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Business. Sociology. Nonfiction. HTML:The most influential book of the past seventy-five years: a groundbreaking exploration of everything we know about what we don�t know, now with a new section called �On Robustness and Fragility.� A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives. Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don�t know. We are, therefore, unable to truly estimate opportunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the �impossible.� For years, Taleb has studied how we fool ourselves into thinking we know more than we actually do. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. In this revelatory book, Taleb will change the way you look at the world, and this second edition features a new philosophical and empirical essay, �On Robustness and Fragility,� which offers tools to navigate and exploit a Black Swan world. Taleb is a vastly entertaining writer, with wit, irreverence, and unusual stories to tell. He has a polymathic command of subjects ranging from cognitive science to business to probability theory. Elegant, startling, and universal in its applications, The Black Swan is a landmark book�itself a black swan.… (more)
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Says Taleb in his book The Black Swan;
The Gaussian bell
Curve’s misleading as hell,
And you seldom can tell what’s going on.
The
Aside from that problem, my other complaint is that this is not a book length idea - it should have been condensed to an essay length. The idea is good and its consequences are worth considering, but not at book length. An essay length discussion would have limited how much the reader could get to know Taleb, and that could only be a good thing for all involved.
Read July 2012
Taleb also rails against historians and what he calls the "narrative fallacy." He argues that trying to understand and derive correlations between historical events is a useless waste of time that cannot possibly explain certain events as drawing causation is mere speculation. One thing may seem to have led to another, but one cannot be sure based on a small amount of known facts. By making these claims with very little basis, historians do damage by giving modern day prognosticators false information. This leads to dangerous forecasts by people in the prediction business - bankers, politicians, fund managers, and economists.
Taleb makes a strong case, but his book is overly verbose and his prose is excessively arrogant. He wonders why people in the economic community take such offense to his positions. While they may disagree, I think they probably take offense more to his delivery. He comes across in the book as someone who is right 100% of the time. He's not trying to add to study of economics or philosophy - he's trying to tear down the entire system and rebuild it with his fundamental beliefs. When many have spent their entire lives developing these economic and philosophical theories, I can understand their responses.
Overall, Taleb's book is very good. It's too long and contains too many examples and diatribes. His message is relatively simple - modern day prognosticators are usually wrong. They ignore what they do not know and they expect that it won't happen. However, it often does and this leads to the inherent weakness of what they do.
If Taleb only saw the Black Swan of his book being too verbose and arrogant, maybe it would have been better received.
- go to parties, you never know who you might meet
- don't be fooled by
- you don't know as much as you think you do
- look for some positive black swans in your life and work
- don't ignore outliers if they can dominate
If nothing else, Taleb is a brilliant self-promoter who presents himself as a fascinating character. I can't imagine a mainstream talk-show producer reading this book without coveting him as a guest. (The fact that other reviewers have castigated him as "arrogant" only enhances this effect.) In an especially clever turn, he introduces the thinly-fictionalized alter-ego of "Nero Tulip," and describes Nero's spectacular facing down of his boss in an episode that could have been part of Palahniuk's Fight Club (98-99). Did Taleb really do that? Maybe.
One little fault I would charge against Taleb is his demonization of Plato. (xxv) He insists that he has read "more material from those I disagree with than from those whose opinion I share," (304) which is of course the intellectually upright approach for those engaged in argumentation. But there's no Plato in his bibliography, and his anecdote to demonstrate what he takes as "Platonicity" only cites a recent book on "handedness". (319) I suspect him of having ingested his distaste for Plato secondhand through Karl Popper. (Taleb lionizes Popper at length.) He insists that to "Platonify" is to see the world through predetermined categories and models. (257) But I think Taleb has a lot in common with Plato in his devotion to intellectual outsiders; and Plato shared Taleb's distrust of narrative knowledge, to the point of proposing that Homeric epics be outlawed.
A key message, and something of the spirit, of The Black Swan can be found in chapter 22 of Aleister Crowley's Book of Lies (1912): The Despot. Taleb writes: "Luck is the grand equalizer, because almost everyone can benefit from it." (222)
This deserves a fuller review, but I'll keep it brief because it's taken me a long time to actually reach the end of the book and some of the detail is lost. And there lies part of the problem, because this book started out as a five-star work because of
So, here's a self-confident and erudite chap pulling down the walls of the economic establishment. Or at least trying to, because the overly self-confident and nowhere near as erudite members of that establishment just carry on blithely ignorant of the message about the Black Swan event ('all swans are white' until you actually travel to the southern hemisphere and expose that fallacy) that lurks around the corner if you put your trust in economic models. And the message is that stark - all economic models, not just some. I recently saw NNT on television (Newsnight, BBC2) where he moderated that somewhat by saying models can be effective at the micro level, but break down at the macro level.
He convinced me; but that was pushing at an open door. I've designed a computer system to support money market traders, and the rules I was given convinced me it's just the same as a casino. Except the '0' (and '00' for those in some locations) mean that you don't just lose your stake but your whole wad.
Read it, then, but I'll quite understand if you abandon the attempt part way through because of the arrogance on display. The second edition with the additional essay saved it for me, so please use that by preference. Note that it will be your loss if you don't stay the course.
The primary example upon which he based the book (the turkey story) is a beautiful example of statistics with a sample size of one! With no more data than one turkey's growth and death records a year for each of the past few years (or a few turkeys from last year), elementary statistics would be adequate to predict the turkey's Black Swan event to the day.
- It is better, perhaps, to try and be generally right rather than precisely wrong
- Beware of looking for more rules than really exist
- Watch out for a tendency to prepare for "last war"
- Rare and consequential events can be much more important than the "normal" stuff in the bell curve
- Some things (that he calls "mediocristan") are such that the most typical is average and single instances don't impact the total much
- Others (he calls these "extremistan") are more winner-takes-all kinds of environments where extreme events matter most
- He makes the point that a thousand days cannot prove you right but one can prove you wrong
There's more but it's a very long book and I am not going to attempt to summarize the nuggets spread throughout it here. Be prepared for a slog if you want to get everything you can out of the book - it goes on and on. 3 stars to average out 1 star for length and incoherence in places and 5 stars for some great content.
It is an easy read, and missing a few pages is not likely to mean missing important content - some of it is self-biography, some is self-biographical sounding fiction, and some is introduction to authors and events not at all clearly explained as relevant. Generally it is a well written rambling collection of attacks on probability’s presumed calculability outside a hermetically closed domain, quite egocentrically, and at times quite sardonically, put forward.
I'm not sure I don't believe that Gaussian methods have no application to real life. Supply-chains and baseball immediately spring to mind as places where Gaussian methods can apply (without worrying particularly about a Black Swan.
The author came off as a
I like irreverant, but too much irreverance made the book's message jumbled.
If only I could give it a half star rating. Possibly the most boring book I have ever attempted to read.
Anyway, read the lengthy reviews of others who know what they're talking about who also
The book could, however, effectively be condensed into a pamphlet - if the repetition, appeals to authority and dribblings of autobiography were removed. Stripped of this excess verbiage, it would become apparent that Taleb is espousing nothing newer than the fundamental problem of inductive reasoning, and would provide less of a platform from which to promote himself. This would be less good for the author, but as a reader, I would prefer the shortened version.
For such a reader, confirmation biases,
Taleb is not - as he makes especially clear in the essay "On Robustness & Fragility" added for the second edition - a statistical nihilist, someone who believes that statistics are of no use. While he calls the Gaussian bell curve, the "Great Intellectual Fraud" (while noting it was not really Frederich Gauss but Adolphe Quetelet who sought it everywhere), he also carefully notes that in the land of "Mediocristan" it does work. The problem is you don't always know when you've left Mediocristan and entered "Extremistan" where probabilities are unknown. Those who purport to chart courses for economies and stock portfolios usually don't know one territory from the other. Indeed, the recent track record of many prominent Wall Street financers and economists shows that not only are their predictions wrong - so is their math. Indeed, Taleb says, in his experience, the only profession that takes risk analysis and management seriously is the military, the origin of the "known unknowns" and "unknown unknowns" alluded to in the title of Donald Rumsfield's recent autobiography Known and Unknown: A Memoir.
Tabeb nicely demonstrates common real world examples of areas where Gaussian distributions and the precisely plotted probabilities of the casino don't apply, regions where it is often scalable probabilities that are at work. This explains the "winner take all" distribution of earnings for some professions like writers. He also briefly touches, in his footnotes, on some more sophisticated mathematical analysis of the problems often ignored by statisticians and economists.
The style of the book is an eccentric mixture of autobiography including his youth in Lebanon, anecdote, mathematics, psychology, accounts of Taleb's phone pranks and cocktail conversations, and clearly listed suggestions as to how individuals and institutions can benefit from tunavoidable black swans - which are not always bad. In fact, his advice to embrace randomness in life echoes one of the findings in The Luck Factor: The Four Essential Principles. And he doesn't talk about black swans just in relation to finances but things like health and diet, an idea he developed more in his recently co-authored The New Evolution Diet: What Our Paleolithic Ancestors Can Teach Us about Weight Loss, Fitness, and Aging.
The intimidatingly extensive and varied bibliography offers plenty of reading material for follow up. (Though I don't remember Marxist historian E. H. Carr's What Is History? being a pursuit of causation - quite the opposite, an argument for the futility of doing so - but it's been many years since I read it.) This bracing review and synthesis of a lot of ideas is usually an entertaining guide to seeing the world - and our ability to plan - in a more realistic way.
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003.54 |