The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto Book 2)

The Black Swan: The Impact of the Highly Improbable is ultimately a book about the limits of human prediction and the uncomfortable extent to which modern life is shaped by events people failed to imagine beforehand. Taleb argues that history, finance, politics, technology, and even personal lives are driven less by steady linear progression than by rare, high-impact events that only appear explainable in retrospect. What stands out most is the force of Taleb’s central insight: human beings are deeply uncomfortable with randomness, and so they construct narratives that create the illusion of understanding after uncertainty has already passed. The book repeatedly exposes how fragile many expert systems become when they mistake confidence for knowledge. Taleb writes with a distinctive mix of philosophy, probability, memoir, skepticism, and provocation. At times the tone is abrasive or deliberately confrontational, but beneath that intensity is a serious intellectual challenge to conventional thinking about forecasting, risk, and certainty. The sections on fragility and robustness are especially compelling because they shift the conversation away from prediction itself and toward resilience. Rather than pretending uncertainty can be eliminated, Taleb asks how systems, institutions, and individuals might survive volatility without collapsing under it. The book can occasionally feel repetitive, and Taleb’s persona sometimes threatens to overpower the argument, but the underlying ideas remain unusually influential because they alter the reader’s perception of certainty itself. After reading it, many forms of confidence—economic, political, statistical, even personal—begin to look more contingent than they first appear. It’s less a book of forecasts than a sustained critique of humanity’s tendency to confuse explanation with understanding.

Taleb'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 --- *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.

This book sat on my shelf for THREE YEARS! Every time I picked it up, I couldn’t get past the prologue. Nassim Nicholas Taleb’s writing style wanders quite a bit and can be dense. I often found myself reading and re-reading entire paragraphs. This month, I decided to buckle down and actually read the darn thing...and I’m glad I did. Once I got past the prologue, it wasn't so bad (yes, still a bit repetitive). and fascinating, filled with keen insights into how we humans try (and often fail) to make sense of randomness, uncertainty, and the flawed reasoning we bring to high-stakes decision-making. At times, it felt like Taleb was chatting with me on a meandering walk...a bit tangential, occasionally smug, but undeniably thought-provoking. I found myself needing to pause after each chapter just to let the ideas sink in. So what’s a Black Swan? A "black swan event" is an unexpected, highly improbable event (from the perspective of the observer) that is nearly impossible to predict but has massive, world-altering consequences. Think 9/11. Think COVID-19. These are just two examples, and Taleb provides many more. Part One defines the concept of a Black Swan and explores the many cognitive biases and perspectives that blind us to the possibility of such events, including our love for narratives and our tendency to fit the past neatly into cause-and-effect stories. Part Two dives into the "fragility of our systems" (e.g., financial, political, social) and how they are deeply vulnerable to the kind of shocks we never see coming. This section is both intriguing and unsettling. especially given current-day events. Part Three offers a more philosophical look at how to live in a world of uncertainty. It’s a sobering treatise on humility in the face of randomness and a call to build systems (and lives) that are more resilient to the unexpected. Part Four serves as a wrap-up and deeper reflection. Taleb revisits the central themes with a slightly more philosophical tone, challenging readers to embrace uncertainty, stop chasing predictability, and become what he calls “empirically skeptical.” It’s less structured than the previous sections but still provides important takeaways, especially around the idea of building robustness (and even antifragility) into our thinking and systems. The Postscript (Second Edition) is a worthwhile read on its own. Written after the 2008 financial crisis (a classic black swan event), Taleb reflects on how the ideas in the book were either misunderstood or vindicated by real-world events. He sharpens his language and emphasizes the importance of practical application. If you’ve ever wondered, “OK, now what do I do with all this?”, the postscript offers some guidance, albeit in Taleb’s usual indirect way. This is not an easy read, and frankly, it’s not for everyone. Taleb’s tone can be grating, and he definitely enjoys showing you how smart he is. But if you're willing to stick with it, *The Black Swan* will challenge your thinking in ways few books do. It’s not just about rare events; it’s a challenge to rethink our assumptions about knowledge, risk, and control. At its core, The Black Swan is about rethinking the way we perceive the world and our place in it.

The 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.

In the main, I found “Black Swan” to be terribly disappointing: long-winded, poorly structured, unnecessarily acerbic, often embarrassingly childish, but above all of limited practical application. Author Nassim Taleb launches a frontal assault on social scientists of all stripes, but unleashes particular venom at economists, especially Nobel Prize winners who’s work is based on Gaussian standard distribution. As Gregg Easterbrook commented in a review of “Black Swan” in the New York Times, “Criticizing the accomplished is healthy; mocking them because they are accomplished is sophomoric.” I agree. One gets the sense that Taleb (or his editors) wanted to “punch this book up” in an effort to appeal to a wider, mainstream audience, the types of folks who scoop up “Freakenomics” at airport bookshops. If so, they overshot their goal by a country mile. For all that I didn’t like about “Black Swan,” Taleb makes several critical points that are worth considering with care. Most of all, I found his warnings about the “narrative fallacy” to be most convincing. “We harbor a crippling dislike for the abstract,” he writes. We seek to fit life and observed experiences into crisp shapes, what he calls “platonicity,” in order to make better sense of the world. “We like stories,” he says, “we like to summarize, and we like to simplify.” The danger is when we confuse these tight and digestible stories with “the truth.” My work experience at Intuit has confirmed this observation (note: Taleb warns, among many other things, of a “confirmation bias” where we readily accept arguments that confirm what we already believe). Intuit is always on the look out of for the secrets to deliver breakthrough product innovations and readily embraces new procedures and practices developed by other firms, such as Amazon’s “two pizza rule” (product teams need to be small enough to be fed by two pizzas) or “The Lean Startup” focus on leaps of faith hypothesis coupled with rapid prototyping and experimentation. These devices are almost all well-and-good, but they don’t explain why one product succeeds and another fails, at least I don’t think so. Reality is much messier than that. The difference between success and failure is more likely the collection of thousands, perhaps millions, of smaller decisions and actions that “escape the eye of history” as it were. There is no better – and certainly no more dramatic – articulation of this perspective than coach Tony D’Amato’s (played by Al Pacino) locker room pregame pep talk in the movie “Any Given Sunday”: “…the inches we need are everywhere around us!” Indeed, they are. A foundational element of Taleb’s worldview is that we live, mainly, in a so-called Extremistan, where the “highly unlikely” occurs more often then we presume and which renders all other observations, certainly those based on a bell shaped distribution, completely invalid. Consider the modeling of height and wealth. In the first case, you take 999 randomly selected humans on planet earth and put them in an auditorium. The average (median) height is perhaps 5’7”. Next, for the 1,000th participant you include the tallest man on earth, a solid eight-footer. The median height of those 1,000 humans barely moves with this most extreme addition. Now consider wealth. The 999 randomly selected humans may have an average wealth of $50,000. And then you add Bill Gates for participant 1,000 and suddenly the “average” wealth per human shoots from $50K to $250M (or whatever it would be). Human height is from Mediocristan; wealth is from Extremistan. Taleb’s core argument is that we live in Extremistan, yet our statisticians and economists and elected leaders continue to behave as though we live in a completely different world, Mediocristan. Mediocristan is the world of platonicity (a frustrating part of this book is keeping straight all the corny names Taleb has made up, although he does include a helpful glossary in the back). “Platonic is top-down, formulaic, close-minded, self-serving and commoditized,” which is perfect for exploring Mediocristan. “A-platonic is bottom-up, open-minded, skeptical, and empirical,” and that’s what the author claims is necessary to navigate through Extremistan. To make things worse, those platonic intellectuals investigating uncertainly have traditionally focused on games of chance, the most ill-suited analogy possible, according to Taleb. These games of chance – cards, slots, dice – are actually some of the most predictable things in life, he says. Where else can you get such mathematically clear outcomes for success and failure over multiple attempts? Far from being risky, they are more like testing average heights among humans. The tendency to promote classic gambling uncertainty to the “real world” is something that Taleb dubs the “Ludic fallacy,” another one of his corny creations. In the end, what frustrated me most about “Black Swan” was what to do with his insights, most of which have real merit. Taleb implores us not to trust so-called experts, especially when they are making predictions about the future. These men and women of supposed great learning are “mere entertainers,” he sneers. They are like people “driving a school bus blindfolded” – incredibly dangerous and irresponsible. So what should responsible members of society do? What are the “lessons of the Black Swan”? Well, there really aren’t any, at least not so far as I could tell. Over nearly 400 pages of dense text, Taleb only shreds and tears down. The closest he comes to providing constructive, actionable feedback is this: “favor experimentation over storytelling, experience over history, and clinical knowledge over theories.” Fair enough, I suppose; but hardly much.

This was a book that was a great cross section between economics, philosophy, and probability theory. I would put it in my top 10 books I've read in my lifetime that made me consider new perspectives and change the way I think. I initially sought out this book as research for a fiction novel I was writing set in the future where a predictive machine governs our way of life only to be thwarted by an unpredictable world event. I appreciated the Taleb's humorous narrative voice with anecdotes from his lived in stories and career as a trader. I would put in him the same league as Ray Kurzweil but for economics and that really means its imperative to read works like this in conjunction with his peers because its the intersection of these ideas that produce the most telling insights. The book was just fun to read and I devoured it in days.

The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb is a thought-provoking and fascinating book that challenges readers to think differently about the role of randomness and uncertainty in our lives. The book offers a fresh perspective on the impact of rare, unpredictable events - or "black swans" - on our world, and provides readers with insights and strategies for navigating the complexities of a rapidly changing world. The book is divided into three parts. In the first part, Taleb introduces the concept of black swans and explains why they are so important. He argues that black swans are rare, high-impact events that are impossible to predict, yet have a profound effect on our world. He uses examples from history, economics, and other fields to illustrate the impact of black swans on our lives, and explains why we tend to underestimate their importance. In the second part of the book, Taleb explores the concept of "antifragility" - the idea that certain systems actually benefit from stress and volatility. He argues that many of our current systems, from financial markets to political systems, are too fragile and vulnerable to black swan events. He offers strategies for building antifragile systems that can better withstand the shocks and disruptions of the modern world. In the final part of the book, Taleb provides readers with practical advice for navigating a world full of black swans. He offers tips for managing risk, making decisions in uncertain situations, and living a more fulfilling and meaningful life. One of the strengths of the book is Taleb's engaging and accessible writing style. He has a talent for explaining complex ideas in clear and understandable language, making the book easy to follow and enjoyable to read. He also has a keen sense of humor, and his writing is often peppered with amusing anecdotes and observations. Another strength of the book is its relevance to our current world. The COVID-19 pandemic is a perfect example of a black swan event, and Taleb's insights and strategies for managing uncertainty and risk are more relevant now than ever before. However, the book is not without its limitations. Taleb's writing style can be overly repetitive at times, and some readers may find certain sections of the book to be overly technical or dense. Additionally, while Taleb's insights and strategies are certainly valuable, they may not be applicable or accessible to everyone. Overall, The Black Swan is a thought-provoking and engaging book that challenges readers to think differently about the role of randomness and uncertainty in our lives. The book offers valuable insights and strategies for navigating a rapidly changing world, and is sure to be of interest to anyone looking to gain a deeper understanding of the complex systems that shape our world.

ego. it seems difficult to discuss "the black swan" without at least a mention of taleb's ego. while i personally don't take offense at the author's sense of self-worth, i can see how some readers' aversion to taleb's personality could carry over into their assessments of his books. however, it would be a mistake to put too much emphasis on the arrogance of others. don't lose sight of the ideas. in my opinion, "the black swan" is not as monumental as its author would believe, but it is certainly worth a read and does contain some thought provoking threads on the role of uncertainty in our lives. a black swan is a highly improbable event of extreme impact that appears obvious and explainable in hindsight. psychological tendencies blind us both before and after the appearance of the black swan, making the black swan hard to predict beforehand, yet making it appear plausible through our rationalizations afterward. this is a story about human limitations in interpreting information; this is a story about epistemology. as an example of a black swan, consider the death of a chicken which has been consistently fed every day by a farmer, viewed from the perspective of the doomed fowl. (those familiar with philosophy will recognize this example as russell's chicken.) taleb repeatedly reminds the reader that black swans are not objective events and care should be taken to consider who is the "sucker" when discussing black swans. death by the farmer's hands may come as a complete shock to the chicken based on the chicken's observations every single day of its life, but the wringing of the chicken's neck is not at all surprising from the farmer's perspective. taleb attempts to make the concept easier for a wide audience to understand through the use of the metaphor of mediocristan and extremistan. roughly speaking, in mediocristan, deviations from the average are not large enough to seriously impact the average when notable deviations do appear in new data. in extremistan, the deviations from the average are large enough for a small number of sizable new measurements, even a single one (the black swan), to significantly skew the average. the measured heights of a population is a topic that belongs in mediocristan, while the wealth of that same population belongs in extremistan. in more formal language, mediocristan is the realm governed by normal gaussian probability distributions and the results that come from using bell curves, while such mathematical tools fail in extremistan. it is the use of tools from mediocristan when one is really dealing with a situation in extremistan that causes blindness to black swans. it is the chicken's belief that each day's events couldn't diverge too much from the uneventful past that caused the chicken to so completely misjudge the farmer's benevolence. the black swan plays a huge role in the financial markets, where fortunes are won or lost by the appearance of statistical outliers. wall street has an entire army of financial analysts and programmers whose work depends on a foundation from mediocristan. economists and finance professors are in the same boat. yet, empirical data doesn't seem to support the hypothesis that these tools are even appropriate in this setting. (mandelbrot does an excellent job explaining why these tools are inappropriate in part one of his book "the misbehavior of markets" if you're not convinced by taleb's presentation; i read mandelbrot before taleb so i was already familiar with the message going in.) it seems remarkable and absurd to me that so many people can ignore the empirical data and just go about their affairs in the dark like this, especially when they are surrounded by this data every single day at work. however, as upton sinclair wrote, "it is difficult to get a man to understand something, when his salary depends upon his not understanding it." taleb deserves credit for attempting to get more people to open their minds to the existence of black swans and to protect themselves from these events as best they can. where he goes wrong is that he overreaches. taleb relates black swans to almost every subject under the sun, and while the connecting of the dots is interesting, frankly, this enterprise just doesn't seem ready for prime time. it also doesn't help that taleb seems to misunderstand some of the topics he writes about, especially when he talks about math and science. for example, on p.55 taleb writes that "mathematicians will try to convince you that their science is useful to society by pointing out instances where it proved helpful, not those where it was a waste of time...owing to the highly unempirical nature of elegant mathematical theories." this is simply an erroneous understanding of mathematicians. first and foremost, mathematicians are interested in the beauty of mathematics. applications to society are secondary, and the pure mathematicians don't even consider the social utility of their work at all. see for example g.h. hardy's book "a mathematician's apology" that is representative of this attitude. imagine my surprise when taleb later quotes from hardy's very book on p.240 to contradict himself 185 pages earlier! another example, on p.287 taleb writes that he finds "it ludicrous to present the uncertainty principle as having anything to do with uncertainty" since taleb believes the future positions of subatomic particles are gaussian in nature and as such average out by the law of large numbers. he further writes, "can someone explain to me why i should care about subatomic particles that, anyway, converge to a gaussian?" it doesn't seem like taleb really understands quantum mechanics enough to be writing about it. in reply to taleb's question, i offer the phenomenon of quantum tunneling as a counter-intuitive example with both theoretical appeal as well as useful engineering applications. in attempting to make his point of view seem grander and more original, taleb also changes the names of various well-known concepts. for example, the aforementioned heisenberg uncertainty principle is called the "greater uncertainty principle" in taleb's book. in place of "survivorship bias," which is quite standard terminology, taleb instead writes of the "casanova effect" and "silent evidence." readers familiar with physics will also recognize the "anthropic principle" from cosmology when taleb discusses casanova. it is helpful to use a different label when there's a significant twist or other insight, but new labels are more harmful than not when the underlying concepts are essentially unchanged. overall, taleb is a colorful author whose personality is intimately woven into the narrative. this has the effect of making the book easy to read while also exposing various weaknesses when taleb walks into territory he's under-prepared to travel. however, these criticisms are not enough to negate the greater message. "the black swan" and his earlier book "fooled by randomness" clearly demonstrate that taleb understands the main problem with treating the world as if it were entirely tameable with our comfortable statistical toolkit. nevertheless, focusing on the author's personality is what draws many readers away from the real message of the book, and taleb carries some of the blame for that, though not all of it. this missing of the mark also shows up in the recent "occupy wall street" protest movement. wall street professionals can make a lot of money using a faulty understanding of how the financial markets work, underestimating risk, yet get the american taxpayers to socialize the losses when the black swan does show up. this is fundamentally unjust, but that message too is similarly pitifully lost in the focus on the protestors themselves.

Good read. Makes us think about alternatives and chances.

good book

I am an Economist , needless to say i felt attacked a bit reading the book (if you read it you will get it), however you see that the point he is trying to make is very very powerful, so managing that he goes overboard and exaggerate on some things (various actually) will make you understand him more and understand his point of the power of the unknown which do seems to be forgotten about as if everything was predictable and expected, his style of writing is interesting, funny (sometimes) and clever, would recommend is an excellent book from NNT, its like opening a cookie jar who has an excellent cookie but slaps you a bit before you get it.

Ein absolut augenöffnendes Buch über unvorhersehbare Ereignisse und Risiken. Taleb fordert den Leser intellektuell heraus und verändert die Art, wie man Wahrscheinlichkeiten im Leben wahrnimmt. Ein brillanter Klassiker.

Es un libro de impacto. Muy recomendable para aprender a gestionar el impacto de lo imprevisible en todos los ordenes de la vida, tanto social como laboral y comercial. Responde perfectamente a la pregunta de porque las previsiones fruto de la experiència adquirida al final no sirven para nada.....