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The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility" (Incerto) Paperback – Bargain Price, May 11, 2010
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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 explains everything we know about what we don’t know, 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.
Elegant, startling, and universal in its applications, The Black Swan will change the way you look at the 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. The Black Swan is a landmark book—itself a black swan.
Praise for Nassim Nicholas Taleb
“The most prophetic voice of all.”—GQ
Praise for The Black Swan
“[A book] that altered modern thinking.”—The Times (London)
“A masterpiece.”—Chris Anderson, editor in chief of Wired, author of The Long Tail
“Idiosyncratically brilliant.”—Niall Ferguson, Los Angeles Times
“The Black Swan changed my view of how the world works.”—Daniel Kahneman, Nobel laureate
“[Taleb writes] in a style that owes as much to Stephen Colbert as it does to Michel de Montaigne. . . . We eagerly romp with him through the follies of confirmation bias [and] narrative fallacy.”—The Wall Street Journal
“Hugely enjoyable—compelling . . . easy to dip into.”—Financial Times
“Engaging . . . The Black Swan has appealing cheek and admirable ambition.”—The New York Times Book Review
- Print length444 pages
- LanguageEnglish
- PublisherRandom House Trade Paperbacks
- Publication dateMay 11, 2010
- Dimensions5.15 x 1 x 7.95 inches
- ISBN-10081297381X
- ISBN-13978-0812973815
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Price | $10.80$10.80 | $17.02$17.02 | $10.39$10.39 | $15.24$15.24 | $168.06$168.06 |
A bold work from the author of The Black Swan that challenges many of our long-held beliefs about risk and reward, politics and religion, finance and personal responsibility. | An investigation about luck–or more precisely, about how we perceive and deal with luck in life and business. | Through deep investigation and insight, Antifragile reveals how to thrive in an uncertain world. | With a rare combination of pointed wit and potent wisdom, Taleb plows through human illusions, contrasting the classical values of courage, elegance, and erudition against the modern diseases of nerdiness, philistinism, and phoniness. | The Incerto Series is an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision making when we don’t understand the world. Makes the perfect gift for the perpetually curious. |
Editorial Reviews
Review
“Hugely enjoyable—compelling . . . easy to dip into.”—Financial Times
“A masterpiece.”—Chris Anderson, author of The Long Tail
“Idiosyncratically brilliant.”—Niall Ferguson, Los Angeles Times
About the Author
Excerpt. © Reprinted by permission. All rights reserved.
ON THE PLUMAGE OF BIRDS
Before the discovery of Australia, people in the old world were convinced that all swans were white, an unassailable belief as it seemed completely confirmed by empirical evidence. The sighting of the first black swan might have been an interesting surprise for a few ornithologists (and others extremely concerned with the coloring of birds), but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single (and, I am told, quite ugly) black bird.*
I push one step beyond this philosophical-logical question into an empirical reality, and one that has obsessed me since childhood. What we call here a Black Swan (and capitalize it) is an event with the following three attributes.
First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.
I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability.* A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives. Ever since we left the Pleistocene, some ten millennia ago, the effect of these Black Swans has been increasing. It started accelerating during the industrial revolution, as the world started getting more complicated, while ordinary events, the ones we study and discuss and try to predict from reading the newspapers, have become increasingly inconsequential.
Just imagine how little your understanding of the world on the eve of the events of 1914 would have helped you guess what was to happen next. (Don’t cheat by using the explanations drilled into your cranium by your dull high school teacher). How about the rise of Hitler and the subsequent war? How about the precipitous demise of the Soviet bloc? How about the rise of Islamic fundamentalism? How about the spread of the Internet? How about the market crash of 1987 (and the more unexpected recovery)? Fads, epidemics, fashion, ideas, the emergence of art genres and schools. All follow these Black Swan dynamics. Literally, just about everything of significance around you might qualify.
This combination of low predictability and large impact makes the Black Swan a great puzzle; but that is not yet the core concern of this book. Add to this phenomenon the fact that we tend to act as if it does not exist! I don’t mean just you, your cousin Joey, and me, but almost all “social scientists” who, for over a century, have operated under the false belief that their tools could measure uncertainty. For the applications of the sciences of uncertainty to real-world problems has had ridiculous effects; I have been privileged to see it in finance and economics. Go ask your portfolio manager for his definition of “risk,” and odds are that he will supply you with a measure that excludes the possibility of the Black Swan–hence one that has no better predictive value for assessing the total risks than astrology (we will see how they dress up the intellectual fraud with mathematics). This problem is endemic in social matters.
The central idea of this book concerns our blindness with respect to randomness, particularly the large deviations: Why do we, scientists or nonscientists, hotshots or regular Joes, tend to see the pennies instead of the dollars? Why do we keep focusing on the minutiae, not the possible significant large events, in spite of the obvious evidence of their huge influence? And, if you follow my argument, why does reading the newspaper actually decrease your knowledge of the world?
It is easy to see that life is the cumulative effect of a handful of significant shocks. It is not so hard to identify the role of Black Swans, from your armchair (or bar stool). Go through the following exercise. Look into your own existence. Count the significant events, the technological changes, and the inventions that have taken place in our environment since you were born and compare them to what was expected before their advent. How many of them came on a schedule? Look into your own personal life, to your choice of profession, say, or meeting your mate, your exile from your country of origin, the betrayals you faced, your sudden enrichment or impoverishment. How often did these things occur according to plan?
* The spread of camera cell phones has afforded me a large collection of pictures of black swans sent by traveling readers. Last Christmas I also got a case of Black Swan Wine (not my favorite), a videotape (I don’t watch videos), and two books. I prefer the pictures.
* The highly expected not happening is also a Black Swan. Note that, by symmetry the occurrence of a highly improbable event is the equivalent of the nonoccurrence of a highly probable one.
What You Do Not Know
Black Swan logic makes what you don’t know far more relevant than what you do know. Consider that many Black Swans can be caused and exacerbated by their being unexpected.
Think of the terrorist attack of September 11, 2001: had the risk been reasonably conceivable on September 10, it would not have happened. If such a possibility were deemed worthy of attention, fighter planes would have circled the sky above the twin towers, airplanes would have had locked bulletproof doors, and the attack would not have taken place, period. Something else might have taken place. What? I don’t know. Isn’t it strange to see an event happening precisely because it was not supposed to happen? What kind of defense do we have against that? Whatever you come to know (that New York is an easy terrorist target, for instance) may become inconsequential if your enemy knows that you know it. It may be odd to realize that, in such a strategic game, what you know can be truly inconsequential.
This extends to all businesses. Think about the “secret recipe” to making a killing in the restaurant business. If it were known and obvious then someone next door would have already come up with the idea and it would have become generic. The next killing in the restaurant industry needs to be an idea that is not easily conceived of by the current population of restaurateurs. It has to be at some distance from expectations. The more unexpected the success of such a venture, the smaller the number of competitors, and the more successful the entrepreneur who implements the idea. The same applies to the shoe and the book businesses–or any kind of entrepreneurship. The same applies to scientific theories–nobody has interest in listening to trivialities. The payoff of a human venture is, in general, inversely proportional to what it is expected to be.
Consider the Pacific tsunami of December 2004. Had it been expected, it would not have caused the damage it did–the areas affected would have been less populated, an early warning system would have been put in place. What you know cannot really hurt you.
Experts and “Empty Suits”
The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events.
But we act as though we are able to predict historical events, or, even wore, as if we are able to change the course of history. We produce thirty year projections of social security deficits and oil prices without realizing that we cannot even predict these for next summer–our cumulative prediction errors for political and economic events are so monstrous that every time I look at the empirical record I have to pinch myself to verify that I am not dreaming. What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it. This is all the more worrisome when we engage in deadly conflicts: wars are fundamentally unpredictable (and we do not know it). Owing to this misunderstanding of the casual chains between policy and actions, we can easily trigger Black Swans thanks to aggressive ignorance–like a child playing with a chemistry kit.
Our inability to predict in environments subjected to the Black Swan, coupled with a general lack of the awareness of this state of affairs, means that certain professionals, while believing they are experts, are in fact not. based on their empirical record, they do not know more about their subject matter than the general population, but they are much better at narrating–or, worse, at smoking you with complicated mathematical models. They are also more likely to wear a tie.
Black Swans being unpredictable, we need to adjust to their existence (rather than naïvely try to predict them). There are so many things we can do if we focus on anti knowledge, or what we do not know. Among many other benefits, you can set yourself up to collect serendipitous Black Swans by maximizing your exposure to them.
Learning to Learn
Another related human impediment comes from excessive focus on what we do know: we tend to learn the precise, not the general.
What did people learn from the 9/11 episode? Did they learn that some events, owing to their dynamics, stand largely outside the realm of the predictable? No. Did they learn the built-in defect of conventional wisdom? No. What did they figure out? They learned precise rules for avoiding Islamic prototerrorists and tall buildings. Many keep reminding me that it is important...
Product details
- Publisher : Random House Trade Paperbacks; 2nd edition (May 11, 2010)
- Language : English
- Paperback : 444 pages
- ISBN-10 : 081297381X
- ISBN-13 : 978-0812973815
- Item Weight : 2.31 pounds
- Dimensions : 5.15 x 1 x 7.95 inches
- Best Sellers Rank: #9,452 in Books (See Top 100 in Books)
- #1 in Developmental Biology (Books)
- #133 in Business Management (Books)
- #143 in Alternative Medicine (Books)
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About the author
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Nassim Nicholas Taleb spent more than two decades as a risk taker before becoming a full-time essayist and scholar focusing on practical, philosophical, and mathematical problems with chance, luck, and probability. His focus in on how different systems handle disorder.
He now spends most of his time in the intense seclusion of his study, or as a flâneur meditating in cafés. In addition to his life as a trader he spent several years as an academic researcher (12 years as Distinguished Professor at New York University's School of Engineering, Dean's Professor at U. Mass Amherst).
He is the author of the Incerto (latin for uncertainty), accessible in any order (Skin in the Game, Antifragile, The Black Swan, The Bed of Procrustes, and Fooled by Randomness) plus a technical version, The Technical Incerto (Statistical Consequences of Fat Tails). Taleb has also published close to 55 academic and scholarly papers as a backup, technical footnotes to the Incerto in topics ranging from Statistical Physics and Quantitative Finance to Genetics and International affairs. The Incerto has more than 250 translations in 50 languages.
Taleb believes that prizes, honorary degrees, awards, and ceremonialism debase knowledge by turning it into a spectator sport.
""Imagine someone with the erudition of Pico de la Mirandola, the skepticism of Montaigne, solid mathematical training, a restless globetrotter, polyglot, enjoyer of fine wines, specialist of financial derivatives, irrepressible reader, and irascible to the point of readily slapping a disciple." La Tribune (Paris)
A giant of Mediterranean thought ... Now the hottest thinker in the world", London Times
"The most prophetic voice of all" GQ
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Customers find the book engaging and thought-provoking. They appreciate the author's wit and humor. However, some readers feel the content is repetitive and boring. There are differing views on the book's approach to predictability - some find it insightful and challenging, while others consider it meddling with emotional arguments.
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Customers find the book engaging and thought-provoking. They appreciate the author's convincing criticism of experts and the Federal government. The text is descriptive and the vocabulary used is excellent, enhancing their grasp of English.
"...respected semiotician, essayist, philosopher, literary critic, and novelist. And he owns a library that reportedly contains over 30,000 books...." Read more
"...The inquiry here is much broader. Taleb is painstaking, almost encyclopedic, in his enumeration of ways in which our understanding of information..." Read more
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Customers find the book insightful and interesting. They appreciate the compelling ideas and pearls of wisdom it provides. The book is described as a somewhat interesting introduction to basic philosophy with layered arguments. Readers describe it as stimulating and entertaining.
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Customers find the book entertaining and insightful. They appreciate the wit, thoughtful aphorisms, and vivid stories. The writing style is engaging and the author's discursive approach makes you feel as though he is talking to you.
"...into thinking we know so very much more than we actually do is both fun and insightful...." Read more
"...Overall, The Black Swan is a thought-provoking and engaging book that challenges readers to think differently about the role of randomness and..." Read more
"...at times, for Taleb's case is well put, and the book is brisling with thoughtful aphorisms and vivid stories...." Read more
"...It is a highly stimulating and entertaining book and will particularly delight those who enjoy the debunking of wrong-headed purveyors of elaborate..." Read more
Customers have different views on the book's predictability. Some find it engaging and subverting all notions of predictability, focusing on the impact of rare events like black swans on our world. Others feel the story is a bit meandering, with emotional arguments and long off-topic stories that make it hard to read and follow. The author mentions life is random and unpredictable, and unexpected things will always happen.
"...The book offers a fresh perspective on the impact of rare, unpredictable events - or "black swans" - on our world, and provides readers with..." Read more
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"Black Swan by Teleb is a wonderful rant about randomness and how that concept is misunderstood in the world causing enormous harm...." Read more
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Customers find the book's content repetitive, boring, and self-indulgent. They mention that it contains too many complex words and redundant sections.
"In the main, I found “Black Swan” to be terribly disappointing: long-winded, poorly structured, unnecessarily acerbic, often embarrassingly childish..." Read more
"...Instead, when looking at "The Black Swan", I see 440+ pages of narcissistic rambling...." Read more
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Insights into Black Swan Events: The Power of the Highly Improbable
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- Reviewed in the United States on February 22, 2013The polemicist Simon Foucher warned that, “we are dogma-prone from our mother’s wombs.” Nassim Nicholas Taleb’s philosophical work, The Black Swan, is truly a masterpiece that addresses this problem. At one point in the book, Taleb asserts that “the ultimate test of whether you like an author is if you’ve reread him”. Considering the fact that I’ve now read this book twice, it’s fair to say that I greatly admire Taleb’s work. Now on to the review.
***
In “Part 1″, there is an interesting anecdote, that sets the tone for the rest of the book, about Umberto Eco’s library. Eco is a highly respected semiotician, essayist, philosopher, literary critic, and novelist. And he owns a library that reportedly contains over 30,000 books. He isn’t, however, known for being boastful about it. When guests come over to his house he usually gets one of two reactions. The vast majority of guests, according to Taleb, respond with something similar to the following “Wow! Signore professore dottore Eco, what a library you have! How many of these books have you read?” And then there are the people who get the point: “A large personal library is not an ego-boosting appendage, but a research tool.” The point of this story emphasizes a critical theme throughout the book, i.e., we overemphasize what we think we know and downplay how ignorant we really are. An antilibrary (representing things we don’t know) is more valuable to us than are the books we’ve already read (or things we already know).
Early on we also learn that Taleb classifies himself as a skeptical empiricist. And, you may be wondering, what exactly is a skeptical empiricist? “Let us call an antischolar — someone who focuses on the unread books, and makes an attempt not to treat his knowledge as a treasure, or even a possession, or even a self-esteem enhancement device — a skeptical empiricist.”
For further clarification, empiricism is a theory of knowledge, which asserts that knowledge can only be ascertained exclusively via sensory experience. And skepticism, it’s important to note, comes in many different varieties. Taleb traces his skepticism back to its roots in the Pyrrhonian tradition. However, he is also fond of “Sextus the (Alas) Empirical” (better known as Sextus Empiricus) and David Hume. Taleb, however, is not entirely devoted to promoting rampant philosophical skepticism. He simply wants to be “a practitioner whose principal aim is to not be a sucker in things that matter, period.”
Largely, then, this book is about epistemology, also known as the study of human knowledge. What can we truly know? And what are the limits of human knowledge? I think Taleb focuses one of the fundamental problems of philosophy, which the German Philosopher, Immanuel Kant, also wrote extensively about (although from a different perspective), i.e., what are the limits of our reason? Kant realized that examining human reason is inherently problematic, namely because when humans try to examine metaphysical or even epistemological issues we can never do so outside the bounds of our own reasoning ability. We’re suckers, blinded to reality, because we are trapped in our own human minds!
Throughout the book, Taleb picks on the great thinker of antiquity, Plato. Taleb, however, also gives the impression that he is quite fond of the great philosopher too, despite his shortcomings. What Taleb calls Platonicity is the obsessive focus on the pure and well-defined aspects of reality, while ignoring the messier parts and less tractable structure that exist in reality. Perhaps an example of Platonicity might help clear up this distinction. A Platonified economist, for example, thinks that he can accurately model something as complex as the macroeconomy. Using foolish assumptions, the Platonified economist tries to assume conditions of reality (that don’t really exist) in order to fit her model rather than accepting that reality is far messier than the model. One who is a Platonic thinker, then, could also be classified as a nerd. Nerds, according to Taleb, believe that what cannot be Platonized and formally studied doesn’t exist, or isn’t worth considering.
One interesting example of Platonicity provided in the book pertains to breast milk. At one point in time, Platonified scientists believed that they had created a formula for a mother’s “milk” that was perfectly identical to a mother’s real milk. Alas, they could then manufacture this milk in a laboratory and make financial gains from it! Despite what appeared to be an identical chemical composition, there was empirical evidence showing increases in various cancers and other health problems in children who drank this fake-milk. Was this a coincidence? Perhaps. But it also could be that the Platonified scientific formula for milk was missing some crucial element of the milk that we cannot see!
Platoncitity can further be generalized as follows, “it is our tendency to mistake the map for the territory, to focus on well and pure defined “forms,” whether objects, like triangles, or social notions, like utopias (societies built according to some blueprint of what “makes sense”), even nationalities. “ In other words, a Platonified nerd is someone who visits New York City, but has with a map of San Francisco with them, and yet still thinks that their incorrect map will somehow help them. Taleb believes that we have a built-in tendency to trust our maps, even when they’re for the wrong location. Furthermore, we fail to realize that no map is often better than the wrong map.
The trouble is, according to Taleb, that we encourage nerd knowledge over other forms of knowledge, especially in academia. Nerds focus on what fits in the box, even if the most important things in life fall outside the box. The nerd simply neglects the antilibrary.
At one point in history it was considered “knowledge” that all swans are white. This was stated as a scientific fact because no black swans had ever been observed. However, this line of reasoning presents an interesting philosophical problem, i.e., “The Problem of Induction“. And the great philosopher, David Hume, wrote in great detail about this problem, although he wasn’t the first to do so.
In order to further understand this problem let’s consider the following classic inference that led to the problem: All swans we have seen are white, and therefore all swans are white. The problem is that even the observation of a billion white swans does not make that statement unequivocally true. This is because black swans may exist, we just haven’t observed one yet. We have obviously since discovered that black swans do indeed exist. What can we learn here? An over reliance on our observations can lead us astray.
Still confused? Then, let’s consider what we can we learn from a turkey, which hopefully provides further clarification. The uberphilsopher Bertrand Russell illustrated this turkey example quite well.
Consider a turkey that is fed every day. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race “looking out for its best interests,” as a politician would say. On the afternoon of the Wednesday before Thanksgiving it will incur a revision of belief.
Taleb, then, states, “The turkey problem can be generalized to any situation where the same hand that feeds you can be the one that wrings your neck.” Probably the most important point to note from the turkey is that our perceived knowledge from learning backwards may not just be worthless, but rather, it may actually be creating negative value by blinding us to future events with dire consequences.
As such, it’s certainly important to note that a series of corroborative facts is not necessarily evidence. But where does that leave us in terms of how we can know things? Well, Taleb further argues that we can know things that are wrong, but not necessarily correct (think Karl Popper’s falsifiability). This he calls negative empiricism. The sight of one black swan, then, can certify that not all swans are white, but the observation of a trillion white swans doesn’t give us any certifiable claims.
Strangely, however, we humans have a tendency to ignore the possibility of silent evidence and look to confirm our theories, rather than challenge them.
One of the central tenets of the book is the distinction between “Mediocristan” and “Extremistan”, which are terms for different types of domains.. When you’re dealing with a domain that’s in Mediocristan, then your data will fit a Gaussian distribution (a bell curve). In Extremistan, however, you’re not dealing with data that is normally distributed. A single observation in Extremistan can have an incredible impact on the total. Think of the following example. If we took the average height of a million humans and then, say, added the tallest person in the world to the sample, the average wouldn’t be affected in a significant way. Height is normally distributed. Now imagine we did the same thing with wealth. Adding the richest person in the world to a sample of a million people would greatly affect the average. The distribution of height, then, falls within the domain of Mediocristan and things like wealth in Extremistan.
One of Taleb’s main points is that we often try to use the model that works in Mediocristan in Extremistan. Taleb states, however, that almost all social matters belong to Extremistan and that the casino is the only human venture where probabilities are known and almost computable. But even casinos aren’t immune to Extremistan — think about it.
Another interesting concept from the book is the “toxicity of knowledge.” Too much information can be toxic especially when it inflates the confidence in an “expert” prediction. More information is not always better; more is sometimes better, but not always. And we often blindly listen to experts in fields where there can be no experts.
If you follow Taleb’s argument, then reading the newspaper may actually decrease, rather than increase, your knowledge of the world. The Black Swan, however, will not only increase your understanding of the world, but it will make you wiser as well. For that reason, I can assure you that I will be rereading this book yet again at some point in the future.
- Reviewed in the United States on July 16, 2014Taleb's romp through the land of what we do not know, what we cannot know, and how we deceive ourselves into thinking we know so very much more than we actually do is both fun and insightful. He takes observations that he made as a trader and uses them as a launching platform into the many pitfalls and traps we fall into in considering any problem.
I bought this book with Mandelbrot's Behavior of Markets, and for the same purpose. I wanted to get a strong intuitive understanding of the consequences of the difference between the actual behavior (power-law) and the assumed behavior (Gaussian) of markets. I wanted to know what the power-law relationships were, so that I could build my own statistical models. And I wanted an analysis of real data showing that, in fact, markets in question do follow power-law relationships. Were I to rate this book solely on its ability to deliver on these expectations, I would have to give it two stars; for this book has nothing to do with the actual empirical facts. It is, instead, a highly rhetorical appeal to us to use empirical facts in making decisions about the market while it nevertheless manages to completely dodge the task of presenting any real market data.
The inquiry here is much broader. Taleb is painstaking, almost encyclopedic, in his enumeration of ways in which our understanding of information breaks down. He draws on ideas from Greek, Roman, Arab, French, and English thinkers spanning more than two millennia. He also draws from the fine work of contemporaries Kahneman and Tversky which demonstrates how - when guessing about things - we all systematically underestimate our probability of being wrong by about a factor of twenty. He asserts that people with MBA's and those running large financial institutions do so a great deal more than, say, taxicab drivers and trash collectors.
He visits physical models which prove that we cannot know much about the physical world, such as the three-body problem. The point is that when even physical systems that can be described very exactly in mathematical equations cannot be predicted with arbitrary accuracy, what's the hope of predicting things for which we don't even know the variables or the math one might use in describing them? Here he misses some opportunities by needlessly scoffing at the uncertainty principle, and by failing to include comments by one towering physicist of the twentieth century, probably Von Karman*, about how no physical phenomenon seemed spookier - i.e. more difficult to describe accurately using mathematics - than turbulent flow in fluids. This is an unfortunate omission since Mandelbrot actually uses the term "turbulence" to describe the fluctuations in market prices of goods and securities.
One reaction to Taleb's arguments about how little we can ultimately know and on what shaky ground our beliefs lie is to stand, like a deer in the headlights, waiting for better information. Taleb argues that this is a mistake. It might be a bit better to proceed, looking for evidence that would prove one's course of action wrong, then modify one's model of reality and repeat the process. Doing this has the advantage that one can learn quite quickly about how any problem is bounded, and get some sense for the shape of the space inside. He quotes Warren Buffet: it is a great deal better to be approximately right than it is to be precisely wrong. And when choosing among things to believe, he advises us to rank beliefs not by their implausibility but by the harm they might cause. Although there are robust methods that draw on both judgments, this is generally very sound advice.
The book is highly irreverent. In financial circles it is seen as blasphemous, not just because it flies in the face of conventional wisdom, but because the author has so much fun demolishing revered ideas. Anyone who can take it seriously and follow its advice ought to be much better at evaluating information and making decisions. This quality gives you a much better chance of becoming rich and famous like Taleb - though as Taleb might explain, there is still a vanishingly small chance of this happening. The down side is that following Taleb's advice is likely to make one a great deal less promotable (especially in financial firms) because - according to Taleb - reaching high levels of a company depends almost exclusively on making others believe you know things about which you are actually completely clueless; and only sociopaths and very self-deluded people do this convincingly.
This suggests that one would read the book for the sole joy of knowing that you're the only person in the room who is sane enough to understand how little you actually know about pretty much anything.
Good Reading
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*Taleb makes great use of footnotes, and I recommend reading them all. Some of the best material in the book is in them. Van Karman is most famous, perhaps, for his role in adjudicating what to do after the collapse of the Tacoma Narrows bridge - arguably a Black Swan event. One day not long after this long suspension bridge was erected, it began twisting and oscillating in a 50 MPH wind. Some minutes later it collapsed. Von Karman was called in to evaluate what happened. He told the town council that the vortex shedding frequency of the bridge in a 50 MPH wind happened to closely match the natural vibrational frequency of the bridge. The bridge had gone into harmonic oscillation which created stresses that were much higher than those created by static loads for which it was designed, and this was why it failed. Although it is to avoid collapsing bridges via harmonic oscillation that British soldiers fell out of step when crossing bridges over several centuries prior, the town council had never heard of anything like this happening before. They declared "It was a very well-built bridge" and therefore "we shall build it exactly as it was before." To which Von Karman replied "If you build it exactly as it was before, it shall collapse exactly as it did before." To their credit, they had the bridge re-designed.
Top reviews from other countries
- ZeeTOReviewed in Canada on December 17, 2022
5.0 out of 5 stars One of the most important books I have ever read.
After reading this book, I am left with a small regret: that I didn’t read it a decade ago when it came out. It would have changed my life for the better over the past decade.
I am blessed and live a generally good life. Yet, the profound wisdom that NNT imparts in this book is not just relevant to any random process (like the investment industry where I make my living), but the life itself that we all live, with its joys, heartbreaks and uncertainties. We live in an uncertain world. And Taleb not only makes us appreciate the black swans that we tend to overlook at our own peril, he shows us the phenomena that hide in plain sight (the silent evidence, the narrative fallacy, survivorship bias etc.). He goes into the hardly enviable mental software that runs us imperfectly in the modern world. Just being aware of our imperfections allows us a leg up in a world full of people having little clue about the wisdom in this book. We cease to be the haughty ignoramuses, and transform into the more humble ignoramuses, making do the best we can while working with our imperfect selves.
The Black Swan is not an easy read. It also requires (in my humble opinion) some mental readiness to absorb the lessons that come in rapid succession. I was not ready to read it 20 years ago, even 15 years ago. Stochasticity and black swans were was not the words my younger self was ready to understand in earnest. It was with the passage of time, and my increasing alarm at finding the world filled with unexpected outcomes that transformed me to be the student who was ready for the master.
The Black Swan is therefore one of the most important books I have ever read. It is transformational. Along with the rest of the books in the Incerto series, The Black Swan awakens us to a completely different world; which surprisingly, happens to be the very same world where we were living in before. Read it today, or read it when you are ready for it. It will change your life for the better, as it has changed mine.
- JankoReviewed in Germany on February 4, 2025
5.0 out of 5 stars Stimulating, intelligent & fun to read
Hands down one of the best books ever written. Nassim Taleb is probably one of the most skillfull critical thinker and writer of our time and he doesn’t even try to hide the fact that he is keenly aware of it ;)
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AuroraReviewed in Italy on November 1, 2024
5.0 out of 5 stars good
va letto almeno una volta nella vita
- NidhuggReviewed in Sweden on June 14, 2024
1.0 out of 5 stars Pointles and badly written
The unexpected happens!
There, I just saved you time and money. Buy another book!
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Amazon CustomerReviewed in Brazil on June 14, 2021
5.0 out of 5 stars Brilhante
Excelente. Tive de repensar varias questões na forma como faço decisões de investimentos pessoais e no trabalho. Importantr saber que não há fórmulas ou implementações prontas, aliás boa parte do livro trata de assuntos genéricos e abstratos sem sequer mencionar o mercado de capitais.