I've been reading Antifragile by Nassim Nicholas Taleb lately and have become transfixed with his ideas. It's difficult to summarize the book because the ideas are so grand in scope, but one of the examples he talks about is building an investment portfolio that is protected from Black Swan events.
He recommends the barbell strategy, which he says will protect you from risks of volatility while still allowing you to benefit from its rewards, thus making it antifragile. Like any investment strategy, the idea is that you don't put all your eggs in one basket, you diversify, expecting that some of your investments will fail.
I think about these ideas when I think about this weekend's match up between the New England Patriots and the Pittsburgh Steelers. Not as much as how these teams match up with each other, but rather how they are built to last a season.
Pittsburgh has arguably the best running back and best receiver in the game, along with a top-notch quarterback. But should one of them suffer an injury, does anyone really think they would still find success?
The Patriots, on the other hand, have the best quarterback and the best tight end. Without them? Tom Brady missed 4 games and the team went 3-1. The team hasn't lost a game since losing Rob Gronkowski to injury in early December. The Patriots may not be antifragile (strengthened by volatility) but their coach/GM Bill Belichick manages this team like an investment portfolio more so than any other GM.
Belichick never chases big free agents, cuts/trades guys a year too soon rather than too late, is careful about whom he extends long contracts to, and favors quantity over quality when it comes to drafting (i.e., two second round picks is better than one first round pick). Why? He expects Black Swan events and builds a team immune to such scenarios. That is why they can withstand a Gronk injury or Brady suspension.
With Martellus Bennett and Jimmy Garappolo, the Patriots are protected from volatility. With huge contracts given out to Brock Osweiler and Derrell Revis, their respective teams are harmed by volatility in the form of sucking and old age. Players are investments and smart GMs better diversify their portfolio.
