The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb Summary and Reviews
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Book Reviews of The Black Swan: The Impact of the Highly Improbable
Book Review: Interesting Subject but Flawed Presentation
Summary: 3 Stars
This book is about a really fascinating subject but is written in a way that hurts the credibility of the author, in my opinion.
Let me give a simple illustration: In the book, Mr Taleb gives the example of a Turkey that is fed everyday and thinks to him/herself "Hey! These humans feed me everyday- They're great!" only to be surprised, one day, out of the blue, when it lands on the chopping block.
This example is given to show that using traditional reasoning to predict the future is fundamentally flawed, because it ignores "black swans".
Mr. Taleb argues "See, That turkey is dumb by predicting that humans will always be nice to him, given prior evidence- Don't be like the turkey"
This is a poorly formed argument: There is a perfectly valid argument for the turkey's beliefs- Occam's Razor: The simplest explanation is that humans are always nice to you. It may be true that the Turkey is stupid, but you're making a poorly formed argument if you do not delve into the use of Occam's Razor as a defense of the turkey's beliefs.
Occam's Razor, which is a central refutation of many of the arguments in this book, is never mentioned in it. This is the general problem with this treatise- Mr. Taleb sets up straw man arguments and then shoots them down- In the process, the reader often thinks "Hey! that's unfair- There are better arguments for the opposite position" but they are left avoided/unexplored.
This is definitely an interesting subject area, and many of the author's arguments may be true, and the book may be worth reading for some... but be aware that you may be disappointed by a lack of crispness in the argument the author puts forth.
Book Review: Very good - and lets start a game on it
Summary: 5 Stars
I really enjoyed this book. The author managed to hold my attention and even if the book's main points are quickly postulated I think that the abundant anecdotes help to really grasp the main message. So read it and learn from it.
Apart from that it is really funny to see how the author falls in some traps himself (which he admits, but some have found their way into the book). So I would like to start a little game and collect these "faultlines". My first throw: In one chapter NNT is approached by an Italian scholar who is convinced that Taleb has grown into an sceptical empiricist because he hails form the Levantine, which is supposed to be the ideal breeding ground for Talebs intellectual developement. NNT reports that he nearly fell for it but then begged to differ: Nationalities are no good to generally predict personal pecularities. But the funny thing: He keeps on bashing the French people in the book (at least a dozen times) and contradicts the aforesaid but also confirms how easily one can fall into hardwired traps.
Book Review: A tough nut to crack
Summary: 4 Stars
I'm not entirely certain what to make of this book. On one hand, it seemed like a fairly convincing rejection of a great deal of prominent statistical and economic theory. But let's face it, very few people are equipped to evaluate Taleb's assertions and decide for themselves whether he's right. It sounded reasonable enough to me, and at least from the standpoint of layman's logic it was enough to convince me that he's on to something, but beyond that there's simply no way on earth I can hope to understand the complex mathematical ideas he talks about in the book.
The Black Swan is part of what seems to have become a popular trend lately, whereby people with grand ideas present them to the general public rather than to their peers (though Taleb doesn't seem to think he really has any peers - I'll get to that in a moment). Books like Freakonomics, The Tipping Point, and Blink are other examples of thinkers selling their ideas directly to laymen like myself (who are in no way qualified to judge the validity of their ideas) rather than subjecting them to academic scrutiny. Taleb insists that there's no point in doing that because the academic community is too narrow-minded or foolish to give his ideas a fair shake (or to even understand them). Again, I have no way of knowing whether that's true. Maybe it is. Or maybe it's just easier to hawk your ideas to the public for $27 a pop and bypass professional scrutiny altogether. I don't know.
Another thing these books have in common is the everything-you-think-you-know-about-the-world-is-totally-wrong theme. I know it's thrilling to think that we have made a new discovery that will revolutionize the world, but these authors can't ALL be right. The problem is that there's really no way for the layperson to know who's right (if any of them are). Their ideas sound compelling enough, but how can we know they're any smarter than the people they say are wrong?
On a more substantive level, one thing I disliked about The Black Swan was its seemingly scattershot approach to things and the author's tendency to ramble. It is mainly a book that covers sweeping concepts with few specifics, but then all of a sudden Taleb will do something like recommend precise allocations for your portfolio out of the blue without expanding on them (but don't get too excited even about the portfolio recommendation, because even it is far from being the kind of investment advice that you can do much with). The ending was also a bit odd. Taleb concludes by pulling a line straight out of the popular self-help book "Don't Sweat the Small Stuff" when he says, well, that you shouldn't sweat the small stuff. But that's not really what the book was about. Instead, Taleb consistently makes several dire warnings about the kinds of horrible things that can happen when we fail to take into the account of unforeseeable and random events - hardly "small stuff."
Finally, I have to say that Taleb comes off as somewhat of a jerk throughout the book. To say that he is arrogant is a bit of an understatement. He goes out of his way to pump himself up as one of the only truly enlightened people alive today. Along the way, he dismisses anyone who dares to disagree with him as a fool, a philistine, or worse.
I actually did enjoy reading The Black Swan, and overall I found it compelling and intriguing - certainly food for thought. So I don't mean to disparage it. I'm actually surprised to read my own review and see how negative it is because I definitely think this book is worth reading. I just think it could have been significantly better if more thought had been put into making it more focused and if Taleb had resisted the temptation to engage in personal attacks on those who disagree with him. The issues he discusses are obviously extremely complex, so there's nothing wrong with simply admitting that reasonable minds can differ about them without someone being stupid or foolish.
So, to sum it up, I recommend this book to anyone interested in the subject, but go into it with a skeptical mind, just as Taleb says he does when he approaches an idea.
Book Review: From a lay prospective
Summary: 4 Stars
I found The Black Swan very interesting, a bit formidable in parts, but entertaining and a great conversation piece at cocktail parties. I really liked the cutting and disection of Nobel laureates in economics.
I would recomend this book to anyone interested in taking charge of their retirement finances.
Book Review: An entertaining attack on economic theories vs reality
Summary: 5 Stars
Let's see now:
1.) Unexpected things can happen (in finance, and other areas of life).
2.) They can have disastrous (or sometimes, positive) consequences.
3.) There's no way to predict when or if they'll happen, and after they do, we can't really know why they happened.
That's the book a nutshell. Since #1 and #2 are not exactly news, this book seeks to prove #3 by debunking all systems which claim to be able to predict these rare and risky "Black Swan" events, especially in the world of finance.
Most of this book is taken up with well-argued and mathematically-based attacks on predictive economic theories and economists, especially overrated Nobel-prize winners (I'll never be quite as much in awe of such people again). Taleb demonstrates again and again how these systems try to predict the future by extrapolating the past -- driving while looking in the rear-view mirror -- and are ultimately doomed to failure.
The real danger, though, is that these theories (based on the Econ 101 "Bell Curve" or Normal Distribution) unfortunately make unusual events (e.g., market crashes) seem more unlikely than they really are. We're not as safe as we think we are. Of course, after unexpected events happen, there are plenty of explanations as to why they were inevitable. So why didn't anybody say so beforehand?
The author is a colorful and entertaining character. He's certainly opinionated, but his opinions are backed by some serious credentials. He has a Wharton MBA and a PhD in mathematics. He's worked and written with Benoit Mandelbrot, the fractal guru. But he says he's learned more about how the world really works from cab drivers, con men, and in-the-trenches options traders, having spent several decades as a Wall Street trader himself. He hates ties and pompous academics. His advice for dealing with a overly-serious economist: "put a mouse down his shirt".
As a writer, he takes a deliberately confrontational/contrarian stance, though he also admits his weaknesses and uncertainties. He includes a legion of instructive stories and personal anecdotes, including those of fictional alter-egos, both male (a trader) and female (a writer). He can be annoying and repetitive, but he's nearly always engaging.
I'm left with a lingering disappointment that he doesn't give us much to do with this information. Maybe there isn't much we can do. He offers little in the way of investment strategies (he mentions that his own investment money goes mostly into government bonds -- it works for him, but it's bad advice for the average investor).
But after soaking up Taleb, when I now hear someone earnestly explaining with a straight face why a particular event occurred, a little skepticism bell goes off in my head, and I think, "Now wait a minute ...". I'd say that's worth the price of the book.