You are correct. I am referring to bootstrapping. The only point I was making is that the implied yield in the outer years is higher than the 1.5%…you obviously understand the process. If the 6 month yield rises to 2% at the end of the 5 year term, you probably would have been better off with the 1.5% over the horizon.
On the Taleb item-I wouldn’t put my own money in that type of fund…it’s true that market irrationality often lasts longer than your own liquidity…my recollection is that even the LTCM bets actually turned out to be right…they were just levered to the point where they couldn’t wait that long.
