Living Every Day With Taleb’s Black Swan

The Black Swan, by Nassim Nicholas Taleb, is an amazing book. It has taken me forever to get to it ( It was published in 2007 and was hugely popular). I should have read it much sooner. I thank my friend Tom S for kicking my a** in June.

My impression of Taleb prior to reading this book was that he’s this rich Wall Street trader who believe’s that the world banks have their “heads up their a**”. Their models of risk are too optimistic. I had thought this is interesting, but what has it got to do with me? Or this doesn’t seem to have anything to do with regular life. Was I ever wrong 😦

The Black Swan is about every day of everyones life!

Taleb takes randomness and probability, which are difficult subjects that most endure, and makes one pay attention to how it works in everyday life. He points out that today’s world is a winner take-all world. It is a world better described as “Extremistan”. There is no room for average. We often use the 80/20 rule to describe our reality. Like 80% of our revenue comes from 20% of our customers, but rarely apply it to ourselves. We rarely apply this type of extreme to our future.

Taleb observes our world today and builds up a model of this “Extremistan” that we live in today. He also provides many observational skills required to survive in “Extremistan”. He is strongly in favour of “doing” vs “thinking”. On page 84 he notes, “Favor experimentation over storytelling, experience over history, and clinical knowledge over theories”. He provides insight into the use of experience ( inductive logic ) in that the problem with it is that we can’t experience everything. He provides insight into learning from stories (narrative fallacy) in that they compress knowledge and thus leave out information. He also provides insight into “silent evidence” which means that only the living “live to tell their story”. The dead can’t talk.

The big thing that Taleb highlights is that we are all suckers for a story. We love stories. By knowing lots of stories we feel smart and safe about our future. Taleb’s shreds this belief on page 138 “True, our knowledge does grow, but it is threatened by greater increases in confidence, which makes our increase in knowledge at the same time an increase in confusion, ignorance, and conceit.”

Optimist or Pessimist … Realist

I’d prefer to say that Taleb is a realist. He’s providing a frame work of actions that we can use (daily) to feel safe in today’s crazy world.

In a nutshell, he’s saying “Pay attention to reality! It’s fun to be alive. Enjoy it.”
… Build your models of the world from reality ( not from the TV, book, Internet, or Story )
… Get off your A** and get direct experience!
… Crazy Events have always happened .. they define us … leverage that
… and keep Paying Attention to reality

Getting Started on Taleb

Here is an entertaining Malcolm Gladwell essay describing Taleb. Blowing Up: How Nassim Taleb turned the inevitability of disaster into an investment strategy, April 22 & 29, 2002

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2 Responses to Living Every Day With Taleb’s Black Swan

  1. Andrew Schmitt says:

    It was a great book and one of my favorites but I thought Fooled by Randomness was better and more readable.

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