The black swan theory or black swan event was developed by philosopher and former trade and risk analyst Nassim Nicholas Taleb.
A black swan event is one that comes as a surprise, has a major impact, and is typically incorrectly assessed with the benefit of hindsight. The outbreak of the COVID-19 coronavirus is one such event, though its impacts have yet to be fully understood at this early stage.
Taleb’s black swan strategy involves keeping your money very safe. For those seeking a simplified approach, there is the Amplify BlackSwan Growth & Treasury Core ETF (NYSE:SWAN).
This ETF, which launched in late 2018, seeks investment results that correspond to the S-Network BlackSwan Core Total Return Index. The investment strategy of this index seeks uncapped exposure to the S&P 500, while buffering against the possibility of significant losses.
Roughly 90% of the ETF will be invested in U.S. Treasury Securities, and approximately 10% will be invested in SPY LEAP Options in the form of in-the-money calls. The fund has been a high performer since its inception.
Shares of the ETF climbed 22% in 2019, and the ETF has increased 3% in 2020 as of close on March 2. Its structure has provided adequate protection in this volatile environment, and it has only dropped marginally over the past week.
I like this ETF as a target, especially as central banks consider even more monetary easing in response to the panic over the outbreak
