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| The Black Swan: The Impact of the Highly Improbable | 
 enlarge | Author: Nassim Nicholas Taleb
Publisher: Random House
Category: Book
List Price: $27.00
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Avg. Customer Rating:  352 reviews
Sales Rank: 98
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 400
Shipping Weight (lbs): 1.5
Dimensions (in): 9.4 x 6.5 x 1.4
ISBN: 1400063515
Dewey Decimal Number: 003.54
EAN: 9781400063512
ASIN: 1400063515
Publication Date: April 17, 2007
Availability: Usually ships in 1-2 business days
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| Customer Reviews:
 serious subject, entertaining writing - a black swan July 5, 2007
22 out of 32 found this review helpful
In his new book Nassim Nicholas Taleb uses the term "black swan" to describe unpredictable or improbable events, completely out of the ordinary, completely unexpected. More specifically, for the purposes of the book, in order to qualify as a black swan an event a) must be unexpected, unpredictable, unprecedented, b) must have high impact, in other words important consequences, c) must be retrospective, it must be an event that people analyze, identify the conditions that preceded it, figure out the reasons that caused it "after" the event. By this definition 9/11 was a black swan. So was the demise of the Soviet Union. All of the important historical events were black swans for that matter. On a personal level, all the important decisions (marriage, choice of profession, major moves, etc.) are also black swans.
By their very nature, black swan events are unpredictable. Yet these are the ones that shape history and also our daily lives. The implication is that, our lives are at the mercy of randomness. This is a big claim but Mr. Taleb is very convincing in his argument. A big part of the book consists of the reasons why we as human beings are unable to see that we are at the mercy of randomness.
Part of the problem is our illusion of understanding probabilities, our addiction to listening "scientific" explanations, "expert" opinions, our need to find reasons. To understand the illusion, we have to be aware of two types of randomness. Perhaps it is best to explain with some of his own examples:
Let's hypothesize that a Martian is trying to figure out the average height of humans on Earth and he is choosing people from different parts of the world to make his sampling as random as possible, and he measures their height. For practical purposes, after about 100 such measurement he can safely assume that he found the average and he can predict the height of his next sample within a certain range. Such predictions represent a probability distribution graph in the shape of a bell (Gaussian bell curve). This is the textbook type of randomness. But let's assume that the same Martian is trying to figure out average monetary net worth of human beings. In this case there is a large difference of values and he would need a sample size of much bigger than 100 to even have an "sense" of the average. One sample that is extremely outside of the running average (say someone like Bill Gates being the current sample), has a huge impact and would change the current average considerably. This would be a black swan.
A more realistic example in the book is about casinos. Normal operation of a casino requires calculating and knowing the probabilities of the games to ensure that the casino has an edge over the customers. Any given day, individual gamblers' luck varies randomly but this is the first type of randomness as in the above example. No matter how great is somebody's lucky run, it wouldn't be so great that he would break the casino. And casinos spend a lot of energy in ensuring their edge by setting playing rules, limits on bets, surveillance etc. But there are some real life examples in casino businesses that caused huge losses for casinos, and those losses resulted from unexpected things. One of them is the end of the show "Siegfried and Roy". It was a Las Vegas attraction and a major source of getting the crowds to that particular casino. But after the unexpected accident (it was a show with tigers, one of the tigers, after so many years, attacked the performer) the show was stopped and there was a noticeable drop in the number of customers in the casino as well. The estimated amount of loss is around 100 million dollars! This came as a result of something that nobody expected, and had a huge impact. It was a random occurrence of the second type. It was a black swan.
Any situation of unpredictability in real life involves the second type of randomness. But probability theory in mathematics deal mainly with the first type of randomness. That's why, according to Mr. Taleb, those math experts with their degrees and computer simulations are not to be trusted with their predictions because things that are trying to predict (stock market, economic indicators, political events in the near future etc.) involve the second type of randomness. In fact, these types of scenarios cannot reliably be predicted. Again, this is a big claim but Mr. Taleb supports his view with records of "experts" which show how terribly wrong they were majority of the time.
There is an interesting, and humorous example in the book comparing an expert's thinking to someone with no formal education but became successful in business world and has a practical way of approaching the problems. The author asks these (imaginary) characters this question: "Suppose I have a fair coin (heads and tails have an equal probability). I toss the coin 99 times and in each time a get a tail. When I toss it for the 100th time, what is the probability that I get a head?". The math expert answers "50 percent", which is, mathematically true. The wise guy says "less than 1 percent of course". When he was told that the expert thinks it is 50 percent, he answers in a humorous way, reflecting his lack of respect for the expert, but the important thing is his line of reasoning. He thinks that if the 99 consecutive tosses showed tails, for all practical purposes it is far more likely that the initial assumption about the coin being fair is wrong than the coin delivering 99 heads in 99 tosses! The expert is thinking completely inside the box. Wise guy on the other hand is thinking outside the box!
Mr. Taleb got some criticism about his use of fictitious characters and his ridicule of the experts (as in the above example). True, he has an unorthodox writing style for a book of such important subject and big claims but I believe he did that on purpose. His sense of humor throughout the book makes it more accessible and fun while at the same time keeping the seriousness intact. This is a very difficult balance and as far as I am concerned Mr. Taleb is doing a great job not only in his very detailed and convincing way of presenting his argument, but also keeping the reader's attention and enjoyment alive. It's a unique book in that sense, itself a black swan.
 An idea for an article, not a book June 18, 2007
21 out of 26 found this review helpful
There is a lot to be said about the impact of highly improbable events. Unfortunately, there isn't enought to be said in order to fill a book.
After Fooled By Randomness I was looking forward to The Black Swan. But it's clear by page 50 that Taleb is padding his prose in order to produce something book-length. That's sad because it eventually waters down a fine idea worthy of discussion.
The Black Swan is yet another example of good article length concepts that a publisher thinks will make a good book. However, the author doesn't have a heck of a lot more to say than what could be easily fit inside the pages of Esquire or Vanity Fair.
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Some Great Points and Some Mistaken Conclusions Amidst This Sea of Emotional Blathering May 29, 2007
20 out of 22 found this review helpful
Taleb brings up many great points:
(i) The world's growing nature to produce larger 'black swans',
(ii) Implications of a world with increasingly scalable functions,
(iii) 2 clearly different types of randomness.
But he give you a headache trying to read his book because:
(i) His sarcasm irresponsibly muddles his stance on issues and reduces his credibility (e.g. he states that scalable careers are a bad idea, but he has achieved success with at least 2 different scalable careers);
(ii) He arrogantly gives his opinions on many major issues with any clear supporting points;
(iii) His anecdotes would be much better replaced with real stories. Real stories provide real evidence; anybody can make up a story to suit their points.
(iv) He spends much more time attacking ideas than embracing them. We have too many critics today who are happy to yell out 'THAT'S WRONG!' but lack that ambition and the backbone to determine and pronounce true solutions to things that they believe are wrong.
(v) His ideas that 'we can't forecast' and 'we can't model situations' is just wrong and irresponsible. If that were the case, we would all go back to being hunter-gatherers; "screw investing in a farm!, you CANT BE SURE that a drought won't occur!". Well droughts DO occur, and a farmer could go bankrupt, but overall society has blossomed for making investments (like a crop) based on forecasted results and the fact that droughts can occur doesn't mean that forecasting how many potatoes you can grow assuming no droughts isn't a worthwhile exercise; it just mean that you have to take proper consideration for the caveats any given forecast/model/plan.
While he brings up some great points, he, in my opinion, comes to some wrong conclusions based on these due to his cynicism and blinding anger (about issues such as his previous home in Lebanon). I am very sympathetic to the issues he has/is going through, but I urge readers to consider that they are reading conclusions of a very unpeaceful mind.
My biggest problem with Taleb's book is that it suggests that one shouldn't make a sizable investment in any one item, but in my opinion, life is often all about investing in 1 relationship, 1 purpose, 1 dream, etc. You have to throw caution to the wind sometimes and just live your life. You spend too much time overthinking everything and you'll end up miserable.
 Randomness from Random House July 13, 2007
20 out of 26 found this review helpful
A poorly organized self indulgent book. An exercise in "proof" by anecdote and name dropping.
To Expect the Unexpected April 25, 2007
19 out of 25 found this review helpful
It's a rare book that makes you look at the world differently. The Black Swan enhances our awareness of our skewed way of viewing reality and the damage that can cause. Taleb focuses on one kind of bias: our penchant to forget the improbable. Rare events with big impact, here represented by the black swan, are easy to ignore until they happen. Because they don't show up for long periods, the risk is invisible--out of sight, out of mind.
As he demonstrated with his earlier Fooled by Randomness, Taleb has an exceptional ability to ground abstract ideas in concrete examples, some from his own experience as quant, derivatives trader and hedge fund manager, but also from other aspects of life. The civil war that descended upon his family in Lebanon, a place where ethnic groups lived together in amity for a century, makes a vivid illustration. His well-to-do and politically connected relatives were sure that that the conflict would end in a matter of days; instead it lasted 17 years.
While the book is mostly a demonstration of our cognitive failings, it also contains a quirky but useful how-to manual for dealing with an unpredictable world where huge consequences can follow from tiny differences. Chapter 13, with a title that starts "Appelles the Painter", explains what to do when you don't know what will come.
Entertaining as they are, chapter headings like "How to Look for Bird Poop" don't help the reader navigate what is an unconventional, nonlinear format. While it bristles with intriguing ideas, the book as a whole is not easy to grasp, as those familiar with Mr. Taleb's style from Fooled by Randomness will know. Each piece is powerfully engaging, but the entire argument is more elusive. But being forced to figure it out is no bad thing and along the way one laughs at the absurdities of fate and humanity.
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