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Taleb studied the markets and came up with his theory of randomness that uses mathematical models that relate to the real world to debunk the all-powerful hold on the public imagination exercised by the bell-shaped curve. The main point is that Gauss hides the rare events (black swans) at the extremes of a distribution and therefore underestimates the potential for destabilisation (of any system but particularly our social systems) that the occurrence of one of these events can actually exert on our lives. Good, strong and well-argued case; it attacks mainstream economic theorists for delivering ideas beased on detailed algorithms that give spuriously accurate results. The impact of the black swan events is unrecognised and therefore any theories so based will fail to work properly when they are most needed. Added to which, he finds time to suggest that we live our lives incorrectly when we think that it is necessary to run for a train. 'Don't run for trains' is his motto (derived from Mandelbrot) - it is beneath your dignity and life should not be lived at that level but in a more elevated and aesthetically defensible manner. Great inspirational read - to read again.

Fascinating stuff, but crippled by faulty premises. Whereas I can understand a person without a faith positing that there isn't a higher rationale guiding the universe, but I have a harder time with his assertion that his unique life with little responsibility gives him a clearer view of humanity. Essentially, he’s a classical erudite Epicurean who vilifies Platonists--who ironically boosts his huge ego through supposedly attempting to be pragmatic to the common man. Never mind that his scorn for common life cripples his ability to actually see things as the typical man (who he attempts to champion) does. ( )

The author is a Lebanese expatriate who never got to go home permanently after the never-ending war in Lebanon. He graduated college in the USA, took a job as a floor trader at an investment firm, moved on to college professorships, and consultant positions. He is a theoretical Mathematician who takes a dim view of the "experts" who predict the economic markets. History is made not by the great men or the rise and fall of cultures but by outliers, Black Swans as he dubs them, which come unexpectedly, catching us unprepared, and with devastating consequences. His advice to the would-be investor in this time of risk: "I'm not telling you not to J-walk across the street, but I am asking you not to do so blindfolded". Black Swans may be inevitable, but they can make money for those who are prepared. ( )

The Impact of the Highly Improbable is not really what the book is about.

This book reads as more of an ego-stroke, as Taleb does his best to point out that he seems to have tapped into a great realisation that nobody else seems to have grasped. He is also extremely deprecating of anyone not sharing his views.

That aside, the book is interesting, and does point out that a large number of tools in use by market financiers and speculators are limited and misleading to those who have limited understanding. Taleb stands on the authority of having been successful himself - but while he points out that his peers' success is mostly due to luck, his success follows from his 'insight' into The Black Swan.

In his own terms, there is likely a 'graveyard' of investors out there who understood the implications of The Black Swan, but were unlucky enough to bet on the wrong swan.

The book is interesting, does offer some interesting thoughts, but doesn't go anywhere near far enough in what really matters (that is, it is more important to have a plan to mitigate the effects of a Black Swan, rather than limit the odds). ( )

NNT (as he calls himself) has some fascinating points and some interesting turns of phrase, though he does rather go on and on and on.... Leaving aside the long-winded somewhat self-absorbed writing style, NNT makes some interesting points that he illustrates well. He discusses the problems with the fact that humans seek validation for what they think (rather than challenging themselves) and why we cannot predict well in many circumstances. He spends a lot of time discussing the problems inherent with the use of a bell curve to predict things where the impact of extreme events really matter. Finally he spends (too little) time on what to do about all this. I took a few key points away from the book:
- It is better, perhaps, to try and be generally right rather than precisely wrong
- Beware of looking for more rules than really exist
- Watch out for a tendency to prepare for "last war"
- Rare and consequential events can be much more important than the "normal" stuff in the bell curve
- Some things (that he calls "mediocristan") are such that the most typical is average and single instances don't impact the total much
- Others (he calls these "extremistan") are more winner-takes-all kinds of environments where extreme events matter most
- He makes the point that a thousand days cannot prove you right but one can prove you wrong

There's more but it's a very long book and I am not going to attempt to summarize the nuggets spread throughout it here. Be prepared for a slog if you want to get everything you can out of the book - it goes on and on. 3 stars to average out 1 star for length and incoherence in places and 5 stars for some great content. ( )

This book was recommended to me as an examination of "how to think," but it would have been more accurate to characterize it as admonitions on "how not to think." It is a lucid and highly vernacular study of randomness and unknowability, debunking much of what passes for "social science," especially economics. The author is a statistically-trained trader of derivatives, a friend/disciple of Benoit Mandelbrot, and a foe of the Nobel-Prize-bearing intellectual establishment.

If nothing else, Taleb is a brilliant self-promoter who presents himself as a fascinating character. I can't imagine a mainstream talk-show producer reading this book without coveting him as a guest. (The fact that other reviewers have castigated him as "arrogant" only enhances this effect.) In an especially clever turn, he introduces the thinly-fictionalized alter-ego of "Nero Tulip," and describes Nero's spectacular facing down of his boss in an episode that could have been part of Palahniuk's Fight Club (98-99). Did Taleb really do that? Maybe.

One little fault I would charge against Taleb is his demonization of Plato. (xxv) He insists that he has read "more material from those I disagree with than from those whose opinion I share," (304) which is of course the intellectually upright approach for those engaged in argumentation. But there's no Plato in his bibliography, and his anecdote to demonstrate what he takes as "Platonicity" only cites a recent book on "handedness". (319) I suspect him of having ingested his distaste for Plato secondhand through Karl Popper. (Taleb lionizes Popper at length.) He insists that to "Platonify" is to see the world through predetermined categories and models. (257) But I think Taleb has a lot in common with Plato in his devotion to intellectual outsiders; and Plato shared Taleb's distrust of narrative knowledge, to the point of proposing that Homeric epics be outlawed.

A key message, and something of the spirit, of The Black Swan can be found in chapter 22 of Aleister Crowley's Book of Lies (1912): The Despot. Taleb writes: "Luck is the grand equalizer, because almost everyone can benefit from it." (222)

Taleb spends about 290 pages making snarky (but funny) comments on everything that's wrong with long-range forecasting. Scattered amongst them are maybe 10 more pages on what exactly to do about it. If he'd swapped those page counts, this would be one of the best books ever. ( )

The subtitle of Taleb's book is 'The Impact of the Highly Improbable' and he is very persuasive when explaining how these 'outlier' events have a huge impact on our lives. I found this book to be both entertaining and thought provoking.

quite self-impressed author making constantly dull jokes on everyone and everything he might connect to france; anyone will know that today's weather says only a certain bit about tomorrow's weather; does not look to be become my most preferred book ( )

An interesting a-typical worldview presented in mostly readable format by a philosopher-thinker-mathematician. What I learned: expect the unexpected and don't fall for hype from financial advisers. ( )

Glad I read this when I did back before the full throttle recession. Badsic Premise: We can't predict Jack. In investing go both ultra conservative and ultra risky - middle of the road is a slow burn. ( )

The author has an annoying persona, but the ideas are very intriguing. He divides phenomena into two classes: mediocristan (where variability is constrained by physical properties, and standard statistics applies) and extremistan (where exteme events can be expected to wildly skew results). Markets and most financial statistics he places in extremistan (although the division seems highly arbitrary). In light of recent economic events, his thinking seems persuasive. But it's hard to see it as a guide to action. ( )

Depressing!

The only real point made by the author could have been made in a much more compact presentation. He tends to ramble and at many points the book appears to be simply a platform to showcase the author's arrogance. This one will not assume a permanent place on my library shelves but instead is destined for the resale shop. ( )

The Black Swan: The Impact of the Highly Improbable has been a recent bestseller recently. Given the current economic turmoil, the lessons that Taleb imparts in this book are even more relevant. However, much of what is interesting and relevant is undermined by the author's attitude and dare I say, arrogance.

Let's start with the definition of a black swan. It is a rare (or outlying) event, which has a maximum impact and that with hindsight could have been predictable. What Taleb reiterates throughout the book is that we should not confine ourselves to the realm of the usual and predictable. Fair enough.

Taleb then goes on to disparage Gaussian statistics and the reliance that is placed on such statistics, particularly in financial or economic matters. Given that Taleb is an ex-trader himself, I found it highly interesting that he doesn't detail any of the modelling methods that he employed. He refers to himself as a skeptical empirist, someone who is not easily convinced.

However, as a physicist (though not working as such anymore) I found his bashing of the bell-curve to be tedious. Most good scientists are well familiar with the limitations of such statistics and do not place any real credence in them. However, judging from the author, you would gain the impression that all of the world is founded upon these methods, and it's just waiting to come crashing down.

In short, I did enjoy his concept. Black swan events should happen and we should not ignore them when they do. Life is a blend of random and predictable and to ignore the former in favour of the latter is hardly a clever thing to do.

I did not enjoy the book because of the Taleb's attitude. His sense of superiority is astounding, especially when you consider that he rails so often against the arrogance of those who think they know it all. ( )

This book is about the perils of learning from "experience"-and the problems of generalizing in a world where extremes are steadily growing more extreme. This is an interesting, and important point to make. However, the author rambles, slags other economists, routinely goes on and on about how smart he is, and generally alienates the reader (or at least this reader).

It could be argued that some of his Black Swans weren't really unpredictable (the predictions just weren't heeded) and that he really needed to spend more time talking about Black Swans outside of the financial markets.

On the whole, this is a book worth reading, but it's not without flaws. ( )

More about the philosophy than the practicalities but a good read and reminder - if only the banking industry had read, learnt and inwardly digested when it came out 2 years ago. ( )

The title of the book comes from the observations of Europeans that all swans are white. Much to their surprise, they came to Australia and found their first black swan. The book starts with this story to illustrate the "limitations to our learning from observations or experience and the fragility of our knowledge." As Taleb points out, it very different to think there is evidence of no possible black swans, than there is no evidence of the possibility of black swans.

Taleb has received lots of press and admirers given the recent meltdown in the financial markets. The book was published in 2007. Taleb seems to have perceived the coming collapse (and probably got a rich financial reward based on his strategy).

His supreme self-confidence (arrogance) shines brightly through in his writing. He has little time for shallow thinking and those who think they understand risk or the financial markets.

Another example running through the book is the first 1,001 days of a turkey's life. For a 1,000 days the farmer brings food to the turkey every morning. On that last day, things change dramatically. The farmer shows up with an axe instead of food. A surprise and horrible change in circumstance for the turkey. But all the historical evidence for the turkey indicated that the farmer would show up with food and not an axe. Of course, on the flip side, the farmer saw the axe day coming.

As Yogi Berra philosophized: "It's tough to make predictions, especially about the future."

It is the unknown unknown that is most dangerous. We spend too much time focusing on knowing what we know. We need to spend focusing some energy in realizing what we do not know and what we do not know what we do not know.

As a compliance and risk professional I was particularly intrigued by the story of the four largest losses by casinos. As you might expect, casinos run very thorough security programs, compliance programs and risk management programs. The four largest losses fell completely outside the casinos' models. One was the white tiger's attack on Roy, the second was a disgruntled contractor who attempted to dynamite the casino, the third was the kidnapped daughter of a casino owner, and the fourth an incompetent employee who failed to file the 1099 reports with the Internal Revenue Service.

It is also important to draw the distinction between positive contingencies and negative contingencies. The black swan can be one that brings unexpected destruction or one that brings an unexpected windfall. His philosophy is to play it safe, but hedge for a disastrous losses and spectacular windfalls. Mitigate the unexpected consequences.

I expected to get a lot of insight from the book. But it was one of the few books that changed the outlook on my profession. ( )

Black Swan is a metaphor for a random event that has huge implications. They can be positive or negative. 9/11 and the current financial crisis are examples. I must confess I found some parts of this book too deep and bogged down in statistical and philosophical theories. However that didn't matter you can still derive most of the author's ideas without studying it in great depth. In fact the author himself indicates which chapters you can miss out. He has a background in financial trading, mathematics and philosophy and doesn't hesitate to criticise current financial practices. Whilst his writing style is easy to read he does come across as arrogant and sardonic. He also has a tendency to present his opinions as facts eg the computer, internet and laser were unplanned inventions. Now whilst their future uses and implications may well have been unpredicted and underestimated the inventions themselves were anticipated.

All in all a worthwhile read because it made me think and question but I couldn't agree with all his points. ( )

Whether you will love or hate this book depends much on whether you belong to the establishment or not. If you have diligently done much as you have been told by authorities, and on that base now occupy a place of authority, from which you are making authoritarian predictions for authorities to make policy on, you might want Nassim Taleb banned, jailed, or worse. If you are bent quite the other way, you are in for a few laughs.
It is an easy read, and missing a few pages is not likely to mean missing important content - some of it is self-biography, some is self-biographical sounding fiction, and some is introduction to authors and events not at all clearly explained as relevant. Generally it is a well written rambling collection of attacks on probability’s presumed calculability outside a hermetically closed domain, quite egocentrically, and at times quite sardonically, put forward. ( )

This is a book about the perils of real life randomness that don't fit within neat distributions such as the bell curve. The author explains his insight in a wandering narrative spiced with enough personal autobiography, criticism of nobel laureates, and even fictional characters to hold the reader's interest. Through most of the book I was considering giving it 4 or 5 stars, but then toward the end of the book the author hurt his credibility by going overboard with his criticism of other economist. I think this book was rescued from obscurity by the coincidental quote included in a pre-publish review manuscript that appeared to predict the 911 attack. It included a quote of a French philosopher who said, " ... predicting something like that is like predicting when the World Trade Center will be hit by an airplane." (my paraphrased quote) The irony is that the point of the quote was that you can't predict things like that. Most reviewers took it as a prediction that came true. Thus the book became famous. ( )

Especially usefully for Academic students that use statistical methods because they were learned to do. Next to this, it brings up topics like induction, narratives and other important issues that influences aspects of life (that I not regularly think of). ( )

Underwhelming, and reads as a polemic against much of the ideas of classical finance. In particular, Taleb's statement that "there is no baby in that bathwater" (in relation to trashing gaussian risk models / modern portfolio theory / capital asset pricing models) is a flawed negative message. Pointing out that normative standard deviation measurements of finance fail--and do so when you need them most--is of course correct, but Taleb erroneously goes much further than that by sweeping away almost all rational basis for taking risks. And I don't think he acknowledges the implications of this.

It strikes this reviewer that one who took Taleb's strictures to heart would never start a business, nor invest more than a trifling amount in anyone elses, nor pursue a creative pursuit or invention. In fact almost all types of economic activity would seem to reside in "Extremistan" (to use Taleb's terms) with only rent-seeking being in "Mediocristan". The latter would include writing books--as long as one is wealthy enough that the downside (no return on the investment) is non threatening.

Overall she finds that Taleb's treatise is an example of emotional arrogance getting the better of scepticism.

Francesca ( )