In the LikedIn Group Quant Finance we have a thread What do people think of new "Black Swan" funds and "Black Swan" hedging. With others, I share the view that buying insurance against a Black Swan event, illiquidity might become the Black Swan of a Black Swan event (nobody left to pay if it happens).
However, inevitably the discussion went into model-complexity and so on.
Maurice, a french quant introduced his idea of an Alexander Dumas meta-model.
He explained: provided I am dueling D'Artagnan (from 3 musketeers). If my sword is too light, I lose and if it is to heavy as well. The same, if I am not familiar with it's usage.
The only chance I have to beat my opponent is if I am skilled and I carry a sword that is perfect for my skills.
I add: if your sword is perfect in handling, it also needs a reliable and robust material, sharp edges ... (which you understand from its recipe, crystal structure, grinding procedures,... and scenario tests).
And you need a maker that not only trains you in the usage, but also never gives you false comfort on its material properties, strengths and limits.
And don't apply the motto of the musketeers: all-for-one & one-for-all: one-size-fits-all approaches fail in quant finance.
