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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:  353 reviews
Sales Rank: 96
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:
 Blather April 21, 2007
76 out of 96 found this review helpful
The Black Swan argues that standard statistics is a fraud because it is backward looking (I too prefer statistics on future data!). All models or theories are simplifications of a more complex reality, parochial and incomplete; they don't work in all circumstances, and are irrelevant at certain levels of aggregation or for certain applications. That doesn't mean they are fraudulent. Taleb makes perfection the enemy of the good, and winds himself into knots of contradictions, such as calling himself an empiricist yet relying mainly on anecdotes.
He states he teaches how to take advantage of uncertainty, but skewering traditional forecasting tools leads him merely to nihilism, or simply overestimating the probability of improbable events. How would one draw the line on which unseen data should be ignored (it's an infinite set, after all)? He argues we reward those who imagine the impossible, but what does that mean in practice, that we encourage people to enumerate everything possible no matter how improbable? Such risk reports are all too common because they reflect a lot of work, but without some sort of prioritization they are useless. One can remember Richard Clarke's vague warnings about Al Qaeda (and cyberterrorism, and ...) prior to 9/11, or the hundreds of `mission critical risk' overrides on the Challenger space shuttle before it blew up, as examples of beautiful hindsight but useless foresight.
I could imagine him teaching a statistics class to freshman and instead of starting with the arithmetic mean and standard deviation ask 'what was the probability of an airplane taking down the World Trade Center on September 10, 2001?', and waxing poetic about how `we just don't know!" Students might think such talk is much cooler than boring formulas, but such confused thinking leads nowhere in particular and can be indulged indefinitely without producing anything useful, as Taleb demonstrates over 400 pages.
 A disappointing follow-up to "Fooled by Randomness" May 10, 2007
70 out of 76 found this review helpful
I'm a mathematician and former trader, and I've always enjoyed Taleb's work, from his technical tome on derivatives, "Dynamic Hedging," to the brilliant "Fooled by Randomness." These books provided a healthy dose of empirical skepticism about a field that sometimes gets carried away with its own "precise" models -- as well as some insightful commentary on why people are bad at recognizing randomness and making predictions, and how we should be wary of charlatans (and fools) trying to sell us false certainty, especially about financial markets. Unfortunately, "The Black Swan" doesn't say much that "Fooled by Randomness" didn't already say (and say better), and I was disappointed by most of the new material.
First, Taleb's ideas on uncertainty have gone a bit over the edge. Before, he denounced the poor use of over-simplified models (i.e. the bell curve) to model uncertainty; he now seems to have given up on models altogether (save for a brief and justified nod to Benoit Mandelbrot). Rather than just attack bad science, and encourage better science in its place, he seems to view the entire scientific enterprise as hopeless -- adopting the somewhat anti-intellectual attitude that we should stop trying to "understand" markets at all, and be more like Fat Tony, the trader from Brooklyn. His portrayal of mathematical finance types is a complete caricature, which is amusing because, whether he likes it or not, he's one of them! (Taleb has taught in the mathematical finance program at NYU's prestigious Courant Institute.) The idea that mainstream academics are too myopic to see beyond their bell-curve models is laughable, and in many cases, decades out of date -- even undergrads learn about the flaws in the Black-Scholes model, and the problem of "fat tails."
While "Fooled by Randomness" suggests (wisely) that we pay attention to the magnitude of events and not just their probabilities, in "The Black Swan" he throws out probability altogether. This results in some bizarre advice, such as that people should structure their lives (and financial portfolios) to capture "positive black swans," i.e. huge but unlikely turns of good fortune, because "unlikely" is a meaningless probabilistic notion. For example, he suggests that people should put 90% of their assets in extremely safe instruments (like T-bills), while gambling the remaining 10% on risky ventures and hoping to hit it big. He claims that this limits one's downside while waiting for a big windfall ... but what happens when the "risky" 10% gets wiped out in a year or two? Do you then start investing your remaining assets (possibly losing more), or do you just stick with low-yield T-bills for the rest of your life? Taleb seemingly hasn't thought it out that far. By the "positive black swan" logic, thousands of unemployed "actors," waiting for that big break that never comes, have the right idea -- not to mention people who waste their money on lottery tickets (hey, the downside is only a buck, but the upside is millions!). This seems to be a complete reversal from "Fooled by Randomness," which had a brighter view of skilled ("Mediocristan") pursuits like dentistry, where one avoids living at the behest of good or bad fortune altogether.
Finally, Taleb has always exuded snobbery in his writing -- in the past it has almost been charming -- but this time it quickly wears out its welcome. He never fails to remind the reader that he sees himself as an erudite "gentleman trader," a rogue philosopher among philistines and eggheads. Yawn.
I still give this book 3 stars, because it does have some decent content, but read "Fooled by Randomness" instead. If you've already read that book, there's no need to buy this one -- but if you're in the mood to read about the problems of uncertainty and prediction in the markets, check out "When Genius Failed" by Lowenstein, "A Random Walk Down Wall Street" by Malkiel, or (for the eggheads) "Fractals and Scaling in Finance" by Mandelbrot.
Disappointing, Underwhelming June 20, 2007
64 out of 73 found this review helpful
After reading "Fooled By Randomness", I eagerly looked forward to reading Taleb's latest book, only to be disappointed. He mentions both in the prologue and acknowledgments, "the book just wrote itself", and it shows. He could have fitted most of the 300 pages into 50 and gotten his points across. In any event, this book does not add anything more to "Fooled By Randomness" (194 pages) and is often rambling and incoherent. Perhaps if one read The Black Swan first, it may have been interesting but not if you read Taleb's previous excellent book.
 A bad book for all the wrong reasons. July 23, 2007
53 out of 58 found this review helpful
I really wish this were a good book, because the basic idea behind it is original, important and clever. That makes Taleb's careless handling of his topic all the more disturbing.
The rock-solid foundation of this book is Taleb's insight that the most important events in history, and presumably to come in the future, are essentially unpredictable; they can't be forecast using the information we have prior to their occurrence. That's a huge point and Taleb goes on to offer some compelling evidence that it is indeed true. He uses the analogy of a Turkey deciding that humans must have his best interests at heart because they show up every day of his life to feed him a good meal, he projects that - based on all of his evidence - this will continue. This works great until a couple of days before Thanksgiving. Suddenly his predictions have failed him catastrophically.
Great idea, and - I believe - true. But Taleb undercuts his own thought baby with shoddy writing, poor research and personal opinion masquerading as evidence.
The writing: A well-written book allows a reader to flow naturally from one paragraph to the next and from one idea to the next, even when the subject matter is complex. Taleb's writing is tough to follow and slow to get through. Beyond that, you really struggle to comprehend what he is trying to get across to you for huge portions of this book.
The research: When Taleb used examples to back his ideas that came from fields with which I was unfamiliar, I felt pretty good about them. However, whenever he used examples from areas where I have deeper knowledge, I noticed that his knowledge was lacking badly (being a trader comes to mind). This started to make me question all of his supporting evidence.
The opinion: Taleb leans heavily on the idea that most of what happens in the world is luck, even when we try desperately to ascribe some sort of tangible cause to it. At one point he uses the example of Mac operating software being far superior to that of Windows, but Windows being dominant in the market. He chalks it up entirely to luck! I'm sure he'd say I'm falling prey to a logical fallacy, but Apple and Steve Jobs had a huge head start on Microsoft, but refused to let anyone else run their operating system - so to run it, you had to buy a Mac. Microsoft let anyone run their operating system and consequently took the dominant share of the market.
This book is really a shame. The idea is just too good to be used this poorly. It made me sad to read this thing. Taleb the thinker deserved a far better writer than Taleb the author. What a waste.
You might still try reading this to understand Taleb's idea, because it's a huge insight, but watch all of his other content because it's riddled with holes.
Don't insult my intelligence June 27, 2007
52 out of 71 found this review helpful
Taleb's concept is certainly not his: "absence of evidence is not evidence of absence" is as old as the Greek philosophers. And is something anyone who studies science should already know. It's one of the classic "logical fallacies".
That natural systems very often do NOT follow Gaussian distribution is something anyone who has taken intro stats should know.
That non-linear systems are common; that positive feedback loops exist in nature; these things we know.
Serious students of economics, physics, chemistry, climate, or biology may sometimes view the world through bell-curve tinted glasses. So remind us. But don't insult our intelligence by combining lack of originality with insufferable arrogance.
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