The Black Swan: The Impact of the Highly Improbable

First, understand that I say everything here in the same spirit that I give my 20 something daughter advice: This is all TIOLI: "Take It Or Leave It."

Had I read the reviews and discussions before reading the book, I might have held off on buying it since after a ways into it I'd actually give it a one star but because of the many thoughtful reviews and discussions it's worth a five. First, a few cliches: Recent quote:" I used to think my brain was the most important organ. Then I realized who was telling me this."- a Google Widget."Everyone is entitled to their opinion, but not their facts."-? "Life is so miraculous it's surprising we have time to think about anything else."- Somewhere in the NY Times. To really appreciate this last one it helps to have had a near-death experience. I was fortunate enough to recently have had two within a year. Terrified the hoo-ha out of me and I'm now somewhat disabled but I wouldn't trade those experiences for anything. Many situations are hopeless but not all that serious. It's much easier now to dispense with so much recieved wisdom, especially those spoken by The Great Mother of Money and Schedules. It's a lot more fun to pick on liars, mosquitoes and moral gnats than before and to do it as noisily as possible. Little else has the power to make you certain than personal experience, with the qualification that it be extreme and preferably adverse. Coming into large sums of money is assuredly adverse, but in the end it makes things harder to enjoy because of money's ability to perform magic tricks and delude you into thinking that endurance and exertion are useless anachronisms. My only regret is that I thought near death, while it changed me radically, would have changed me more, like they would have shown me that there is color darker than black and that even the sweetest, most evidence-based grudge should be easy to give up....not so. Therefore I will have to settle for becoming an "Almost Buddhist." Those who drew up the plans for the human mind were first order pranksters who probably had been bullied in childhood. The mind, it seems, craves certainty but "exists" in a "universe" in which certainty is defined by the epistemology of the definer. Therefore we are faced with the one thing I can recall from high school algebra that has practical relevance, unlike cosines and unreal numbers or whatever numbers that don't exist but are called and which I'm told are useful to mathematicians. It's the same with Zombies. They don't exist but they're useful to screenwriters and eccentrics of various stripes. Anyway, I found the idea of the "asymptote" positively enchanting: the formula for a curve that when graphed will always approach the axis but never reach it. That's a certainty only because numbers are a language that can do what all languages can do: say what they want. So I like to think of certainty, or complete knowledge, as as something like true love: a mentally tranquil and reassuring metaverse that you can always get halfway to but never reach. It's the "unreachability" that makes me certain. Science is the anonymous sum of collected information that has the illusion of truth; it can and must be consensually validated by empirical evidence that can be replicated and held to a standard of truth, the whole truth and nothing but statistics. Until it is pointed out, most everyone confuses truth with reality, which is simply what one experiences and ironically is the absolute opposite of truth. To confuse matters further, we have religion, for those who have been robbed of their sovereign right "to experience" as children or those who are afraid to grow up and require "a being" to depend on for security, a proxy for Mom and Dad. Rest assured, if you think this is just a lot of babbling, you should read what I'd say if I didn't have to run off now for a night of carousing with my Recovering UFO Buff group. Let me just leave you with this "The truth hurts." "There are no easy answers" "Everything is a trade-off." The book will likely be more enjoyable if you think of it as a personal narrative in drag.

I wanted to like this book because I can identify with many of the premises. I abhor the faulty use of models - mathematical and otherwise - and I certainly believe in skepticism. But reading this book was, like interviewing a brilliant psychotic, painful. The author doth protest too much -- railing against academics, Frenchmen, bankers (easy targets...yes?)-- but in the end the most an intelligent reader will get is the banal observation that models used outside of their appropriate domain are inaccurate and that unpredictable events are...well..unpredictable. The author has obviously been neglected by the academic establishment and he is hurt, and can't wait to share his wide breadth of knowledge and prove that he is smarter than all those ignorant fools and that he doesn't care anyway. It comes across as a temperamental spoiled brat on the playground. The flight of ideas, forced little tidbits from philosophy to theoretical physics mixed with quotes in other languages and all crammed on each single page comes across as just pathetic. I get it...you are smaaaart!! But the ideas belong to others...truly original thinkers like Kahneman and Tversky or writers like Gladwell,Ariely etc. And one wonders about the true depth of the author's knowledge by little slips...like when he says his coffee cup contains "several trillions of atoms" (you might want to check how many orders of magnitude you are off here). The book is supposed to give us some insight about improbable but highly significant events but the title and mantra "black swans" leave me mystified. OK, I see that most swans are white and then one day a black swan appears -- uh -- so what?? Couldn't he have come up with something that more accurately reflects his premise?
There are some nuggets of interest here and I suspect the author could write a very interesting book s'il devient moins poseur (ooh la la, je peux ecrire des mot en francais aussi)-- stop with the aggressive megalomania. Grow up, stop bashing everyone else, focus on your premise and examine the boundaries where it might be useful, trash 98% of the pseudo-erudite bulls*** (2% is OK...like a little garnish) -- and it might grow into something intelligent and worth reading. As it is, the book will appeal to the self-styled avant-garde pseudo-intellectual set and has already generated some copycat publications (even among some of the hated "academics" who are always looking for something to set them apart from the pack). But ultimately it isn't going to lead to any paradigm shifts and it is headed for the $1.00 remainder bin.

I admit it: I am a "Black Swan" groupie. Maybe I'm one of those people who heartily express their agreement with Taleb and then go back to applying the same flawed models "made in Mediocristan" to illuminate our way through Extremistan. But I still delude myself into thinking that the book had a profound impact on me. That I am wiser because of it. Maybe if I read the book enough times I will some day cease to be a turkey... In any case, I bought the second edition, not just for the new section but also to re-read the entire book. Ok, the impact of a second reading is not the same sensation of being struck by a thunderbolt that you felt three years ago. For one thing, Taleb's ideas have gone mainstream. They're simply everywhere. I was recently listening to a lecture from British astronomer Martin Rees and, boom, the Black Swan is there. The concept even pops up in books written before 2000 (read Stephen Jay Gould's Full House: The Spread of Excellence from Plato to Darwin for a pre-Talebian critique of the Gaussian curve that sounds distinctly familiar). For another, a megacatastrophe like the 2008 financial meltdown has made us more amenable to the idea that the universe is probably less stable than we delude ourselves into believing, and that "economy" and "equilibrium" should probably not be used in the same sentence.

So is it worth buying the expanded edition? The author has apparently been told one too many times that there aren't enough positive recommendations in the original book. Busy executives want "actionable lists." Editors want tidy tips to put at the back of the book. Although Taleb protests repeatedly that negative advice is just as useful as positive prescriptions, he caves in to a certain extent and --in his trademark obnoxious style-- goes on to lay out several useful dictums to guide you in life, some more tongue-in-cheek than other ("Don't give dynamite sticks to children even if warning labels are attached"). Having drunk the Kool-Aid, I found the section enjoyable (not surprisingly), but probably the most useful tip is that it highlights over and over the importance of the "barbell strategy" laid out in Chapter 13: don't be moderately conservative or moderately aggressive; rather, be hyperconservative but leave some exposure to positive Black Swans. In any case, if you want very explicit answers to the burning questions of the moment, you will find some here: further stimulus runs the risk of setting in motion inflationary forces that are scarily non-linear; don't let anything become too big to fail; love redundancy, etc. Hey, there's even a hint at a pre-historic diet and exercise plan. Somebody get this man a Dear Abby column. Better yet: when is the "Black Swan Cookbook" coming out? I'm only half joking. I would totally buy it.

A compilation of pretentious citations from historical literature and anecdotes, this book is an intellectually hollow basket delivered with a bombardment of flamboyant arrogance. It is a lengthy elaboration of an obvious problem that is inevitably recognized, consciously or subconsciously, by anyone with some basic analytic education: Total prescience is simply unattainable and thus any model attempting it is inherently defective (recall Gödel). In other words, there is no absolutely correct model--including those of hard sciences from Newtonian physics to relativity and quantum mechanics, but that doesn't make the whole idea worthless. A popular analogy among the revolutionary physicists at the turn of the last century makes the perfect point: Models are like Austrian train schedule; you can't trust it to predict exactly when the train will arrive, but without it, how would you tell if the train is late? The moral is, the fact that all models are defective is no reason to abolish modeling altogether; rather, it is a perpetually progressive process. The author seems deliberately ignore--since he is unlikely oblivious of--the reason why math models, or for that matter, human knowledge exists.

Thanks to Dr. Taleb -- unmistakably a smart and well-read man but of questionable ego and judgment, for glorifying a trivial observation (unpredicability of rare events) and canonizing it as the "Black Swan" problem. The trouble is, after being fed with all the model trashing, it is only fair for the reader to expect an alternative, if not better, approach from the author. That, after I reached the closing period of the book, is still as far from sight as at the time i turned the first page.

As a counterpoint to many who disliked this book, I really enjoyed this book BECAUSE of the over-the-top egotistical presentation, the liberal use of high-falutin' words, and actually naming names of his foes in economics and finance. I am disappointed with the ending because he does not provide much of an alternative to the thoroughly bashed Gaussian models. His main advice is: if you are in a positive black swan world, actively take on risk, but if you are in a negative black swan world, be hyper-cautious.

I think the reason for this lack of a workable approach for living with black swans (both positive and negative) is that our collective understanding of the field is so undeveloped. So I see this book as a CALL TO ARMS to the profession by goading them into an angry riot. Maybe if enough of them rolled up their sleeves and said, "I'll show that ---- Taleb, what he can do with his high-falutin' arse!" then we will have a robust development in non-Gaussian models.

There are already small groups working on non-Gaussian models (e.g., computer simulations using inheritance rules, stress tests using data from previous market crashes and imagined potential crashes, and substituting power-law distribution in place of the Gaussian). This group could really benefit from the media spotlight derived from Taleb's book! Several researchers say that "independence" and "stationarity" assumptions are harder to get around than the "Gaussian" assumption. I have high hopes for these groups and wish them the best of luck. :-)