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The Black Swan
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  • Prediction is Uncertain - Even Behavioral Consistency
    Imagine you are a turkey being fed comfortably on one of those mass production turkey farms. You may well assume that the good food, good company, and pleasant surroundings will go on forever. If you are a quant-savvy turkey, you might even gobble together a mathematical model that predicts good times well into the future, beyond not just Thanksgiving, but past Christmas and New Years as well. Suddenly in November, unexpectedly, with life-changing consequences...things change. You just didn't see it coming. Pass the cranberry sauce.

    Financial planners, economists and other more sophisticated turkeys don't see it coming either, argues author Nassim Nicholas Taleb. His book highlights the danger of the unexpected. The unexpected will happen even if we have a comfortable model predicting only minor changes. After such a "black swan" catches us by surprise, we use our flawed hindsight to decide how we could have predicted the disaster using a better model. We are kidding ourselves, insists Taleb. We need better strategies to live in a world where truly random, unpredictable events occur. He goes to some trouble in this book, and his previous Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets, to educate us.

    The flawed basis of many formal models is "the great intellectual fraud" of the bell curve. We learn that highly constrained variables like height and weight cluster around an average and that extreme variations from the average are unlikely. We just aren't going to meet anybody that's half a foot or half a mile tall. These "Mediocristan" models are fine until we misapply their assumptions to unconstrained "Extremistan" phenomena like stock values, book sales and such. We are slow to see this problem. We persistently commit the "Ludic Fallacy," clinging to our formal models because they seem more real to us than the messy, real-world events they are meant to explain. Taleb illustrates this point with examples ranging from the events of 9/11 to the "off model" problems that cost casinos money. S. I. Hyakawa warned us in the early `70s that "the map is not the territory," but we haven't learned.

    Taleb also warns us of the narrative fallacy based on our love of stories. We feel we understand something when we can tell a story about why it happened--even after the fact, with only part of the relevant information. When musicians achieve fame and dramatic financial success, we backtrack through their histories, explaining success by what we see along the path. We don't see the hidden cemetery of failed garage bands and starving artists who did all the same things to no avail. Because we believe this artificial story, we don't have to face the role of randomness in success or failure. Or consider its impact on our own plans.

    Taleb offers some suggestions--though fewer than I'd hoped for. He advises us to be open to positive black swans and guard against negative ones. Lending money at interest, for example, opens us only to a high impact negative. This worst case is that the borrower will go bankrupt and we won't get our money back. But the very best outcome is that the loan will be simply repaid. If the borrower's entrepreneurial effort is wildly, off-the-scale successful, the lender doesn't get any more than this. An investor, on the other hand, suffers the same risk of loss, but participates fully in an "Extemistan" success. Readers are left to ponder the implications--and perhaps to hire Taleb as an investment consultant.

    Although Taleb does not venture there, some of his ideas are useful in applied psychology. Personnel tests, for example, rely on the principle of "behavioral consistency," assuming that our past actions best predict our future actions. If someone is a poor performer, the safe bet is that this person will perform poorly in future employment. This may be fit a general model, but employers--and psychologists who advise them--might consider whether we commit Taleb's fallacies. Are we so comfortable with are general predictive models, with our stories about how people "are," that we close ourselves to possible change? Wouldn't it be better to seek the occasional "gray swan" of improvement and hire the flawed job applicant? The author has convinced me that this is worth considering. My time reading this book was well spent.

    One final note: The author's condescending tone has been mentioned by other reviewers. It's there all right. Yes, he is condescending. Yes, he sneers at his fellow financial analysts. Yes, his citations veer into name dropping. And, yes, he finds ways to not-so-subtly complement himself as he praises Benoit Mandelbrot. But none of this matters. Taleb's message is valuable. I recommend you ignore his tone--or perhaps even be entertained by it. Stay on task and learn something about the nature of randomness and prediction....more info
  • Excellent concept, but book not as good as it could be
    First off: The Black Swan is not as good as Fooled by Randomness. The concept behind the book is excellent but the second half of the book is not written very well. I hope taleb produces a full revision of this book in which he corrects this huge missed opportunity.

    ...more info
  • OK
    This book brings attention to some of our biases and how it effects our decisions. For example given enough monkeys (trillions) on typewriters one would write the Iliad but don't except the next book to be the Odyssey. This applies to traders giving enough some will experience random success for several years until they blow up.

    Bottom line don't take randomness for success.

    I'm not sure if you need to read a whole book to get the point. Especially since it's hard to implement as a trading strategy. I forget the exact quote but the author says don't expect to read the art of war and become a great general don't read my book as a practical guide to trading.

    What's to say that Talib's trading strategy is randomness and one day will blow up.
    ...more info
  • Good book.
    The book was a good one. And I also liked the prompt delivery service: The book arrived quickly.
    ...more info
  • A towering intellect and an even more towering ego
    The most predictable thing about events in this world is that they are far less predictable than we think. That is the thesis of this book. Most people reading this review will have heard that Nassim Nicholas Taleb is one of very few people who predicted the recent financial meltdown and made money betting on it. Only a small portion of the book is specifically about financial matters. Nevertheless, an understanding of the concepts here is essential for anyone hoping to understand the recent financial carnage. And yes, making a remarkably accurate prediction is an ironic way to gain credibility for a message about the futility of prediction.

    For centuries all swans were believed to be white and every known observation of a swan had served to confirm this belief. Then a single observation of a black swan destroyed that theory. This principle is known to philosophers as Hume's problem of induction or Popper's falsification principle. It is known to investors as the fine print in the prospectus that says, "Past results are no guarantee of future performance." Taleb would prefer that this warning was taken out of the fine print and printed bold on the cover of the prospectus.

    This book seeks to answer the question: How do we make decisions when faced with opacity of information on which to base those decisions? Taleb concludes we simply convince ourselves to be more certain than we have any objective right to be. The reasons for this have deep roots in evolutionary psychology. We prefer information that conforms to our biases. We prefer anecdotes over scientific statistical analysis. When we attempt scientific statistical analysis, we chose tractable models and mistake the model for the far less tractable reality. We respond to even the most unpredictable events by quickly convincing ourselves (with the benefit of hindsight) that they could have been predicted and we won't fail to do that next time.

    Taleb convincingly shows that Bell Curve statistical analysis is vastly overused in situations where it is not just useless but dangerous. Usually this is done by confident, overpaid "experts." Using this model where it is not appropriate dramatically under predicts the likelihood of rare events. Even worse, it dramatically under predicts the impact of these events. A trader can lose a life's savings in an afternoon using the same methods that brought him a lofty income for many years.

    In place of the Bell Curve, Taleb advocates the mathematics of Mandelbrot for studying most social and economic phenomena. This will yield far fewer firm predictions but a much better appreciation of risk. Attempting to find some examples of where the Bell Curve may work, he cites mortality and crime rates. This may be a rare case of him being too generous with his foes. History is replete with pandemics and societal breakdowns that blew up longstanding mortality and crime patterns.

    Taleb aspires to be viewed as a big league philosopher. His biggest fear seems to be that he will be viewed as just a successful (or worse - lucky) trader. He is the type of polymath that you almost never see anymore in this age of hyper-specialization. While few of the elements he uses originate with him, there is some important and creative synthesis here. He effectively draws on philosophy, psychology, history, the mathematics of Mandelbrot, and his experience as a trader, in support of his thesis. Despite a showy vocabulary, he never hides behind jargon. He has a genuine talent for making technical ideas accessible to a general audience.

    The book is marred by Taleb's incessant name dropping. He is very intent on establishing that his sensibilities in all things scholarly and cultural are unrivaled. Perhaps this is true. Even so, many readers will find it tiresome being reminded of it on every page. He admits to sharing the same psychological instincts that make us all bad risk managers. It's just that, his tone would indicate that, in himself, these are charming eccentricities while in others they are contemptible weaknesses. Like his hero Popper, Taleb preaches epistemic humility even as he is short tempered with all who challenge him. These flaws did not detract much from my enjoyment of the book but for others they will. How can you tell which group you are in?

    One of the many relevant psychological principles Taleb cites is confirmation bias. I was inclined towards his ideas before I ever picked up the book. I had already concluded that most of what passes for economic prediction is useless - or worse. And that watching CNBC can only make you dumber.

    If you are inclined to believe that events are inherently predictable and that corporate risk managers make their companies safer, then you probably won't like this book. On the other hand - if you believe we have often been sold a bill of goods by "experts" in the prediction business - then you are likely to find this a useful and satisfying read....more info
  • The White Swan
    Nassim Nicholas Taleb opines in his book that a great honor that could be bestowed upon him is if some scholar took the time and effort to auther a rebuttal book titled "The White Swan." Unfortunately, I will disappoint Mr Taleb and offer only an on-line review written by a decided philistine and usurp the title for this brief critique.

    Mr Taleb is certainly correct on many of his contentions: that improbable "off-the-radar" events shape our world, that "professionals" in the prognostication industries (e.f. financial analysis and advice, economics, CEO's) are collectively charlatans, and that the human mind is biased through millennia of mammalian evolution to believe in causality and embrace the narrative where only random events may exits.

    But his book is lacking in a number of respects. The most prominent forms of evidence which he offers is to cite either his own superior intellect, life-experience, and erudite approach to life (and the repeated narcissistic autobiographic references do become very tiresome even within the first 20 pages) or to engage in demagoguery. He draws parallels between himself and those he respects and emulates (like Poincarre) and dismisses his critics and foes as philistines (hence my self-description above). Indeed, I have no doubt that most financial analysts and CEO's are philistines. But that fact and allusion to that fact does not constitute evidence to support Mr Taleb's arguments.

    Second, he gets some concepts and facts painfully wrong.

    He casually and repeatedly dismisses "the bell curve", and does so inaccurately. He implies that the bell curve does not allow for rare events. That is incorrect. The "tails" of the bell curve extend to infinity and encompass the numerically improbable, but inevitable events. Any element that can be quantified (wealth distribution as one example Mr Taleb reference several times) can and will have examples of rare outliers, which nevertheless exist within the bell curve. Bill Gates' wealth is at the far extreme right of the bell curve, multiple standard deviations from the mean. But it is not outside the bell curve. Some variables are not "normally" distributed but these two can properly be described by appropriate skewed methods, such as nonparametric analyses. Granted, the principal type of "Black Swan" that Mr Taleb describes is the qualitatively unpredicted event (e.g. jumbo jets crashing into the Twin Towers) that falls well outside the realm of the bell curve, but many, many of the "exceptions" that he cites are within the bell curve. He is simply wrong in dismissing the bell curve.

    Though Mr Taleb dismisses facts and knowledge as irrelevant (and is thus free to draw any conclusions from any observation, no matter how incorrect his facts are), there are some readers who will insist that he gets his facts correct before he cites fictitious scenarios. To wit: at one point he states that doctors will avoid prescribing drugs which may be proven to offer benefit to a large proportion of patients because of the fear of uncommon side effects and their potential attendant lawsuits (the "Black Swan" of this example). He is wrong. In this era of evidence-based medicine, the entire medical profession has devoted enormous effort in exactly the opposite direction. The Federal government now scorecards hospitals on the same. The risk is much greater that a physician failing to prescribe such an effective medicine will be sued for failing to adhere to "standard of care" than be sued for the rare "Black Swan" side effect.

    As another example: research and discovery. Correctly, Mr Taleb cites important examples of serendipity in scientific discovery (Alexander Fleming and penicillin). But Mr Taleb is clearly ignorant of planned discovery and development. Most medications which have emerged in the last two decades did not come about via serendipity but through a concerted process of target identification, receptor mapping, chemical synthesis (guided by knowledge of what side-branches impart what properties of absorption and solubility), with preclinical and clinical testing to follow.

    He insists that the automobile and the atom bomb are the results of accumulated serendipity. Perhaps that is true for one or more of the key elements that led to the invention, but let's not ignore the Manhattan Project nor the incremental engineering developments that have evolved the automobile from the Model T to its modern counterpart.

    For Mr Taleb, facts are inconvenient items because they fail to support his hypotheses.

    Finally, the writing in general is quite poor. Again, Mr Taleb invokes an intellectual giant such as Poincarre to make the point that digressions and other irrelevancies are an example of a superior mind and only an ignoramus editor would dare suggest otherwise. Ever the philistine, I will offer that flight-of-ideas is also a symptom of some forms of psychiatric disorders. A poorly constructed chapter with random allusions transparent only to the author is a form of literary autism.

    In conclusion, worth a read, but borrow this book from your library, don't buy it.
    ...more info
  • Not As Good As One Would Hope
    After seeing Taleb interviewed on television, I thought I would give his book a try. After 60 pages I realized how much I was hating this book. His cutesy style, the digressions and occasional partial sentences started to drive me to distraction. He needs a better editor to show him how to write clearer. I returned my copy to the library without completing it....more info
  • Not As Good As One Would Hope
    After seeing Taleb interviewed on television, I thought I would give his book a try. After 60 pages I realized how much I was hating this book. His cutesy style, the digressions and occasional partial sentences started to drive me to distraction. He needs a better editor to show him how to write clearer. I returned my copy to the library without completing it....more info
  • Juvenilia
    Terrible book! I've read a little statistics and cognitive science so, I was enthusiastic about this book when I first heard of it. I tried to get into it but found it so poorly written that I abandoned it. For me, this is rare. I usually just put something aside and tell myself, I'll get back to it. Here, however, no interest. Then, I heard Naill Ferguson praise the book so, I figured I'd make a second attempt. Taleb's facts are pertinent and accurate but, his style and interpretation is akin to juvenilia. Ferguson's poor judgement here confirmed for me a growing suspicion that he too is more air than intellect. ...more info
  • Brilliant, Humorous Attack on Conventional Wisdom
    The Black Swan is brilliant for a variety of reasons. Author Nassim Nicholas Taleb (NNT) voices many thoughts about the way the world works (and doesn't work) that lurk in the back of all of our minds. Taleb's worldview is unique, well informed, and in many respects shockingly accurate. Highly improbable events are what shape our world. The fact that they are unpredictable is frightening, but what makes Black Swans that much scarier is that after the fact, experts concoct "logical" explanations to make sense of it all.

    And Taleb is well positioned to say that the world is unpredictable, having been a highly paid "quant" or quantitative analyst, graduating from Wharton business school at a young age, and all the while modestly (and humorously) insisting to anyone that asks, that his job is a limo driver.

    NNT has a variety of unique perspectives that make this work well worth reading and continuing to ponder long after the book has been put down and completed:
    - Taleb has a deep distrust of experts; "empty suits" that he feels in fact are no more capable in their predictions of the future than cabdrivers. They are just more eloquent in fooling themselves and their audiences.
    - NNT is a sharp critic of "hotel journalism," where reporters don't actually go out to get the story. He finds that there is so much overlap between newspapers that one actually decreases world knowledge the more one reads them.
    - The author's command of such a variety of fields is remarkable and his description of the unread books on his shelf haunting him is inspirational.
    - Taleb, like Thomas Friedman, interestingly feels that the United States is by far the most creative nation in the world and that this is the source of great competitive advantage.
    - Experience can make you little prepared for the future; Taleb's Thanksgiving turkey analogy is mind-blowing and so true.
    - Human beings tend to oversimplify the facts and tell stories following events in order to explain the truth, which then isn't the truth at all. We need narrative in our lives.

    And so on. I wasn't even able to get to the part where Taleb blasts the bell curve here, but other reviewers have more than adequately covered that aspect. I can't say enough about this book. If you want your eyes opened and your mind expanded, read The Black Swan.

    ...more info
  • terrifc
    The Black Swan: The Impact of the Highly Improbable

    A very enjoyable book to read. Very hard to put down....more info
  • Throwing modelling to the wind in a maudlin mewling (du cote de chez Swann)
    It is obviously a difficult exercise to write a popular book about (applied) Science without turning into a populist pamphlet, especially for an upper class intellectual, and it is almost inevitable to end up oversimplifing one's discourse by emphasizing a few examples over others and making theories out of those examples, but I think the book overdoes it! By a fair margin. Worse, by attacking modelling tools like the Gaussian, models and modelers (as a conglomerate of "charlatans"), the Black Swan contributes to the anti-Scientist discourse that is unfortunately so prevalent today. Being a skeptic is commendable and scientists should never cease questioning their models, but throwing all models to the winds and using only "facts" to drive one's decisions is not very helpful. As put by George Box (or by someone else before him), "all models are wrong, but some models are useful" and statisticians can devise tools to assess how wrong and how useful without falling into the "statistical regress argument" (p.310). Encouraging a total mistrust of anything scientific or academic is not helping in solving issues, but most surely pushes people in the arms of charlatans with ready answers. ...more info
  • Do not be fooled by stock brokers and financial advisers
    read this book before you listen to "expert" advisers who project and plan your financial future...more info
  • Am In the Beginning, and Hope to Understand More
    I am a new convert to these types of concepts. Intelligence and intellect after reading scores of badly written novels for me is a refreshing change -- daunting my previously hum-drum reading habits. So far, I find myself reading and then re-reading paragraphs - and then my head spins around, suddenly realizing that for so many years I didn't know much. I appreciate the genisus, I am pleased to see that after reading Freakanomics, I have found a new world of thinking. The Black Swan has some non-answers to my many questions, but perhaps that's a good thing! ...more info
  • Simply Outstanding Book
    This (and its sister book 'Fooled by Randomness') completely blew me away. I am a 24 year old finance major, now working as a management consultant, with a real interest in markets and psychology.

    The central thesis of the books are tantalisingly simple: the world is so functionally complex (and growing ever more so) that most social phenomena are effectively `random'. Randomness, however, is poorly understood and even more poorly explained by orthodox mathematical modelling which systematically underestimates the `wild randomness' inherent in the world. Taleb suggests (and attempts to demonstrate) that merely understanding the deficiencies of orthodox thinking with regard to randomness (and probability) is a big advantage in life.

    The book(s) are a must read for people looking to understand more deeply the world we live in and the limitations with mainstream thought generally and modern portfolio theory more specifically.
    I cannot recommend these books highly enough. I read them both in a couple of days and have found them totally absorbing (in a way few books truly are). They challenge and confront and pull the reader out of his or her `comfort zone' with regard to many perspectives on the world. The core readership of the book will obviously be those interested in behavioural finance but I would happily (and will probably) give the books as presents to friends who hate finance. I will probably also give the books to my mother, which for me is the test of whether I consider a book a `must'.

    Having said that the author (this is perhaps at times a symptom of his unique writing style) does at times become rather grandiose. He suggests not advising others about how to behave and then only a few pages later commits the very sin he has just warned against. In `Fooled by Randomness' he invents fictional characters "Nero Tulip" (hmm could the initials N.T also stand for someone else?) - the brilliant but modestly profitable trader (that due to massive risk aversion only invests in treasuries) who overcomes cancer but is overshadowed by a flashy superstar trader neighbour who later `blows up'. In `The Black Swan' Taleb later details how he has overcome cancer and is very risk averse, investing a large percentage of his worth in treasuries. This grandiosity is however in the end totally forgivable due to the ability of the anecdotes to entertain and inform the reader.

    One other thing that I found slightly difficult to follow (admittedly I am convinced that I am not as smart as the author so it may be my fault) is the fact that in `Fooled' he correctly discusses peoples' inability to think in terms of conventional probabilities and then sharply criticises those `experts' who rely on such probabilities in managing financial risk (a theme built on very powerfully and convincingly in `Black Swan'). There is the risk that (without meditating somewhat and trying to assimilate everything) the reader will be left nodding at everything Taleb says, but later wondering how it all fits together.

    Finally, coming from a legal background I found the discussion in `Fooled' about the warped use of probabilities in the OJ Simpson trial very interesting. The author discusses the legal burden as being `beyond a shadow of a doubt'. I am from Australia (with a different legal system to the USA) but this seems a mistake. I would have thought the correct criminal legal burden would be `beyond reasonable doubt'. This is nitpicking I know.

    Great book(s). Priceless wisdom and insight.
    ...more info
  • Good Fats/Bad Fats; Good Fat-Tails/Bad Fat Tails
    Taleb challenges the Gaussian modeling premises underlying various financial/sociological phenomenon. Fat-tails are challenging thin-tails for order beyond the six sigma.

    Taleb does hint at the macro-economic actions that cause Black Swans to occur and escalate; but he refrains from driving the point home:

    "In the summer of 1982, large American banks lost..everything they ever made in the history of American banking--everything. They had been lending to South and Central American countries that all defaulted at the same time.."an event of an exceptional nature."..the bankers led everyone, especially themselves, into believing that they were "conservative". They are not conservative; just phenomenally skilled at self-deception...[This repeated again a decade later in early 1990s when..] the savings and loan industry required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense; when "conservative" bankers make profits, they get the benefits; when they are hurt, we pay the costs."

    In the world of finance, (contrary to Taleb) these periodic Black Swan events are not really random events; there is a macro-economic logic to this madness; i.e., astute Hedge Fund managers could game this until the tall-poppy syndrome catches up.

    Timely feedback loops are essential. Thus without the Gift of Pain (see author Paul Brand) , the disease of leprosy devastates the human body. Similarly, without the gift of bankruptcy, flawed economic decisions escalate into a singular Black Swan event. Capitalism uses negative feedback loops in a timely fashion; in contrast, altruism is in open-loop denial until the obvious is in plain "King Without Clothes" sight. This lack of negative feedback is the fundamental reason why draconian regulations never go away, but instead get layered in like sedimentary rocks.

    Black Swan events are not necessarily negative (witness J.K Rowling's phenomenal success); i.e., innovations could be deliberately seeded by grasping and tweaking the embedding fat-tail context. Just as there are good-fats versus bad-fats, likewise there are good fat-tails versus bad fat-tails.

    All this is connected to E.O. Wilsons socio-biological re-framing of the Darwinian order--individual entities are evolving within the group context; like-wise, thin-tail phenomenon are unfolding within the fat-tail context. If one respects the individual freedoms, these are not necessarily antagonistic evolutions; unfortunately in the current stage of human evolution, they often end up so. There is a psychologically deep, mirror-neuron level (see author/discoverer Giacomo Rizzolatti) reason why this is so; why altruism often trumps capitalism; why we as a species cannot suffer/witness chronic pin-prick pains, but instead settle for one giant tsunami of overwhelming pain such as the Great Depression. And we may have to wait for a Wilsonian socio-biological evolution to temper our overactive mirror neurons and learn to accept the small-scale self-corrective bankruptcies before they escalate.

    As an aside, Taleb is off-mark in his critique of Modern Portfolio Theory and the associated practice of Risk Management. When governments step in to rip the carpet armed with a collective mandate from populations hooked on overactive mirror-neurons, systemic risk rules; and portfolio diversification is of no value. But MPT was never designed for such a scenario; and neither does Taleb have long-term solutions for this. But as a timely industry gadfly, Taleb shows the limitations of modern finance subject to systemic assault. And in his search for the governing fundamentals, Taleb does bring the richness of Cognitive Sciences/Decision Sciences to the table; but missing from Taleb's table are the mirror neurons. All in all, an excellent book to read and read again. ...more info
  • Throwing modelling to the wind in a maudlin mewling (du cote de chez Swann)
    It is obviously a difficult exercise to write a popular book about (applied) Science without turning into a populist pamphlet, especially for an upper class intellectual, and it is almost inevitable to end up oversimplifing one's discourse by emphasizing a few examples over others and making theories out of those examples, but I think the book overdoes it! By a fair margin. Worse, by attacking modelling tools like the Gaussian, models and modelers (as a conglomerate of "charlatans"), the Black Swan contributes to the anti-Scientist discourse that is unfortunately so prevalent today. Being a skeptic is commendable and scientists should never cease questioning their models, but throwing all models to the winds and using only "facts" to drive one's decisions is not very helpful. As put by George Box (or by someone else before him), "all models are wrong, but some models are useful" and statisticians can devise tools to assess how wrong and how useful without falling into the "statistical regress argument" (p.310). Encouraging a total mistrust of anything scientific or academic is not helping in solving issues, but most surely pushes people in the arms of charlatans with ready answers. ...more info
  • Good concepts, grating read
    Many of the other reviewers expounded on the virtues and shortfalls of this book, so I'll be short. The book is filled when gems of ideas big and small, but I had a hard time getting over the condescending tones in many sections of the book. Taleb argument is essentially this:

    (1) most systems are only quasi-predictable because impossible-to-predict events dominate its evolution on long time scales
    (2) many people pretend to have found ways to predict the evolution of these systems
    (3) Those people are idiots (proof: see axiom 1).

    If you can get over Taleb's air of superiority then the book is great and provides a wide breadth of insight that might inspire you to conduct further intellectual exploration....more info
  • Mediocristan. 5 stars for ideas, 1 star for writing. I averaged the two
    Taleb's main point is that the bell curve doesn't apply to financial predictions. That the industry of risk managers assumes that it does, means that the perception of risk becomes self-referencing, and ignores the possibility of a black swan event. I give credit to Taleb for predicting the demise of Fannie Mae, and to some degree the black swan of the current economic meltdown.

    Taleb reminds us all to look beyond the normal and suspend our assumptions and judgments because of the fresh eyes this can offer.


    As a practioner of structured creativity, The Black Swan tenets reinforce this thinking, which can be very powerful and liberating in business and in life. Taleb's main ideas are a beautiful outlier. For some more concrete strategic thinking on how to create or just get in the way of black and 'little grey' swans check Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant and The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials)

    Unfortunately, Taleb's writing is also often an outlier. The structure of the book was lost on me. Some of Taleb's descriptions, when introducing a new topic, were efficient and entirely clear and concise. That is not the norm in this book. It was an intellectual challenge and a struggle to stay engaged. I wish, as other reviewers have suggested, that I had read Fooled by Ramdomness first, as it sounds like Taleb did the work needed to write a short book in that endeavor, and not a rambling, random work from mediocristan. (Taleb's word for the world of bell curve reliance.)

    I imagine that Taleb is a tough man to direct, but an editor with a red pen would have been very useful to The Black Swan. The footnote predicting Fannie Mae's demise, refers to 'Fanny' Mae. Although we knew what he meant, the fact that this was mis-spelled is a symptom of what's wrong with this book; the editing, right in the middle of what was dead right; the prediction.

    Read it, but feel free to skim....more info
  • The Socrates of Wall Street
    I urge any professional, executive, or manager to study Taleb. He reveals the flaws in how we and our peers think. He has a philosophical approach but has little in commmon with most academic philosophers. He draws from his experience in financial derivatives trading, but has little in common with most investment bank analysts or economists. Instead, like Socrates, Taleb shows how supposed "experts" systematically delude themselves and their audiences into believing they know much more than they really do....more info
  • One of the best, readable books
    This book is the easiest book on the subject of probability I have ever read. It is a delightful read. Yet, much of what Nassim writes is so true, and he reminds us of our fallibility. Everyone should read this timely book as it has major impact on our views of the world and its economy. ...more info
  • A great Example of a well-known Idiom
    Idiom: "Don't let success go to your head"

    Dear old Taleb, what an ego, and such Cheneyesque arrogance.
    This was my first Taleb book, and after the initial thrill of finding someone who shared my concerns about "statistical methods", I realized that this author, rather than being informational and thought provoking, was on a tirade. Not simply an occasional rant, but a continual outpouring of ego and insults to many accomplished mathematicians and thinkers.
    I'm sorry that Taleb failed to heed the idiom above, but too many of us do allow success to go to our heads.
    As an engineer, I have successfully applied the "white swans" to the design of aircraft wings, aircraft engines, and several other products we use today.
    Taleb, I'm sure, was grateful that the work of some of the people he criticised (indirectly) helped to keep his airplane aloft as he flew around the world promoting his book.

    I am not ashamed to admit that I only discovered one black swan during my research years in England - a discovery which happily led to my being invited to work at three of the world's major aerospace companies.

    Regarding this book, I would recommend saving your money - BUT if you do want to fund Taleb's comfortable lifestyle, then limit yourself to his first book (which I decided to borrow rather than buy - just in case!).
    ...more info
  • Too much ego, too much information, too little value
    Spectacular tour de force on the nature of the real world of probability. Highly intellectual fare, peppered with too many examples and gratuitous references, and ending with (spoiler alert) a grand over-simplification of advice: "don't sweat the small stuff". My feeling is that he could have cut the content by half and have done a better job. Mr. Taleb is obviously a very intelligent man, and I sense that he enjoys displaying that fact. However, it was a useful read. I'm glad I borrowed my copy to read. I would have regretted buying it. The Black Swan: The Impact of the Highly Improbable...more info
  • Decent Read
    The basic premise, that future events are unknowable and consequently unpredictable, is not a new one. We humans are stuck in the neverending rut of trying to prepare for future events by relying on the past, wasting time and money on creating narratives that deceive us into believing we have some false security or that we hold the key to success. The governments spending dump in the wake of 9/11 on measures that are supposed to keep us safe is a prime example. Although this book does a good job, if a bit flawed in prose, of articulating this point, it should be mentioned that this is not a novel argument. Taleb's book held my attention but was wanting in the detail and research that I really desired. ...more info
  • Huge Disappointment
    After hearing of "black swans" at a highly informative seminar about the current financial crisis I was eager to read about the highly improbable. What a disappointment.

    Little in BS is new. Almost all of it can be explained by the common notion that our brains grew up on the Plains of Natural Selection in East Africa and aren't ultra-rational computers smoothly dealing with the complex world around us. Onto the "deficiencies" of our frontal lobes the author bootstraps a cute image, that of the black swan. Turns out -- it's hard to make this stuff up -- the black swan isn't even a swan.

    What is shocking about BS is the sheer avalanche of unsupported preaching that spills out paragraph after paragraph, section after section, chapter after chapter. The reader who instantly and uncritically agrees with the author is encouraged to pat herself on the back for being as brilliant as the author clearly feels himself to be. The reader who says -- over and over again -- "And you back this up with--what?" is roundly condemned. Fortunately, such condemnation puts one in good company as, well, everyone who doesn't agree with the author is an idiot.

    The emotionality in the book is fertile ground for wonderment. When was the last time you started writing words like "scorn" on your bookmark and then, with hash marks, kept track of the number of times the word was used? First-year clinical psychology students would have a field day with BS. The answers to "What is the author revealing about himself?" would make fine reading.

    In sum, I am bewildered as to how this book captured anyone's imagination. It is, in a word, trite.

    Of course, I'm one of the idiots who can't park my skepticism and uncritically swallow BS.

    Dr. Kirtland Peterson

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  • Against the Gaussians; For the Mandelbrotians
    N.M. Taleb fulminates against the adepts of the Gauss-distributions (calling them madmen) and applauds profusely the Mandelbrot-fractals supporters. Why? Because the tail-ends of the Gauss-distribution underestimate the occurrence of black swans (unattended phenomena, spikes, large deviations). Indeed, for N.M. Taleb, `our world is dominated by the extreme, the unknown and the very improbable. Our future will be increasingly less predictable because of the apparition of black swans.'
    The author even rejects Heisenberg's uncertainty principle, because it is ... Gaussian.

    But, as J. von Neumann said: `mathematical formulation necessarily represents only a theory of some phase (aspects) of reality, and not reality itself.' Even Mandelbrot fractals are models. More, its exponents are not easy to gauge.
    There is also a huge difference between descriptive and predictive (based on the past) models. Moreover, as the author states himself: `you can project the behavior of a physical system in the future. But we hit a stumbling block when humans are involved, if you consider them living beings endowed with free will.'
    However, as Schopenhauer said, our minds did not develop in the first place for thinking, but in order to have the best survival reaction (fight or flight) in case of danger.

    I agree with the author that `we just don't know how much information there is in the past'; that `there is a huge gap between what we know and what we think we know' and that `people don't know what they don't know.'

    Nevertheless, there are black swans for outsiders which are simply white ones for insiders. For the author, one example of a black swan is the 9-11 massacre. But some people made a killing in the stock market by buying massively put options on airline and brokerage stocks just before the attacks. An extremely strange and mind-boggling event.
    There are other black-white swans (see Gene C. Marcial's `Secrets of the Street').

    This thought provoking book is a very worth-while read, but it has to be handled with caution.
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  • Fascinating and revolutionary ideas
    I found this book to be one of the most fascinating books I have read recently, and I have been reading a lot of similar books. I will not summarize the book here -- you can read one of the other 479 reviews for that. Suffice it to say that Taleb presents new and fascinating ideas that I had never heard before and backs them up with logic and evidence.
    Some complain about Taleb's tone, that he sounds smug or angry. I was a little taken aback by his tone initially, but after a while I found it refreshing. It wasn't pandering or condescending. If you are the type of person who limits your reading by the tone of the messenger, this book is probably not for you. But if you are open-minded, this book is well worth you while.
    This book was life changing for me. It has changed my thinking about a lot of different things. As an economics major, I am even more suspicious of economists. More importantly, I have recently retired and have a large amount of my money in a 401k. I always agreed with those who said the stock market was the best place to put your money because it has historically always out performed all other investments over the long term. I now realize that perhaps I am being a turkey and have changed my investments....more info