The Black Swan (2010) | Nassim Taleb

It is hard to understand and absorb. Let alone mentally process it, for an amateur like myself, with very little idea of the topic. What I got is our current models of predicting and making sense of randomness needs an upgrade: We underestimate Black Swans.

A Black Swan is an event with three properties. It is unpredictable, of very high consequence and can be rationalized afterwards.

In the book, Taleb writes of two worlds: Mediocristan and Extremistan. One land of Averages and one of Extremes. Black Swans are produced in Extremistan. He goes on to argue the over-reliance on the Gaussian Bell Curve, which functions well on Mediocristan. However reality is much closer to Extremistan and more Mandelbrotian.

Again, very hard to process, especially on the nitty gritty details of the topics.

Some of the much easier to absorb texts. Taleb advises.
  • "Be a fool in the right places. Avoid unnecessary dependence on large scale harmful predictions. Avoid the big subjects that may hurt your future. Be fooled in small matters, not the large. Do not listen to economic forecasters or social science, but do make your own forecast for the picnic."
  • "Maximize serendipity around you. Trial and Error means trying a lot."
  • "Barbell Strategy, put a high value on safe instruments, and place less on high risk bets."
I guess ultimately what he means is to be prepared. To not discount the idea of bad things happening. To plan ahead. And to see much more clearly; a truck may pass you by and hit you when crossing road, but his idea is to not walk with blindfolds.

He ends the first edition with a reminder of how lucky we are with our existence: 

"I am sometimes taken aback by how people can have a miserable day or get angry because they feel cheated by a bad meal, cold coffee, a social rebuff, or a rude reception. [...] We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurence of monstrous proportions.
Imagine a speck of dust next to a planet a billion times the size of the Earth. The speck of dust represents the odds in favor of you being born; the huge planet would be the odds against it. So stop sweating the small stuff. Don't be like the ingrate who got a castle as a present and worried about the mildew in the bathroom. Stop looking the gift horse in the mouth-remember that you are a Black Swan."


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