What this book is about:

Notes

  • Black Swan has three attributes

    • outlier - lier outside realm of regular expectations - nothing in the past can convincingly point to its possibility
    • extreme impact
    • human nature makes us want to explain it
    • ie: RARITY, EXTEME IMPACT, RETROSPECTIVE

  • certain professionals in environments subject to Black Swans think they are experts but they are not- they are better at narrating or making things sound complex

  • adjust to Black Swans existence - don’t try to predict - focus on what you do not know and set yourself up to collect positive Black Swans.

  • “the reason free markets work is because they allow people to be lucky, thanks to aggressive trail and error, not by giving rewards or “incentives” for skill. The strategy is to tinker as much as possible and try to collect many (positive) Black Swan opportunities).” “the world is dominated by the extreme, the unknown, and the very improbable (improbable according to our current knowledge)” yet we spend our time taking about the known and the repeated. Use the extreme event as a starting point and not an exception.

  • Part One: Umberto Eco’s Antilibrary or how we seek validation (Ch 1-9) - how we perceive historical and current events and what distortions are present in such perception

    • Black Swan’s come from our misunderstanding of the likelihood of surprises (unread books) - we take what we know a little too seriously
    • Antischolar - someone who focuses on unread books and makes an attempt not to treat his knowledge as a treasure or even a possession or even a self-esteem enhancement device - a skeptical empiricist
    • Chapters in this section - how humans deal with knowledge and our preference for the anecdotal over the empirical
    • two varieties of randomness (chapter 3)
    • The Black Swan problem, we tend to generalize what we see (chapter 4)
      • The error of confirmation, the tendency to look at what confirms our knowledge, not our ignorance (Chapter 5)
      • The narrative fallacy, how we fool ourselves with stories and anecdotes (Chapter 6)
    • emotions get in the way of our inference (chapter 7)
      • The problem of silent evidence, the tricks history uses to hide Black Swans from us (Chapter 8)
    • building knowledge from the world of games is a lethal; fallacy (Chapter 9)

  • Chapter 1: The Apprenticeship of an Empirical Skeptical

  • Triplet of Opacity - the generator of historical events is different than the events themselves

    • illusion of understanding - everyone thinks he knows what is going on in a world that is complicated and random
    • retrospective distortion - we assess matters after the fact and make them seem like they are not rare
    • overvaluation of factual information and handicap of authoritative and learned people, particularly when they create categories “Platonify” - the curse of learning

  • information is dubious, not knowledge

  • during the Lebanese war, Taleb notices journalizing “clustering” around the same “framework of analyses”

  • “Categorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from seeing the fuzziness of boundaries, let along revising the categories. Contagion was the culprit. If you selected one hundred independent-minded journalists capable od seeing factors in isolation from one another, you would get one hundred different opinions. But the process of having these people report in lockstep caused the dimensionality of the opinion set to shrink considerably - they converged on opinions and used the same items as causes”

  • categories are arbitrary, a manifestation of Platonicity, produce a reduction of true complexity

  • quant: “brand of industrial scientist who applied mathematical models of uncertainty to financial data”. Taleb: studies “the flaws and limits of these models looking for the Platonic fold where they break down.”

  • Chapter 3 - Two types of randomness, scalable and nonscalable. In scalabale environments, Black Swans can be produced and have a huge impact on history

  • scalable environments are increasing throughout history. For example, the invention of music recording made the profession of pianist scalable.