The Black Swan by Nassim Nicholas Taleb

The last book I read topped my all-time favorites list. This added a challenge for the next book on my list, my expectations were high for writing and content. The Black Swan, unfortunately, did not rise to the challenge. The content was not the problem, it was Taleb’s pretentious writing that was intolerable. I expected to thoroughly enjoy this book, the subject matter is right up my alley in terms of my work, but Taleb writes in a way that forces me to lose respect for his material.

Nevertheless, I believe that his philosophy about the world is valid and should be promoted. He just needs to find a protegé that can write without being condescending toward his/her readers. The name for his theory, the black swan, stems from the idea that there was a time at which humans believed that all swans were white. The sighting of a black swan was out of the realm of imagination. And yet, black swans existed. Since history had only ever shown us white swans, we could not predict the black swan. Thus, historical observations proved useless in forecasting the color of future swans. Unfortunately for you bird lovers out there (looking at you, my brother and his girlfriend), this book was not centered around ornithology. This was only the beginning of the theory. He generalizes this idea to different fields of study, mainly finance and economics. Black swans in these areas include events that are unpredictable and have a high impact. Taleb explains that these events, these incredibly rare events are the ones that shape our world the most. From wars to financial crisis to religions, the most unpredictable events are the most significant. Another part of the black swan philosophy is our innate human desire to explain the situation and retrospectively predict the event. This is useless. 9/11 is one of these black swan events. We try to explain it in retrospect instead of accepting the concept of rare unpredictable events. The financial crisis of 2007/8 on the other hand, Taleb does not consider a black swan (he writes about this in his postscript essay since his book was published in early ’07.) His reasoning for this is that this crisis was predictable, as you know if you’ve seen The Big Short.

There are a lot of other intricacies to this philosophy, but this is the gist of it. So what? What can we do about these black swans? What is Taleb’s solution? Well, that’s really not the point of the book. The only “solution” he provides is awareness. The more aware you are of the possibility for a black swan to occur (even if you don’t know what the precise event may be), the less of a “sucker” you will be. Taleb’s words, not mine.

So why did I find most of this book insufferable? Taleb is incredibly condescending, to both the reader and to anyone that has disagreed with him. There are a couple of things that I remember very distinctly from my high school English course, that I have tried to carry through in my writing ever since (considering my old teacher has subscribed to my blog, I don’t mean ONLY a couple of things, just that two things really stand out). First, that the terms “basically” or “essentially” are useless. Nearly one hundred percent of the time we do not mean what these words infer. This has since become a pet peeve of mine during work presentations. Some of my colleagues use these words when describing our software to customers. But when you say, this product basically does x, it makes it seem like it doesn’t really do that, or not fully at least. This is never what they mean. They just use basically or essentially as filler words. Stop. Please. I digress. This is not my point with Taleb. The second thing that stuck out from high school was the use of the word “obviously.” As my teacher put it, if it is obvious, you don’t need to say it. If it is not obvious, it is insulting to the reader to say so. I hope I got that right. Taleb uses words like obviously or insinuates that something should be obvious nonstop. The majority of the time, whatever he was saying was not, in fact, obvious to me, a simple layperson. I did not, obviously, know about obscure economists or philosophers or other industry experts simply because I have not exclusively studied this topic my whole life. Now, these things may, of course, be obvious to some people, but Taleb says himself in his postscript that this book is “accessible,” it is not intended for any specific audience. And for a book to be accessible to the layperson, very little is obvious.

Am I ranting? Sorry. Taleb made me want to blow my brains out a few times.

Taleb was also annoyingly repetitive with his arguments, so much so that I got to a point of skimming through because I didn’t feel some chapters were providing additional value. He was rude to anyone who opposed him, claiming that financial analysts who spend their days creating models and forecasting are unethical and should quit their jobs and stating that it is the job of his opposition to prove their theories correct, not his job to disprove them. While this can be valid in certain situations, it is also incredibly annoying and arrogant.

But as I have said, he did make some good fair points, and I highlighted numerous passages, so I’ll give him a little credit and share some quotes.

Here is a great example of his pretentious tone overshadowing an otherwise valid argument:

“Our inability to predict in environments subject to the Black Swan, coupled with a general lack of the awareness of this state of affairs, means that certain professionals, while believing they are experts, are in fact not. Based on their empirical record, they do not know more about their subject matter than the general population, but they are much better at narrating – or, worse, at smoking you with complicated mathematical models. They are also more likely to wear a tie.”

Quite frankly, that last comment would make me chuckle if it were infrequent in his writing. But the frequency pushes it beyond playful jabs at colleagues.

The following quote surrounds one of the many side notes in his philosophy. This one, in particular, is his argument that we should not strive to be in fields that produce black swans, whether positive or negative. (This is quite contradictory for him considering one of these black swan fields is writing which is the very thing he is doing, but I’ll let it slide.)

“…your happiness depends far more on the number of instances of positive feelings, what psychologists call “positive affect,” than on their intensity when they hit. In other words, good news is good news first; how good matters rather little. So to have a pleasant life you should spread these small “affects” across time as evenly as possible. Plenty of mildly good news is preferable to one single lump of great news.

Consider that our major satisfaction for thousands of years came in the form of food and water (and something else more private), and that while we need these steadily, we quickly reach saturation. The problem, of course, is that we do not live in an environment where results are delivered in a steady manner – Black Swans dominate much of human history.”

Okay, first of all, say sex. I mean, Christ, you’re insulting people left and right and yet the word sex is where you draw the line? I’m sorry, I may be being insensitive to his culture, but stuff like this is irritating. And see, now that minor detail distracted me from the main point at hand, a point that I wholeheartedly agree with. Anyways. I’ve seen this or at minimum heard about this firsthand from colleagues of mine. I work in sales and in terms of happiness, I think people are better off with a number of smaller wins throughout the year than one large win to hit their target. The big win is great in the moment, but it is nearly impossible for that satisfaction to last you the whole year.

Here is a (long) quote that starts to dive into his argument against forecasting (or at the very least against the people who forecast):

“Let’s say you failed to predict the weakening and precipitous fall of the Soviet Union (which no social scientist saw coming). It is easy to claim that you were excellent at understanding the political workings of the Soviet Union, but that these Russians, being exceedingly Russian, were skilled at hiding from you crucial economic elements. Had you been in possession of such economic intelligence, you would certainly have been able to predict the demise of the Soviet regime. It is not your skills that are to blame. The same might apply to you if you had forecast the landslide victory for Al Gore over George W. Bush. You were not aware that the economy was in such dire straits; indeed, this fact seemed to be concealed from everyone. Hey, you are not an economist, and the game turned out to be about economics.

You invoke the outlier. Something happened that was outside the system, outside the scope of your science. Given that it was not predictable, you are not to blame. It was a Black Swan and you are not supposed to predict Black Swans. Black Swans, NNT tells us, are fundamentally unpredictable (but then I think that NNT would ask you, Why rely on prediction?). Such events are “exogenous,” coming from outside your science. Or maybe it was an event of very, very low probability, a thousand-year flood, and we were unlucky to be exposed to it. But next time, it will not happen. This focus on the narrow game and linking one’s performance to a given script is how the nerds explain the failures of mathematical methods in society. The model was right, it worked well, but the game turned out to be a different one than anticipated.

We humans are the victims of an asymmetry in the perception of random events. We attribute our successes to our skills, and out failures to external events outside our control, namely to randomness. We feel responsible for the good stuff, but not for the bad.”

Okay first of all, referring to yourself in the third person, “NNT?” Ugh.

But again, he makes a good point. We do this all the time, taking credit for the good and blaming randomness for the bad. I have certainly been a culprit of this in my career. When I demo software, there will almost inevitably be “random” events that occur that make things go terribly wrong. For instance, just last week I was demoing a web-based solution and both Google Chrome AND Internet Explorer were not working. The likelihood that both browsers had unrelated crashes was incredibly low. It was unexpected and random, however, it was not an excuse for failure. You have backup plans, you account for the randomness before and thus are subject to less risk. This is Taleb’s overarching theme. We cannot predict Black Swans, otherwise, they would not be Black Swans, but we can attempt to minimize our risk when they do occur.

And just so you get an idea of how infuriating some of his thoughts were, here is my final quote:

“For example, the curator of a conference known as TED (a monstrosity that turns scientists and thinkers into low-level entertainers, like circus performers) complained that my presentation style did not conform to his taste in slickness and kept my lecture on Black Swans and fragility off the Web. Of course, he subsequently tried to claim credit for my warnings voiced before the crises of 2008.”

I don’t even need to add anything after that. If I ever sound even a fraction as pretentious as this guy, someone contact WordPress and take down my blog. Seriously.

This post is already far too long so I’ll leave it at that. While I think it is important to understand his philosophy, do yourself a favor and look it up online. Don’t waste your time with his condescending tone and repetitive thoughts. The next book on my list is fortunate to fall after The Black Swan, my expectations are back to an all-time low.

 

 

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