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. Now, in this revelatory book, Taleb explains everything we know about what we don’t know. He offers surprisingly simple tricks for dealing with black swans and benefiting from them.
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.
Bestselling author Nassim Nicholas Taleb continues his exploration of randomness in his fascinating new book, The Black Swan, in which he examines the influence of highly improbable and unpredictable events that have massive impact. Engaging and enlightening, The Black Swan is a book that may change the way you think about the world, a book that Chris Anderson calls, "a delightful romp through history, economics, and the frailties of human nature." See Anderson's entire guest review below.
Guest Reviewer: Chris Anderson Chris Anderson is editor-in-chief of Wired magazine and the author of The Long Tail: Why the Future of Business Is Selling Less of More. Four hundred years ago, Francis Bacon warned that our minds are wired to deceive us. "Beware the fallacies into which undisciplined thinkers most easily fall--they are the real distorting prisms of human nature." Chief among them: "Assuming more order than exists in chaotic nature." Now consider the typical stock market report: "Today investors bid shares down out of concern over Iranian oil production." Sigh. We're still doing it. Our brains are wired for narrative, not statistical uncertainty. And so we tell ourselves simple stories to explain complex thing we don't--and, most importantly, can't--know. The truth is that we have no idea why stock markets go up or down on any given day, and whatever reason we give is sure to be grossly simplified, if not flat out wrong. Nassim Nicholas Taleb first made this argument in Fooled by Randomness, an engaging look at the history and reasons for our predilection for self-deception when it comes to statistics. Now, in The Black Swan: the Impact of the Highly Improbable, he focuses on that most dismal of sciences, predicting the future. Forecasting is not just at the heart of Wall Street, but it’s something each of us does every time we make an insurance payment or strap on a seat belt. The problem, Nassim explains, is that we place too much weight on the odds that past events will repeat (diligently trying to follow the path of the "millionaire next door," when unrepeatable chance is a better explanation). Instead, the really important events are rare and unpredictable. He calls them Black Swans, which is a reference to a 17th century philosophical thought experiment. In Europe all anyone had ever seen were white swans; indeed, "all swans are white" had long been used as the standard example of a scientific truth. So what was the chance of seeing a black one? Impossible to calculate, or at least they were until 1697, when explorers found Cygnus atratus in Australia. Nassim argues that most of the really big events in our world are rare and unpredictable, and thus trying to extract generalizable stories to explain them may be emotionally satisfying, but it's practically useless. September 11th is one such example, and stock market crashes are another. Or, as he puts it, "History does not crawl, it jumps." Our assumptions grow out of the bell-curve predictability of what he calls "Mediocristan," while our world is really shaped by the wild powerlaw swings of "Extremistan." In full disclosure, I'm a long admirer of Taleb's work and a few of my comments on drafts found their way into the book. I, too, look at the world through the powerlaw lens, and I too find that it reveals how many of our assumptions are wrong. But Taleb takes this to a new level with a delightful romp through history, economics, and the frailties of human nature. --Chris Anderson
Author: Nassim Nicholas Taleb
Publisher: Random House
Customer Reviews
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A Major Achievement -- Don't Miss It!
Most of the criticisms of Taleb and this book seem sensible:
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<br />- His confidence sometimes seems to reach the level of condescending arrogance.
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<br />- With a wave of the hand, he dismisses those he disagrees with, even Nobel prize winners. And perhaps he oversimplifies their positions in order to argue with their straw-man shadows.
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<br />- He often circles around his points without winding up finally making his points clear. Is this how a supposedly street-smart guy should talk?
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<br />- His frequent digressions make it hard for the reader to follow the thread of his narrative, sometimes giving the impression that there actually is no such thread, and that we're just witnessing his stream of consciousness.
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<br />- One could argue that the more technical chapters are written poorly and are therefore too unclear.
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<br />- Many of his ideas aren't as original as he seems to imply, so maybe he needs to explicitly give more credit to others.
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<br />- His suggestions on investing aren't very specific, and one wonders if they rely too much on luck or being rich in the first place.
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<br />- His references to his anger suggest a need for personal growth.
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<br />But this book easily deserves 5 stars and its bestseller status. Why?
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<br />- Taleb's erudition is undeniable, and a strong case can be made for his iconoclastic brilliance as well. In a book like this, perhaps the usual modesty and humility wouldn't make sense?
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<br />- His criticism of his opponents may have more validity than we normally want to admit in polite society. It's scary to think that economists and others in finance are generally as clueless as Taleb suggests, but recent events seem to have significantly (and unfortunately) vindicated him.
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<br />- His refusal to get right to the point pushes you to think more deeply about the implications of his ideas, rather than just quickly saying "yes, that's obvious, so what?" It's not enough to merely understand something; it has to sink in, in a way that genuinely changes your worldview and approach.
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<br />- Once you drop your preconceptions of how a book should be written, most of his digressions are fun and many are quite insightful. For an open-minded person with an intellectual inclination, this can be a tremendously entertaining book (it certainly was for me). Taleb deploys his own intellect and erudition for us with an unusual frankness which is worthy of our appreciation; instead of being put off by it, enjoy the ride!
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<br />- I do think the technical chapters are lacking but, alas, it's hard to write a perfect book, especially for an audience with varying technical background. I think we can cut him some slack here.
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<br />- His ideas may not be entirely original, but the way he's woven them together and presented them with flourish certainly is. Ideas need to be communicated to have any value, and Taleb can surely deliver his ideas in a way that has lasting impact on the reader.
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<br />- This book is about black swans in general, not investing in particular, so let's not get carried away if the book doesn't provide a how-to guide on getting or staying rich. And Taleb's general advice to arrange safeguards against financial disaster, and also get exposure to potentially huge opportunities, certainly seems sensible.
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<br />- His anger surprises and even disappoints at first, but one eventually starts to wonder if it might not be at least partly justified. Things might be worse than we want to believe. After all, isn't that part of his thesis? Plus he does end on a very positive note.
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<br />The bottom line is that this book is truly unique in its ability to intellectually entertain while conveying some deep insight and wisdom. Few people in the world have the right intersection of ingredients to produce a book like this, so we should cherish the fact that the book exists. Even if you don't fully agree with him, Taleb is worth engaging with.
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<br />I've read this book in print and also listened to the excellent unabridged audiobook, and I look forward to returning to it at least a few more times in the future. This book changed my outlook in some fundamental ways, and I think that's about as much as we can hope for with any book.
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<br />Very highly recommended. Indeed, don't miss it!
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Outliers
The Black Swan: The Impact of the Highly Improbable
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<br />This book is especially relevant in these "turbulent" economic times. In a way, this book is an example of the subject which it discusses, in that it is far removed from the conventional or "normal" book on the role of chance in our lives, including the financial realm. It will make you think harder than you ever have before about your comfortable assumptions concerning "randomness". But more than that, it will teach you to be a better critical thinker by practicing skepticism daily. I have been using selected readings from this book in an informal "seminar" on the current financial "crisis", and it has provided many very useful contributions to the discussion. As an engineer in aviation safety, I am very interested in the unexpected and the unanticipated, and the tradeoffs between the costs of preventing accidents and the costs of having them happen. Although this book does not directly discuss this particular area, the principles it espouses are very relevant. I highly recommend this book for a thought-provoking and enjoyable read.
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Open your mind
I must recognize that through the easy and entertaining Mr Taleb's style, I have adquired a wider vision of how we, as human beings, mostly and unreasonably make predictions.
<br />300 pages would have been enough (it has 400, at least in spanish edition).
<br />Nevertheless, I highly recommend this book. Open you mind and have fun!
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