Review: The Black Swan by Nassim Nicholas Taleb



The black and white cover page - the library didn't have it - of this book had attracted my attention lot of times in book stores but after reading the back cover description I never bought it or cared to read it till yesterday when I stumbled upon it in my employer's library. And without giving a second thought I picked it up and started reading it - and ten hours later I was done with it. Now, having read the book completely, I reflect upon what made me read it so lecherously and what's in there to be applied in one's own life. (Of course the author would be happy to know that I finished his book so quick because he himself advocates that more information doesn't necessarily makes us more capable of taking a decision)

From the outset Taleb sets the tone by mentioning an incident in Lebanon during which he got put behind the bars. The mentioning of this event was purportedly done to prove to the readers that this is not going to be a regular economics book with great insights from a stock market trader. He moves on to Umberto Eco's library and then to his (Taleb's) 'antilibrary' - a collection of unread books, pointing to the fact that what is not read (or not known) is rarely focused on. He starts with the ever failing predictions of when a war would end based on his own experience in Lebanon and otherwise across the world. He rightly asks who could have predicted the rise of Hitler after the First World War, the fall of the Soviet, 9/11 and other one-off events - he calls them black swans. The underlying stupidity of predicting global oil prices for the next decade and beyond when it can't be done for the next year is highlighted often. He skeptically looks at all the jazz that is around statistics, mathematics, economics and forecasts. He annihilates lot of big shots on the way - Plato, Nietzsche, Gauss (the argument "if Gaussian is not to be used, then what should be?" does hold weight despite him not agreeing), Sharpe, Markowitz, Robert C Merton, and Heisenberg amongst many others.

The author wants us to focus on the events outside the realm of our equations - the ones which cause the maximum impact. He sweepingly chops with his sword the use of Gaussian bell curves, excel based forecasting, the blind following of economists, doctors, Nobel laureates, mathematicians and other 'experts'. With Taleb calling the shots and his passionate detestation about newspapers assigning causes to a stock market's rise and fall, I am surprised how praise by Financial Times got onto the front cover! - here he has fallen into his own fractal trap against which he warns philosophers later in the book. He gives the example of the later acclaimed writer Yevgenia Krasnova and how she had to release the draft of her book A Story of Recursion on the web because no publisher was ready - to illustrate how we fail, again, in predicting which will become popular and which will be just a lost bet. I was hugely annoyed when he says that Yevgenia is a character of his self-destructive doubting mind. (Italicized are my words).

A lot of his examples are thought provoking and, provocatively, true - scalable professions being not better, how a Turkey (more relevant that Thanksgiving is here) is surprised on the 1000th day as it incorrectly estimated that its going to be fed every day of its life just like the previous 999 days, how absence of being a criminal doesn't mean that one is not a criminal, how our minds just can't avoid interpreting all the time to avoid information overload, how we never and can never account for the unknown unknown, how we question the religious but never the social scientists, economists and statisticians and how we always have been really bad estimators. But at the same time, a lot of his 'experiments' cannot be trusted because they were created on the fly and are so 'kindergartenly' - like the predictions made by some MBA students, the "hardened by Gulag" case (hasn't he heard of child soldiers?!). These seem to be so naive when contrasted against his incredulity. One of my biggest disagreements with him is about the use of the word 'luck' when explaining our existence or for Casanova's success or for a restaurant business making it good in New York. Luck, to me, means being favored by some unknown force out there which chose you over the rest because of whatever reasons - 'coincidence' is a better word.

Towards the end, the author gets philosophical and urges the reader to stop living a life of others' expectations. Well, its easy to be a monk when you own a Ferrari. It’s easy to be philosopher, which he still wants to be, when you have raked in the bounty. (Not that I totally disagree with what he preaches in these last four pages)

You have got to read this book only to be convinced that you shouldn't be easily convinced by what you read. (Taleb, again, is caught unawares in his own psychedelic fractal). He convinces that the rare is rarely focused upon despite of it carrying the most weight with no scholarly books or theories prophesying about it and that is the biggest fallacy of our current systems (I myself will need one more reading to understand this book better). In the pyrrhic war of the worlds between Mediocristan and Extremistan with Mandelbrot as the hero and Gauss as the anti-hero, Taleb is nihilistic.



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