The Black Swan: The Impact of the Highly Improbable (With a new section: "On Robustness and Fragility")

The Black Swan, by Nassim Nicholas Taleb

Just as the negative space gives form to the objective in a work of art, so the unknown gives relevance to knowledge. In The Black Swan, Taleb shows that all human knowledge is but a collection of crude marks on a vast canvas of ignorance. We know much less than we think we know, and understand even that poorly. Further, our history, both personal and collective, is governed by events that we did not predict, could not have predicted, and really do not comprehend.

Taleb defines the black swan concept as an event with three characteristics: unpredictability, extreme impact, and (unfortunately) the power to inspire us to contrive ex post facto explanations. For much of history conventional wisdom held that all swans were white. When Europeans colonized Australia and found black swans, however, an entire body of knowledge was upended. That is a key concept. Some events out there will obliterate all prior understanding. These events reside in a province Taleb dubs "Extremistan."

Despite our blindness to high-impact black swan events, we always go back and contrive explanations that would have predicted those events. Narrative fallacy is a term the author uses to describe how we fit facts to a preconceived story. After the dust settles, we tell ourselves that we are smarter now, and wait for the next Black Swan, drunk with the false belief that we understand the risk and are somehow protected from it.

Taleb describes several other mental traps. Epistemic arrogance is a term he uses to tell us that we are not nearly as smart as we think, and confirmation error is the tendency to look for instances that confirm our beliefs. It is our nature to connect random facts, weave a story, and then force fit this crude mental model onto physical reality. We do this not only to make future predictions, but also to interpret the past. Causal stories we contrive to make historic events appear deterministic are in fact just a cherry picking of facts to fit a story. We can't even predict history well. The author cautions us to be very wary of any human explanations: he makes a strong argument that we should avoid making strong arguments.

Despite the shortcomings of our primitive mental processors, the situation is not entirely as hopeless. Though we can know little of the events that most impact our lives, we can profit from the delusion of others. Financial markets are driven by a great many people that underestimate the impact and likelihood of Black Swan events. We can profit by betting on long shots, doing it a lot, but placing only small bets. That way, the losses will be bounded and you never suffer from catastrophic black swan events. Taleb cashed in this strategy, and retired to pursue his passion for philosophy.

When someone writes with intensity and honesty, the reader invariably gets a sense of the writer's personality. So it is with Taleb. He is a brilliant and unconventional thinker with little respect for established and institutionalized knowledge. Platonified (compartmentalized) thinking incenses him and he despises the high priests of academia - the ministers of what Robert Pirsig called "The Church of Reason". Taleb disdains their sacraments (especially the Gaussian curve) and their holiest institutions (e.g. the Nobel Prize.) I went through most of the book believing the writer a man of very strong opinions, only to realize at the end that I was, of course, wrong. Nassim Nicholas Taleb is a man of extreme opinions.

5 out of 5 people found this review helpful.

Nice hook, not much else.

Taleb's Black Swan metaphor is a clever one. It fits his central concept--the highly improbable and its impact. This book would make a nice 15 page essay the rest is autobiographical filler, snide comments about various 'established' cultures (e.g., academe) and absurd attacks on established statistical concepts.

5 out of 10 people found this review helpful.

Taleb 's Message... Keep Your Eyes Wide Open!

Easy enough to understand but rarely used in practice... Taleb's overwhelming point in this entertaining book is simple... 'Keep your eyes wide open'. Through his anecdotal reasoning Taleb illustrates case after case and historical reference after historical reference with a unique narrative style that is slightly fragmented yet nearly as entertaining as what you might expect from a work of fiction often leaving the reader with a discernable smile while mumbling to himself: 'Hmmm... You know this guy's got a point!¿ With an impressive understanding of the human social condition and our psychological tendencies, Taleb lays good claim to how we fail to anticipate, react to and make sense of the random events that have the greatest impact on our lives. In the end Taleb offers no specific solution or process by which one can profit or gain from the unexpected... however, the reader invariably learns the value of 'skepticism' and can easily see how this primarily philosophical dogma can be applicable to real life and of course, the financial markets! The Black Swan does more to re-align one's perspective than anything else, but few books do as good a job in this regard.

4 out of 5 people found this review helpful.

'Never judge a book by its cover...'

I could hardly make myself finish the book. Mr. Taleb devotes thousands of words to weaving together quip anecdotal musings that struggle to support his loosely defined thesis statements. Using a short, choppy prose style we are forced to review Mr. Taleb¿s observations of ¿nonlinearities¿ that seem to better highlight the authors worldly travels and successful friends than offer new insights. The popularity of this book simply illustrates our societal weakness for catchy titles and to ¿listen¿ to anyone who speaks authoritatively about the unknown.

4 out of 7 people found this review helpful.

a reviewer

According to critic Harold Bloom, Hamlet's predicament is not 'that he thinks too much' but rather that 'he thinks too well,' being ultimately 'unable to rest in illusions of any kind.' The same could be said for philosopher, essayist and trader Nassim Nicholas Taleb, who finds something rotten in misguided yet supremely confident investment gurus, traders, hedge fund managers, Wall Street bankers, M.B.A.s, CEOs, Nobel-winning economists and others who claim that they can predict the future and explain the past. Like everyone else, says Taleb, these so-called 'experts' fail to appreciate 'black swans': highly consequential but unlikely events that render predictions and standard explanations worse than worthless. Taleb's style is personal and literary, but his heterodox insights are rigorous (if sometimes jolted by authorial filigree). This combination makes for a thrilling, disturbing, contentious and unforgettable book on chance and randomness. While Taleb offers strong medicine some readers may find too bitter at times, we prescribe it to anyone who wants a powerful inoculation against gullibility.

4 out of 5 people found this review helpful.

Did Not Enjoy

Author took way to long to make the (obvious) points: 1.People don't properly assess/quantify risk; 2. A low probability event doesn't mean that it cannot happen.

2 out of 3 people found this review helpful.

Not Blink

The book would make a great 3-page magazine article. I give NNT credit for the brilliant premise. I also give him the credit he deserves for predicting the collapse of the banking industry on page 225. However, the rest of the book is a rambling series of examples that do little or nothing to support his main topic. Malcolm Gladwell's book, Blink has a series of rambling stories but they all support his main theme. I felt like this book was 3 pages worth of brilliance and 297 pages of nonsensical filler.

2 out of 6 people found this review helpful.

A Great Work

This book simply challenges our presuppositions regarding our ability to understand the world we live in. It seems that many of the long-held and cherished statistical dogmas that we depend on to interpret our past, present and future are simply and demonstrably false. Sometimes counterintuitive, frequently funny, always engaging and highly addictive, this book will prove to be one of the important works of the early 21st Century.

1 out of 1 people found this review helpful.

Wandering, meandering, boring

This is one of the worst audio books I have ever listened to. My wife agrees. The thesis is that it is only the things that we don't know about or can't anticipate that matter. The proof points given are 9/11 and the rise of Google. However, no proof is provided. Neither of these examples occurred out of nowhere - as the authors seem to think. For instance, all the elements of 9/11 were anticipated - the WTC was attacked previously, terror experts knew that attack with airplanes was possible - the failure was in the synthesis of the data. Same with Google - the importance of search had been established, and the importance of e-commerce: Google brought it all together.

At any rate, these are just examples of what is not covered in this book while the authors ramble all over the place and don't provide a shred of evidence for their thesis.

So, this is a work of fiction sold as if it reveals some type of scientific breakthrough.

1 out of 3 people found this review helpful.

Phenomenal -- A must read!! The title says it all. Just think of the rarity of a Black Swan.

This book was mentioned in a book I was reading by Malcolm Gladwell. It took me three or four trips to the bookstore before picking up a copy, but when I did I was truly impressed. This book will make you think about the world around you especially statistics, why some people are placed in a higher position than others, your views on improbably events occurring and so much more. I loved the idea that it is through mistakes that great discoveries were made and was totally impressed with the 10,000 rule. This made so much sense that am sharing it with everyone I know. How much time does anyone spend doing an activity until they are considered an expert? Read this book and you will find out. Some of the information I was familiar with but never had I read it in one conceptual context. Another area that I found interesting was the "memes" which is when an idea is passed and changed. If anyone has played 'telephone' they understand. Many of the thoughts/ideas that we think are cut in stone are actually ideas that have been distorted. If you like to read a book that makes you think about life and the way you view ideas, customs, thoughts and the world this is the book for you. It will challenge you and Taleb makes you question your own understanding of the world, the principles that you follow and the life that you live.

1 out of 2 people found this review helpful.

Interesting Concept...

The book had an interesting concept but was a bit confusing and too general for the average reader. There are many theories but few practical examples about the real world. This book is mostly for professors or researchers.

1 out of 2 people found this review helpful.

A thought altering read

The kind of book that made me gaze away every few pages to ponder the impact on how to apply this approach to my job and personal philosophy.

1 out of 2 people found this review helpful.

A reviewer

its fun and entertaining. some don't understand it but that's fine. it is for people with an open mind.

1 out of 2 people found this review helpful.

A reviewer

I have read this book carefully. Reading it, I must admit, was a waste of my time, let alone my money. Mr. Taleb, in this book, indulged himself in an exercise of futility. Everyone knows that events in life (including life itself) are unpredictable. But to surrender to chance and make-believe that the sun may not rise tomorrow is really naive and ridiculous. As this book is now on the bestsellers' list, Mr. Taleb was successful in creating his own little black swan, thanks to the power of advertising.

1 out of 5 people found this review helpful.

How did it get published?

Honestly I have no idea how this book was published. It is clear that the author does not understand probability theory. We all know that normal distributions can not be used to describe all the possible phenomena in nature and society. But the author uses this argument to discard probability theory. The book is full of incomplete stories and ideas that hardly make sense. Don't bother to buy or read. There were other negative comments of this book but apparently were deleted. I hope they don't delete this one.

1 out of 5 people found this review helpful.

WARRIOR DEN

Couldn't finish it

Rehashed the same thought over and over - he doesn't like bell shaped curve

Thought provoking

A great book for challenging your thinking. I struggled with the writing style, but material is worth pushing through.

If you can get past the author's tone, it's an extremely worthwhile read

The book's underlying premise is that we truly cannot- given our limited ability to note/visualize/comprehend/understand anything that happens in the physical world in terms of cause-effect- truly and truthfully understand why events happen. NNT notes that 'We don't know nuthin' . He is absolutely correct, and I would recommend this book to any true skeptic as long as they can get by the author's supercilious tone.

0 out of 2 people found this review helpful.

I can't believe this is a best seller - the jokes on us who bought it.

What a grind! "Unexpected life-changing things happen that can't be predicted with a bell curve." There - Now you don't have to waste the 10 or more hours it takes to plow thru this life-sucking experience. I can't believe the fawning reviews this book gets. Like it was an expensive wine with all the upscale adjectives. I also can't believe the dislike of the 1 star reviews which are telling a truth that you may not like to hear- that the blank canvas that you're looking at isn't really art at all.

If you want specifics, I would use the key words, disjointed, long-winded, no-sequitur, unscientific, and axe-grinding.

0 out of 2 people found this review helpful.