +6.0%1972: +3.9%1973: +2.7%1974: +4.6%1975: +11.1%1976: +9.4%1977: +6.6%1978: +8.5%1979: +13.5%1980: +13.6%19801981: +13.8%1982: +12.5%1983: +11.5%1984: +8.7%1985: +10.2%1986: +6.5%1987: +4.1%1988: +8.1%1989: +9.3%1990: +5.1%19901991: +9.7%1992: +5.2%1993: +4.5%1994: +3.3%1995: +8.1%1996: +6.5%1997: +7.3%1998: +4.1%1999: +6.8%2000: +5.7%20002001: +4.7%2002: -0.4%2003: +6.5%2004: +2.9%2005: +3.3%2006: +6.1%2007: +3.9%2008: -2.1%2009: +3.5%2010: +2.9%20102011: -0.6%2012: +1.8%2013: +4.3%2014: +0.4%2015: -0.5%2016: +2.4%2017: +2.3%2018: +0.6%2019: +4.3%2020: +2.7%20202021: +2.3%2022: -0.4%2023: +6.2%2024: +5.8%2025: +4.9%

Any N-year period

Any N-year periodWorst10 % worse thanMedian10 % better thanBest
1 y (1192)−7.9 %−0.1 %+4.4 %+9.4 %+23.1 %
3 y (1168)−3.1 %+1.2 %+4.1 %+8.1 %+14.2 %
5 y (1144)−0.7 %+1.5 %+3.9 %+8.0 %+13.1 %
10 y (1084)+1.4 %+1.9 %+3.8 %+8.8 %+10.9 %
15 y (1024)+1.5 %+2.1 %+4.3 %+9.0 %+9.8 %
20 y (964)+1.9 %+2.4 %+4.5 %+8.4 %+8.8 %
30 y (844)+2.5 %+2.9 %+5.0 %+7.7 %+7.8 %

How it behaved in history

Published results (by others)

What we could not verify

Sources

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Calculated on historical data. Past results do not predict the future. Models before the 1990s use stand-ins for classes that had no index yet; fees, taxes and fund costs are not included. This is mathematics, not an investment recommendation.