The Black Swan: The Impact of the Highly Improbable

Excellent book. Nassim Taleb has questioned at length the (empirical and philosophical) foundations of our public thinking. To illustrate: Imagine an aspiring politician who predicts that her policies will create one million jobs, or the incumbent politician who reads his tea leaves and announces that his policies have created two million new jobs. You, like me, have probably wondered: "In such a big and complicated world, how do they know the impact of their actions with such singular clarity and absolute certainty?" Taleb describes in detail why their (and our) confidence is not justified.

You could easily rename this book "how not to be taken for an intellectual chump by society's big thinkers". While avoiding that fate you come to appreciate Benoit Mandelbrot, Karl Raimond Popper, and Fredrieck Hayak' and you are provided reasons to be skeptical of Carl Freidrick Gauss (and the bell curve). Taleb connects these esoteric dudes to the hard realities we face today. This book is ultimately an essay about mathematical empiricism, philosophy, reason, risk, uncertainty, and real life. But what makes it a great read is that Taleb actually takes the time to "dis" entire professions (if not individual professionals and intellectuals) on the grounds of intellectual merit. His attitude makes it more fun.

Read this book (twice) if you want to more deeply consider the big (uncertain) challenges facing the world.

An excellent read during this time of troubled economics. A challenge to those who rely completely on statistical significance in all aspects of life. Thought provoking.

Enjoyed Black Swan. It was an easy read and addressed some interesting high concepts around probability theory. The math toward the end of the book likely sent a few things over my head, but I didn't feel anything was purposefully pedantic. As for the main premise, I am not quite sure that today is more extremistan than yesterday - notwithstanding current dysfunction in the capital markets. I do think our expectations for normalcy have been heightened given our current propensity for risk (or lack thereof). So stuff feels much more extreme.

First of all, I must say I agree with most of Taleb's philosophy. The book shows the deep understanding of the human epistemology and the overlapping fields, and a certainly proper way to see the uncertain. However, everything is over at this point. His philosophical thoughts could be condensed in a fraction of the book, and Taleb could spare us a lot of digressions, pointless cultural references and dull stories. In addition, the writing style is hard to follow, somewhat boring and bombastic, and not necessarily cultured, and it displays a (maybe exaggeratedly) notorious cockiness. Mandelbrot's popular works (being him one of Taleb's heroes) state many of these ideas, proving other people wrong (or going against them), without being so insulting.

The impression I had, while and after reading the book, is that Taleb's intention (or desire), maybe hidden and unconscious, was aimed at writing a compendium of his thoughts, much like the work of all these philosophers he tells us about through the book (Popper, Hayek, Huet, Montaigne...), capitalizing on his previous best-seller and his reputation as a leading quant-finance professional. But he fails, giving too many distant stories and a lack of structure that does not match the depth of his philosophy. The book ends up being a narration, precisely one of the things the author warns us against (a fact already noted in the preface).

In conclusion, a badly conveyed but great philosophy.

Taleb wants to tell us about 'Black Swans' - highly improbable events that have a disproportionate impact - and the subject couldn't be more timely, in light of the global financial crisis, and especially in view of his (2006) comments on the precarious state of Fannie Mae. He makes the point that much statistical theory (and certainly economic modeling) assumes normally-distributed data, whereas the real world ("Extremistan" in his parlance) contains significant outlier events that can create havoc with models - and, as we have seen, with shareholder value.

Another bonus is that he is widely-read, widely-traveled, and eclectic in his sources. So he should be worth listening to. Unfortunately, he spends most of the book telling us about himself, and in particular how only he and a select few academics (Benoit Mandelbrot comes in for particular praise) really 'get it' as far as probability is concerned. He is a self-described 'erudite' whose exotic background (Lebanese Greek Orthodox, with several languages) gives him special insight that more pedestrian practitioners lack. Taleb spends much of the book reiterating how fraudulent, foolish or ignorant most economists, mathematicians and philosophers are; and how 'NNT' - as he prefers to call himself - has, through his empirical work as an options trader and his wide reading, achieved insights that the Nobel laureates have missed. (Nobel laureates are especially scorned.)

Apart from the self-aggrandizing and repetitive nature of his prose, the book's main failings are that Taleb tries but does not succeed in making the case that stock-market returns are fractal in nature (sorry, Dr Mandelbrot - this was discredited some time ago), and he offers virtually no useful advice on the central problem he raises. That is, given that Black Swans are so far outside our normal experience that they cannot be readily modeled or predicted, how should be prepare ourselves for the worst (or the best)? Taleb's answer: think outside the box, pursue potentially 'good' Swans, and hedge against bad ones. Oh, and 'don't be a sucker'.

I was - I paid money for his book.