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The Black Swan: The Impact of the Highly Improbable

(Book #2 in the Incerto Series)

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Book Overview

This description may be from another edition of this product. The Black Swan is a standalone book in Nassim Nicholas Taleb's landmark Incerto series, an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world...

Customer Reviews

4 ratings

This is NOT the second edition!!!

If you say it’s second edition, send the second edition. It’s not that hard.

Never Trust An Expert

Book Review submitted by: Stephen J. Hage, SteveH9697@aol.com In this book Taleb uses the term black swan as a metaphor for the unexpected. He chose it because, before Australia was discovered, people in the Old World were convinced that all swans were white. The bombing of the Twin Towers in New York on 9/11 is a perfect example of what Taleb means by the term black swan. Other examples are best selling books by unknown authors and insanely popular new restaurants. He also points out that another type of Black Swan is the highly expected event not happening. The defining characteristics of black swans are puzzling; a combination of low predictability and large impact. Taleb's central theme is since Black Swans are unpredictable we need to adjust to their existence and that trying to predict them is futile. The best way to do that is by focusing on antiknowledge, or what we don't know. This advice provides the grist for his engaging, thoughtful and thoroughly provocative expository mill. Taleb is an iconoclastic polymath who lays bare the futility in our belief that we actually can predict the future with any degree of success. And he shows this to be true by demonstrating the abysmal track records of those high priests we rely on like stock market analysts of every ilk including the mathematical economists or "Quants." The true and lasting value of this book is Taleb's ability to write by telling stories that deal with subjects that are complex, abstruse and difficult to understand. But, not to worry; the stories are easy to read, fun and highly thought provoking. The subject matter deals with almost any situation imaginable and identifies techniques we can all use to protect against being hoodwinked by "experts" willing to advise us on how best to handle complex situations and how to position ourselves to collect serendipitous Black Swans of the positive variety. I strongly recommend you read this book. And, if you do, I promise you won't be disappointed.

To Expect the Unexpected

It's a rare book that makes you look at the world differently. The Black Swan enhances our awareness of our skewed way of viewing reality and the damage that can cause. Taleb focuses on one kind of bias: our penchant to forget the improbable. Rare events with big impact, here represented by the black swan, are easy to ignore until they happen. Because they don't show up for long periods, the risk is invisible--out of sight, out of mind. As he demonstrated with his earlier Fooled by Randomness, Taleb has an exceptional ability to ground abstract ideas in concrete examples, some from his own experience as quant, derivatives trader and hedge fund manager, but also from other aspects of life. The civil war that descended upon his family in Lebanon, a place where ethnic groups lived together in amity for a century, makes a vivid illustration. His well-to-do and politically connected relatives were sure that that the conflict would end in a matter of days; instead it lasted 17 years. While the book is mostly a demonstration of our cognitive failings, it also contains a quirky but useful how-to manual for dealing with an unpredictable world where huge consequences can follow from tiny differences. Chapter 13, with a title that starts "Appelles the Painter", explains what to do when you don't know what will come. Entertaining as they are, chapter headings like "How to Look for Bird Poop" don't help the reader navigate what is an unconventional, nonlinear format. While it bristles with intriguing ideas, the book as a whole is not easy to grasp, as those familiar with Mr. Taleb's style from Fooled by Randomness will know. Each piece is powerfully engaging, but the entire argument is more elusive. But being forced to figure it out is no bad thing and along the way one laughs at the absurdities of fate and humanity.

Lost in Extremistan with nothing but a Bell Curve

If, as Socrates would have it, the only true knowledge is knowledge of one's own ignorance, then Nassim Nicholas Taleb is the world's greatest living teacher. In The Black Swan, Taleb's second book for laypeople, he gives a full treatment to concepts briefly explored in his first book "Fooled by Randomness." The Black Swan is basically a sequel to that book, but much more focused, detailed and scholarly. This is a book of serious philosophy that reads like a stand-up comedy routine. (Think Larry David...) The Black Swan is probably the strongest statement of enlightened empiricism since Ernst Mach refused to acknowledge the existence of the atom. Of course, in theory, everyone today is supposed to be an empiricist - all right-thinking intellectuals claim to base their views solely on positive scientific observation. But very few sincerely confront the implications of rigorous empiricism. Specifically, few confront "the problem of induction," illustrated here by the story of the black swan. Briefly: observing an event once does not predict it will occur again in the future. This remains true regardless of the number of observations one adds to the pile. Or, as Taleb, recapitulating David Hume, has it: the observation of even a million white swans does not justify the statement "all swans are white." There is no way to know that somewhere out there a black swan is not hiding, disproving the rule and nullifying our "knowledge" of swans. The problem of induction tells us that we cannot really learn from our experiences. It makes knowledge very problematic, if not impossible. And yet, humans do behave -almost without exception- as though they believe that experience teaches us lessons. This is forgivable; there is no better path to knowledge. But before proceeding, one must account for the limits that the problem of induction places on our claims to knowledge. And humans seem, at every turn, to lack this critical self-awareness. In one of the many humorous anecdotes that seem to comprise this entire book, Taleb recounts how he learned his extreme skepticism from his first boss, a French gentleman trader who insisted that he should not worry about the fluctuating values of economic indicators. (Indeed, Taleb proudly declares that, to this day, he remains blissfully ignorant of supposedly crucial "indicators" like housing starts and consumer spending. This is a shocking statement from a guy whose day job is managing a hedge fund.) Even if these "common knowledge" indicators are predictive of anything (dubious - see above), they are useless to you because everyone else is already accounting for them. They are "white swans," or common sense. Regardless of their magnitude, white swans are basically irrelevant to the trader - they have already been impounded into the market. In this environment, one can only profitably concern oneself with those bets which others are systematically ignoring - bets on those highly unlikel
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