The Black Swan: The Impact of the Highly Improbable

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If, as Socrates would have it, the only true knowledge is knowledge of one's own ignorance, then Nassim Nicholas Taleb is the world's greatest living teacher. In The Black Swan, Taleb's second book for laypeople, he gives a full treatment to concepts briefly explored in his first book "Fooled by Randomness." The Black Swan is basically a sequel to that book, but much more focused, detailed and scholarly. This is a book of serious philosophy that reads like a stand-up comedy routine. (Think Larry David...)

The Black Swan is probably the strongest statement of enlightened empiricism since Ernst Mach refused to acknowledge the existence of the atom. Of course, in theory, everyone today is supposed to be an empiricist - all right-thinking intellectuals claim to base their views solely on positive scientific observation. But very few sincerely confront the implications of rigorous empiricism. Specifically, few confront "the problem of induction," illustrated here by the story of the black swan.

Briefly: observing an event once does not predict it will occur again in the future. This remains true regardless of the number of observations one adds to the pile. Or, as Taleb, recapitulating David Hume, has it: the observation of even a million white swans does not justify the statement "all swans are white." There is no way to know that somewhere out there a black swan is not hiding, disproving the rule and nullifying our "knowledge" of swans. The problem of induction tells us that we cannot really learn from our experiences. It makes knowledge very problematic, if not impossible. And yet, humans do behave -almost without exception- as though they believe that experience teaches us lessons. This is forgivable; there is no better path to knowledge. But before proceeding, one must account for the limits that the problem of induction places on our claims to knowledge. And humans seem, at every turn, to lack this critical self-awareness.

In one of the many humorous anecdotes that seem to comprise this entire book, Taleb recounts how he learned his extreme skepticism from his first boss, a French gentleman trader who insisted that he should not worry about the fluctuating values of economic indicators. (Indeed, Taleb proudly declares that, to this day, he remains blissfully ignorant of supposedly crucial "indicators" like housing starts and consumer spending. This is a shocking statement from a guy whose day job is managing a hedge fund.) Even if these "common knowledge" indicators are predictive of anything (dubious - see above), they are useless to you because everyone else is already accounting for them. They are "white swans," or common sense. Regardless of their magnitude, white swans are basically irrelevant to the trader - they have already been impounded into the market. In this environment, one can only profitably concern oneself with those bets which others are systematically ignoring - bets on those highly unlikely, but highly consequential events that utterly defy the conventional wisdom. What Taleb ought to worry about, the Frenchman warned, was not the prospect of a quarter-percent rise in interest rates, but a plane hitting the World Trade Center!

Yep, the precise facts of 9-11 were actually presaged by this French gentlemen, as a rogue wave that just might be lurking over the horizon. And, to the contemporary American mind, this is THE quintessential Black Swan. Of course, the Frenchman's insight was just a coincidence - the thing with Black Swans is that they cannot be foreseen.

Taleb explains that conventional social scientists use induction to collect data, which is then plotted on the good old Gaussian bellcurve. With characteristic silliness, Taleb dubs the land of the bellcurve "Mediocristan" - and informs us that it is the natural habitat of the white swan. He contrasts Mediocristan with "Extremistan" - where chaos reigns, the wholly unexpected happens, power laws and fractal geometry apply and the bellcurve does not. Taleb's fictional/metaphorical 'stans' share something with the 'stans' of the real world: very ill-defined borders. Indeed, one can never tell whether one is in the relatively safe territory of Mediocristan or if one has wandered into the lawless tribal regions of Extremistan. The bellcurve can only help you in Mediocristan, but you have no way of knowing whether you have strayed into Extremistan - beyond the bellcurve's jurisdiction. This means that bellcurves are of no reliable use, anywhere. The full implications of this take a while to sink in, and are sure to cause huge controversy. In July, Taleb will debate Charles Murray (author of -what else?- the Bell Curve). I'll let you know who wins.

Taleb frames his whole argument much more entertainingly than I could here, and he bolsters it with an astonishing command of both cutting-edge social science and the entire history of philosophy. This is an astonishing work of serious philosophy, and it reads like pulp fiction. Readers who enjoyed FBR will find here the same dry wit, the same literary erudition, and deep sense of the absurd that made that book so much fun. But this is better, by an order of magnitude - easily the best book I have read in 5 years. I smell a timely pop-science bestseller here to rival Gladwell or Surowiecki, but this is also a classic that will be read for decades to come.

This is an entertaining and enlightening book, and fairly easy to read. It has an important message regarding how the world works; that the world is governed not by the predictable and the average, but by the random, the unknownable, the unpredictable -- big events or discoveries or unusual people that have big consequences. Change comes not uniformly but in unpredictable spurts. These are the Black Swans of the title: completedly unexpected and rare events or novel ideas or technologies that have a huge impact on the world. Indeed, Taleb argues that history itself is primarly driven by these Black Swans.

It is convincing argument, entertainingly presented with plenty of sarcasm, and indeed, anger, by Taleb. For example he rails against the academic community, economists (including specific names), and Nobel Prize committee. Considerable numbers of his arguments "ring true" to me, that is my experience in life confirms that they are more accurate than the traditional approach. Like any important work, 90% of what is in the book is not original; that does not make it less important. Taleb's contribution is in integrating the material together, and showing how these different ideas are tied to the Black Swan.

The themes include: winner-take-all phenonomen, numerous effects of randomness on the world, the invalidity of the Gaussian Bell Curve to most things in world, concepts of scalablity, numerous instabilities in the world, especially the modern world where information travels so quickly, the fallacies about people's inability to predict the future. The importance of these ideas, Taleb's ability to weave them together into a single theory, and the ability of this theory to change the way you look at the world, means the book easily deserves my highest recommendation.

However, the book does have many flaws, unfortunately -- unfortunate because I believe they will take away from the credibility of the message, which is in important one. The are numerous minor flaws such as, for example, the inexplicable invention of a fictional author (disclosed a few pages later), when certainly there must have been some real example that would have worked better. Another example is repeated jabs about the French; these may be amusing but I just don't think they have a place in work like this. There are also diatribes against specific people, including famous economists, which, though amusing, and possibly justified, demonstrate a high level of anger by author and take away from his credibility. Often he also overreaches, for example in saying the usual combination of anti-abortion and pro-death penalty or the opposite combined views of pro-abortion and anti-death penatly cannot be explained logically, when in fact widely known theories such as George Lakoff's (in Moral Politics) have explained hows these groups of views are entirely consistent.

Another flaw is that Taleb seems to go a little toward the extreme of saying that we can predict almost nothing about the future, and though he does not say so explicitly, this seems to imply we have no moral responsibility to the future. This, combined with Taleb's advice to the reader about their behavior based on the "Black Swan" view of world just rubbed me the wrong way, for several reasons. One is that Taleb personally has very little in common with most people; never having as far as I know had a regular career (essentially what he calls non-scalable, e.g. dentist, engineer, baker) he nevertheless recommends that people choose these kinds of careers rather than a scalable career (e.g. financial trader, author, actor which are subject to a few lucky successful people and a lot of failures). This advise is odd first because Taleb is in a non-scalable profession (derivatives trader, then hedge fund manager) -- indeed it appears he is quite wealthy. Even more odd because he says all these types of non-scalable types of work are boring and evens makes sarcastic comments (the book is extremely sarcasm heavy) for example about dentists being able to do well by diligently drilling teeth for 30 years. The second things that bothered me is that Taleb seems be somewhat amoral to me; in this type of book where plenty of his own emotions come through, plenty of his personality, he has plenty of criticism of others for their wrong models and wrong view of the world, and how this has hurt the world, but there remains a lack of moral responsibility to his advice.

Perhaps the best comparison I could make are to other important works that do not suffer from these flaws, for example the Age of Fallibility by George Soros and Irrational Exuberance by Robert Shiller (1st and 2nd editions). But probably Black Swan will sell better than either of these because of it's "edginess," i.e. aggresiveness; I personally have a distaste for this approach.

Despite my criticisms, the main ideas of the book as so important as to merit reading and indeed great consideration.

Starting with the good (chapters 15 - 17), within chapter 15 Taleb explains where the Bell curve works and where it does not. The Bell curve captures well variables that don't deviate much from the mean. Otherwise, it does not work. Taleb suggests we often fool ourselves in believing that correlation, regression coefficients, or standard deviation convey much information. This is because those coefficients are unstable (and can flip sign when possible) depending on the time selected. This is because the underlying variables are often not stationary enough for these coefficients to be stable.

Chapter 16 is excellent as an introduction to Mandelbrot's fractal geometry as an alternative to Gaussian based investment theory. He supports well that these mathematical tools do capture randomness (of non-stationary variables) far better than the Normal distribution. However, he admits that Mandelbrotian models are not predictive. When looking at the same data set, he and numerous colleagues each came up with different underlying parameters to build fractal-like models. And a small difference in such parameters makes a huge difference in outcome. That's why you will not hear much of fractal geometry within the quantitative financial community. Nevertheless, this is a fascinating subject that deserves further exploration. For this purpose, I recommend Mandelbrot's The Misbehavior of Markets

Within Chapter 17, Taleb further elaborates on the flaws of the Normal distribution. He underlines that half of the return of the stock market over the past 50 years was associated with just 10 days with the greatest daily change. This is an example where stock returns have outliers of such magnitude that using the Normal distribution is not appropriate. Taleb describes the run-ins he experienced with the living legends of modern finance including Myron Scholes and Robert Merton due to his rejection of the Normal distribution assumption that underlies all their models.

The remainder of the book is not nearly as good. Hundreds of pages can be summed up in just stating that we can't predict rare events. Taleb goes way overboard in attributing everything to luck. He thinks MicroSoft beat out Apple just due to luck. Taleb does not consider that MicroSoft open system allowed it to mushroom while Apple locked itself into a proprietary corner. Also, according to Taleb both the rise and fall of Rome were due entirely to luck. But, Rome was best at developing military strategy and transportation networks. However, it eventually suffered from imperial overstretch. Explanations are not always narrative fallacies as Taleb believes. They often beat out ignorance.

When it comes to advice, Taleb's recommendation is interesting. It consists in an asset allocation of 85% risk free investments (T-bill) and the 15% remainder into buying way out of the money Calls and Puts. By doing so, he positions his portfolio to capture the occasional mispriced Black Swans.

This book is somewhat uneven in quality and is not nearly as good as his first book: Fooled by Randomness Revision (Not Available in US): The Hidden Role of Chance in the Markets and Life that has become a classic on Wall Street. Otherwise, it still is an interesting reading.

If you find the subject of this book intriguing, let me suggest a few other books that are more rewarding. Scott Plous'sThe Psychology of Judgment and Decision Making explores the flaws in human judgments far more thoroughly and clearly than Taleb in `The Black Swan.' Perry Mehrling's Fischer Black and the Revolutionary Idea of Finance is also an excellent book. Ideally, that may be who Taleb would have liked to become. Fischer Black was brilliant and as skeptical as Taleb regarding much of the body of economics and finance. Yet, he left a great legacy of elegant models that people still use extensively including the famous Black-Scholes option model. Yes those models were often based on Taleb's dreaded Normal distribution. But, with minor modifications those models have remained valuable. Another recommendation is William Poundstone's Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street that describes the career of a bright MIT mathematician, Ed Thorp. The latter showed how to successfully deal with uncertainty in gambling and investing. Even Taleb recognized Thorp's unique expertise within `Black Swan.'

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.

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.

Ok, let me summarize this book for you: Nicholas Nassim Taleb is smarter than everyone. He's smarter than scientists, philosophers, economists, entrepreneurs and every person who has ever walked on earth. Oh, and he can beat the street too.

His first book is good. This one is just bad. He talks too much about how great he or some friend is, but that even isn't what annoyed me the most.

What really made me write a 1 star review is that there isn't really anything new on the whole book. Really, not one original idea. If you've read a good science book in the last ten years you can skip this one. If you haven't, you can find the same content elsewhere without reading what looks like a lazy draft from a self-centered kid.

Oh dear. If you've read Taleb's previous book, Fooled By Randomness, don't bother with The Black Swan. Fooled By Randomness was deservedly successful, filled with contrarian thinking that makes sense, delivered in an original and engaging style. But success went to Taleb's head. In The Black Swan, Taleb seems more interested in talking about himself. He doesn't do his reputation any favors by doing so. He describes what he seems to think of as charming quirkiness, nearly giving an octogenarian Nobel Prize laureate a heart attack by heckling him at a lecture. Taleb loves to take blowhards down a notch or two. But when someone challenges his ideas, it's because they haven't read his book, or they didn't understand his brilliance.

The Black Swan jumps around, switching from a tale of a non-existent Russian author to Taleb's experiences in Lebanon to the mathematics of probability. The language is repetitive, using "black swan" and "extremistan" long after their cuteness has worn off.

Read Fooled By Randomness or Devil Take the Hindmost or Fortune's Formula. Read Harry Potter. Anything but The Black Swan.

First of all I had fun reading it. I was many times in a non-reading mood, and some of the drafts came to me. I print them out in order to read another time, and suddenly I was finding myself after reading a few pages. Joyful style but with content. Very interesting content. The stuff that make you thinking, thinking, and thinking again.

The principles of the book are quite simple.

The unknown is more frequent than we tend to think.

The effect of unexpected things is rather huge. Much more than we dare to fantasize.

"we know" is in many cases a big illusion. The human mind tends to think it knows, but does not always have solid ground for this dellusion of "I know".

As in the good old medieval days, "experts" are many times empty heads with empty (and expensive) suits. The "truth" behind science, is limited to some areas, and in many areas having a degree and posing scienist, is truth irelevant.

"Narrative falacy" talks about our tendency to build stories around facts. In love it may serve a purpose, but when starting to beleive the stories and accomodating facts to the stories, things become stupid.

Much more is there for the taking.

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.

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.

I agree with other reviews that this is a poor follow on to "Fooled by Randomness." I've found myself skipping sections and not missing anything.

Mostly this book is soaked with the author's extreme arrogance. And it is nothing more than listening to a babbling know-it-all. The type of guy that you get stuck talking to at a party until you start praying for a fire alarm.

As a scientist, I don't agree with the notion that an outlier event disproves a hypothesis or central tendency statistics. It merely proves that outliers exist and mathematical models are attempts to predict and are often flawed. Duh, we already knew that.

Further, the whole notion that no one could have predicted the internet or Google is absurd. We've seen them grow--and participated in that growth. How is that improbable and unpredictable?

The book is mildly engaging at times, and apparently I'm one of the few that disliked it. Maybe my PhD made me too dumb to understand.

I found the book highly polemical and the authors style annoying. His bile seems to be primarily directed at academic economists, and secondarily at corporate risk management. I don't think the general public is taking academic economics too seriously, and most undergrad b school majors or econ majors couldn't understand it, even if they wanted to.
Asymetrical distributions with thicker tails have been used more or less forever by statisticians and anyone seriously dealing with risk.
If everyone strictly believed in EMT, who would get involved in hedge funds or private equity? After LTCM blew up, a vivid counter example was on Page 1 of every newspaper in the country.
As far as corporate risk management is concerned, there are a lot of black swans that are irrelevent since they wouldn't include actionable information, even if the probabilities were quantifiable. For example, an astroid hits the earth or world war III. We are all dead. Even much less extreme events are essentially unmanagable at a corporate level. The example of the casino risk managers seem like a caricature of enterprise risk management (although it may be true), but doesn't represent current best practice.
There are some real problems regarding risk management in the financial area, and although Taleb mentions them in passing, they deserve more thoughtful and lengthy treatment. These are more in the grey swan category, and you don't need Karl Popper to understand what's going on. I think a grounding in the history of speculative excesses could provide some perspective on the current situation. One timely example being financial engineeering whose main purpose is to reduce transparency -- see the WSJ on CDO's in conjunction with the Bear Sterns blip.
If Taleb would get an editor, or better yet, a ghost writer, this could have been a valuable book.

I picked up this book thinking that the premise was interesting.
Sadly this book is horrific.
The author is encumbered with an unchecked ego and his sense of superiority drips disdain on his readers and the rest of the world.

He decries editors, yet could have used a good one.

The book is rambling, poorly organized and his points aren't that interesting. One of his main arguments uses the story of an author whose unconventional book becomes a best seller only to have the sequel flop. This is complete fiction though--there is little to no real science in this book, just the ramblings of an egomaniac. His main points are neither new nor particularly exciting. This book seems just to have been written to show off how smart he thinks he is.

Overall it would be mildly interesting if he didn't write so poorly, but alas there is little to be gained from this book other than frustration and the loss of a few hours of your life.

"The Black Swan" was very disappointing for several reasons. It needed someone to edit it, it was too long and rambling. Taleb goes on and on and on. Please, give us a break. Early on I decided that I didn't like the book, but I finished it. Taleb comes across as a pompous, arrogant know it all. I could sum up "The Black Swan" this way; it is better to be lucky than good! A much better book on risk is "Against The Gods,The Remarkable Story of Risk".

I am a mathematical statistician and I have read the book in question. Although I agree with the book's conclusion, I can only say that the information in the book can be written in about two pages. It does not require a book to say it.

Stirred by the mention of "uncertainty" (a pet topic), I purchased this zany refutation of everything conventional. A total contrarian, and full of cynicism, I'm not really sure even still what this author advocates... that we should NOT plan for tomorrow, because the sun might not rise? To buy flood insurance?? Who knows? - Because he certainly proposes that we can't learn ANYTHING from experience.
He says it's the 9/11s and Tsunamis that have a great impact in our lives. How true, and yet most of us cannot ignore the "small hours" (Rob Thomas's latest song about poignant moments) or the individual people who have had huge impacts upon us. So what exactly is his point?
Can we truly say that we shouldn't plan on going to college, and someday actually attend because of the random tornados that might intervene? Or on some day having children? Give me a break. This author's very metaphor of a "black swan" being rare, unpredictable, and big impact is inappropriate... Please -- I ask you -- what big impact does a black swan have, or ever had upon the first one's discovery? Why didn't he name the book "earthquake" -- Now there's an unpredictable, rare and big impact event!!
When you read some of the names of theorists this author has insulted, it becomes apparent that he has some real issues, and is in a deep search for some attention from anywhere he can get it. Self-discredited, he doesn't like Bell curves -- well that's because this individual is way out in six sigma land -- an outlier to be ignored. That unpredictable things will happen is not argued, but that we should not have logical expectations is inane. Disappointed -- This book won't sell, despite a snazzy look and (poor) metaphor. It is of little value to anyone who wants to make things happen in the real, mostly predictable, world.

The author expressed his strong negative options on statistics, econometrics, some finance professors, some Nobel Prize winners, etc. The whole point is that traditional stat, econ, finance techniques are mostly around the first moment (mean) but the distributions in finance tend to be non-normal and it's the risk that we should pay more attention to. That's a point few people would disagree with. What the author may not have known is that there are stat techniques out there that handle all the issues mentioned - while it's true that there's a lot of room for improvement, it's misleading to say that this is an area ignored by the academics and practitioners. While fractals are recommended, it is not clear how they can be directly applied to the area of investment finance.

There is a 2007 issue in American Statistican dedicated to the debate with the author and is highly recommended.

A superficial and self-aggrandizing book. Taleb seems to want to claim credit for concepts with which any student of statistics or investing ought to already be throughly familiar. I was hoping for an interesting read that might lead me to more detailed sources, but got neither from this book. Completely disappointing and poorly written.

As a mathematical statistician I am a little taken aback by Taleb's lack of scholarship in understanding and appreciating what professional statisticians do. He puts down economists, Nobel laureates, philosopher and statisticians among others. There is a degree of unseemly arrogance on his part and I am sure that some of the other 300 or so reviews on amazon take him to task on that.

It is a shame too because for many of us, it spoils the really good main point of the book which is that Black Swans exist, make predictions difficult if not impossible but can be handle in the stock trading business at least by using his barbell approach.

I found the first 1/3 rd of the book very philosophical extremely redundant yet provocative. The rest of the book was much more interesting to me particular the last few chapter which had the most technical discussion and many points to agree with and also to quibble with.

A Black Swan is an extreme event that is very rare but so significant that it creates instability in averages and can ruin predictions and be either castastrophic (the negative Black Swan) or bring great fortune (the positive Black Swan). These Black Swans are real and Taleb cites many examples. Taleb is also right with his point that some economists are blind to the Black Swan or at least the unpredictability of them. I have often seen major declines in the stock market explained after the fact with seemingly logical but very suspicious and dubious rationalizations. Taleb deserves credit for recognizing this and realizing that in the world he calls extremistan where the Black Swans exist they must be accounted for but no should attempt the futile business of predicting them!

He also recognizes that there is another world where the Gaussian distribution and other light-tailed parametric distributions prevail and he calls this the world of mediocrastan. Here, the usual parametric statistics is useful but in Taleb's view it is not very common in practice to be in a mediocrastan world. This is the world of parametric statistics and is the place where most elementary courses in statistics reside. But here is also where I think Taleb makes a big mistake. He assume that this is the world where all statisticians and econometricians live and play and so these teachings are irrelevant to the practical world. Well, in many of the areas he discusses the parametric statistical models do not work. But probabilist, statisticians and econometricians have realized this for at least the past 60 years. In the 1930s and 1940s the field of nonparametric statistics developed through the work of Pitman, Mann and Whitney and Wilcoxon to name a few. Also the theory of extreme value distributions goes back to Fisher and Tippett in 1929 and was rigorously developed by Gnedenko in the 1940s. Nonparametric statistics deals with general distributions that do not have a simple parametric form and includes the heavy-tailed distributions that Taleb cares about. Also the asymptotic theory of extreme values that Fisher and Tippett, Gumbel and Gnedenko discovered showed that the extreme events had systematic behavior based on the three extreme-value types of distributions. So the extremes can be treated using asymptotic statistical theory just as well as the averages can be characterized asymptotically through the central limit theorem and the stable laws (in the case of a heavy-tailed population distribution). So in some ways Taleb is off and out of gas because he doesn't address or perhaps is even ignorant of this theory.

In the area of finance as well as in other areas, time series models have been useful in developing forecasts. In the world of mediocrastan the Box-Jenkins ARIMA models are very useful for problems in forecast and stochastic control. This was well established with the very popular book by Box and Jenkins that was first published in 1970. However financial data often falls into the world of extremistan and the stationary distributions when they exist are non-Gaussian and heavy-tailed. It is in this context that ARIMA models fail but the statisticians and econometricians have developed other models including the GARCH models which handle this type of data and allow for better predictions. Taleb mentions the GARCH models but only to make fun of them in a very superficial way that does not discuss any of the mathematics associated with these models. Again, I am not sure if Taleb is ignorant about this body of literature or just dismisses it because he see other models that cannot be used to predict as more appropriate.

Taleb is enamored with Mandelbrot and his theory of fractal geometry and the apparent natural properties of fractals. Well at least fractals look like coastlines on the world globe as well as other common items in our natural environment. But is this enough to say that fractals are the only models relevant to extremistan? I am not yet convinced.

This August I went to the Joint Statistical Meetings in Denver. There was a session on the Black Swan and to his credit Taleb was brave enough to accept the invitation of the statistical community to come to discuss the issues in his book. Unfortunately, I was not able to attend that session. But it got mew curious enough to want to read the book and see what Taleb's premise was all about. I do not yet know much about what came out of that session. I hope that at least Mr. Taleb came out of it with a better appreciation of the intelligence of statisticians and the more sophisticated models that he appears to be ignorant of based on the lack of discussion of them in his book.

Another branch of nonparametric statistics developed in the 1970s that is now called resampling methods. One of the more successful of these methods is the bootstrap. I have done some research into bootstrap methods as well as having authored a text on the topic. I believe that the bootstrap approach to time series analysis is another way that these time series with non-Gaussian innovation distributions or the stationary distributions of the time series model can be handled. I am not yet convinced that in the world of extremistan the hope of some form of forecasting must be abandoned as is Taleb's thesis.

Sorry to be so negative about a book that so many others find interesting, but I found it pretentious and filled with arrogance. Taleb seems mainly interested in letting the reader know how smart he considers himself to be. Maybe if I had given it more than 40 pages, it would gotten better, but that was all I could stand to read.

The author spends over 300 pages lecturing us on how not to be a sucker and the meaning of a Black Swan. It can all be summed up in three trite words, "Expect the unexpected." And, lo and behold, we realize early on that we've been the author's sucker to actually buy this book and read his psycho babble dribble! This book is a Black Swan: An unexpectedly bad diatribe against classic thinking by a psuedo intellectual. Don't waste your time or money.

2007 Random House, 396 pages (of which 305 pages for main body of book)

The Black Swan is a very unusual book. A couple of days after finishing it I still feel like I'm struggling to integrate its message with life. It reminds me a little of Richard Dawkins' Selfish Gene in that respect: its central thesis, which appears to be unassailably argued, indicates that the standard view of the world is wrong. In Dawkins' case, the primacy of the individual (as opposed to the gene) and in Taleb's case, the view that the world is essentially driven by normal, day-to-day events.

The subtitle of Taleb's book tells you what it is about: The Impact of the Highly Improbable. According to Taleb, high-impact rare events ('Black Swans') are not anything like as rare as we think they are and their effect is so disproportionately large that they effectively drive events in the world.

This may not sound all that provocative, but Taleb's argument is that virtually everybody's view of the world as essentially linear and step-by-step is just an illusion that protects us from understanding that our progress through life is much more random and fragile than we think.

Taleb's outstanding first book, Fooled by Randomness, is about the much greater role of luck in life than is commonly understood. The Black Swan develops this thesis further and shows that rare and unexpected events (what you might think of as a subdivision of luck) drive much of the results in the world.

Since reading Richard Koch's The 80/20 Principle eight or so years ago - after which I began to look at the world through the lens of unequal cause and effect - I have been coming gradually around to Taleb's views. Even so, The Black Swan is difficult to assimilate - and it must seem extremely odd (and itself most improbable) to those who have not had some preparation.

One can see this difficulty in the absolute refusal of modern academic finance to give up theories of how the world works (the bell curve or pattern of 'normal' distribution) that allow them to use complicated mathematics and which are just plain wrong. Taleb thought the Long Term Capital Management debacle in 1998 - in which various Nobel-winning economists proved their (Nobel-winning) ideas did not apply in the real world - would be the end of these dangerously wrong beliefs.

However, it was Taleb who was wrong about that: a whole gang of academics who have invested a good chunk of their lives in an idea that turns out to be worthless (actually significantly negative) won't give it up easily (and perhaps not until they are all dead). The sub-prime mess, with accompanying cries of surprise and of '25-standard deviation events' from various hog-greedy financiers and hedge fund managers, shows the continued prevalence of these appalling ideas.

After the success of Fooled by Randomness, it would appear that Taleb had more freedom to write (and be published) however he wanted. It makes The Black Swan more idiosyncratic and aggressive than Fooled by Randomness. I imagine this will act as a polariser and some people who would otherwise appreciate the content may not like the delivery. Personally, though, I loved it.

As someone who has tried working in various jobs in the City of London (the UK equivalent of Wall Street) I feel in some ways that Taleb is a kindred spirit: I can't stand arrogant, ignorant 'empty suits' either. I thought his "Get Another Job" section (p. 163) was perfect:

"There are those people who produce forecasts uncritically. When asked why they forecast, they answer, "Well, that's what we're paid to do here."
My suggestion: get another job.
This suggestion is not too demanding: unless you are a slave, I assume you have some amount of control over your job selection. Otherwise this becomes a problem of ethics, and a grave one at that. People who are trapped in their jobs who forecast simply because "that's my job," knowing pretty well that their forecast is ineffectual, are not what I would call ethical. What they do is no different from repeating lies simply because "it's my job.""

Taleb's very severe and aggressive criticism of risk measurement techniques in modern finance could be interpreted as an intemperate rant. I don't subscribe to this view and suspect Taleb chose this approach deliberately in order to make it clear that the prevalent financial risk management techniques and his ideas cannot in any way coexist: they are absolutely and totally mutually exclusive. (Taleb mentions that after finding it impossible to refute his ideas some people then try to combine them with their old ways of operating.)

I also liked the way Taleb approached and structured his book: he uses stories to get ideas across (as with Nero Tulip in Fooled by Randomness) and has separated his book into sections that allow one to understand his ideas with or without the scientific underlay (I think this is a great idea).

Some people (whether wilfully or not) confused the central theme of Fooled by Randomness, that much of life is driven by luck, with the superficially similar but totally different 'all of life is driven by luck'. In a similar way, I believe some people think that Taleb's message in The Black Swan is unremittingly negative: that we are all permanently exposed to large unexpected events that can wreck all our plans in an instant, and which we can do nothing about.

Taleb's point is rather that most specific forecasting is pointless, as large, rare and unexpected events (which by definition could not have been included in the forecast) will render the forecast useless. However, as Black Swans can be both negative and positive, we can try to structure our lives in order to minimise the effect of the negative Black Swans and maximise the impact of the positive ones.

I think this is excellent advice on how to live one's life and seems to be equivalent, for example, to the focus on downside protection (rather than upside potential) that has led to the success of the 'value' approach to investing. Highly recommended.

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.

The fundamental premise of the book is that it is the unknown or highly improbable events that have the biigest impact. There are myriad examples of how business, society and individuals closely monitor the known risks yet do not position to limit the downside of negative black swans or expose themselves to positive black swans.

The concepts in the book are good. For example the fallacy of trying to apply rational predictive tools, like normal distribution curves, to social science being one of the best ones. It is interesting with the current subprime mortgage issues causing roller coaster fluctuations on the market over the last couple of weeks: it reinforces that market experts have little idea about what is really going on.

I also like the concept that history is always written with 20/20 hindsight. NNT looks at diaries at the time immediately prior to WW1 which don't predict the turmoil, but to historians after the event it was all as plain as day as to what was happening.

The big problem i have with the book is that it is written in such a pompous and arrogant style. NNT isn't really trying to engage the reader, it seems he is trying to show the world what a superior individual he is to the rest of us. According to him he is a great mathematician, philosopher, writer, trader, statistician amongst the many other talents which he probably didn't have time to mention. This book could have been really good but unfortunately the author forgets that his readers are more important than him and while he leaves you slightly intrigued I found myself more frustrated and disengaged.

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.




.

Taleb has some fascinating thoughts on risk and predictions. Had there been an editor brave enough to delete the meandering anecdotes, attacks on every expert named (excpet Mandlebrot and, curiously, Malcolm Gladwell), the relentless self-aggrandizement, and barely concealed rage at those more famous than he, one might find two good chapters in here. Really, really good chapters. As it stands, your best bet is to skim, and not to look for the final summation chapter showing you how to apply this insight. Because it's not there.

Taleb(T)has written an excellent book that should be required reading for every social scientist who bases his theoretical analysis, empirical work,and applied policy recommendations on the presumed use of the normal probability distribution.The use of the Normal distribution ,usually applied by social scientists,especially economists and psychologists, without any type of goodness of fit test, to their time series data,is the major reason for the predictive and forecast failures that occur with regularity in the social sciences.Taleb's message is that accurate and reliable prediction in the social sciences is not possible because of what Schumpeter called the " regular irregularity "problem of not being able to know,due to changing expectations,what the process or mechanism generating the stochastic time series data is.The social data being generated by the interaction of the ever changing mix of relevant social variables over time is not stable,uniform,and homogeneous over time due to constant financial, social,technological,political, and economic innovation and advance(or obsolescence and decay).Taleb's message is practically identical to the one that John Maynard Keynes delivered to Jan Tinbergen in 1939 and 1940 in their exchange in the Economic Journal over the logical(inductive and analogical) foundations of econometrics.Tinbergen sought to use the method of multiple correlation and regression based on least squares.Unfortunately,least squares is based on the assumption of normality( assume a normal probability distribution).Tinbergen,in his lifetime,never provided a goodness of fit test demonstrating that the time series data was, in fact,normally distributed.

At a much deeper philosophical and epistemological level,T explicitly shows how the social sciences ,over the last 130 years, have failed to grasp the limitations imposed on these fields by Hume's problem of induction.All social sciences have the severe problem that the interactions of human beings with each other in their physical environment constantly creates new combinations of possible outcomes that are not predictable or forseeable.T is correct that this problem is enormous and can't be dealt with by assuming some kind of probability distribution a priori,especially when the generating mechanism for the outcomes is constantly being changed by the very interactions of human decision makers with eachother brought about by reactions to previous forecasts or predictions that may have had some degree of reliability in the past.

I have one minor bone to pick with T.This is T's decision not to explicitly make use of the extremely powerful results presented by Keynes in 1921 in his A Treatise on Probability.Keynes spent all of Part III of this book on Hume's problem of induction and his partial solution in terms of an interval based approach to probability combined with his concept of the weight of the evidence,w.w measures the degree of the completeness of the relevant evidence upon which the probabilities are being calculated.Keynes always sought to differentiate between the highly improbable and the highly uncertain(or highly ambiguous a la Daniel Ellsberg).The highly improbable becomes a severe problem in all social sciences precisely because the weight of the evidence in these fields is relatively low in general.w must have a weight of 1(w is defined on the unit interval between 0 and 1,0<=w<=1) in order to support the claim that the probability distribution has a particular shape(i.e.,a bell shape)that will be applicable in the future.The presumption that the shape is bell shaped rules out BOTH the highly improbable(which Mandelbrot has shown for over 50 years occurs much more often than would be predicted by a normal distribution)and the highly uncertain or ambiguous.The use of Keynes's TP would have added support to T's sound conclusions.Perhaps he is planning to write another book in this area which would explicitly take Keynes's work into account.

T has demonstrated that the social sciences,particularly economics and psychology, are a mess.These fields assume continuity,independencs,and stability,as well as the existence and uniqueness of supposed solutions without providing any empirical/experimental support for such claims.The entire foundation for social science must be rethought.The tool kit presently in use is not correctly measuring and/or describing what is actually occurring.Unfortunately,just as Keynes and Mandelbrot have been rejected,so will Taleb.This is because coming to grips with failure requires that the current practitioners realize that their methodology is not working and decide to change.This is precisely what these fields refuse to do and will continue to refuse to do.They will simply continue to catalog an exploding number of anomalies that future researchers will supposedly have to deal with.

-This is the first book I quit reading in more than a year.

-The author, a self-important fellow named Nassim Nicholas Taleb, is a lousy writer.

-I don't think you can use the word 'erudite' as a noun. As in, Larry Weasel is an athlete and an erudite. I looked it up; I am correct.

-The book is a one trick pony. Ok: until like 1910 the whole world thought that all swans had to be white, but then a black swan was discovered and everyone had to re-examine their premises. This doesn't mean that you have to write a book filled with vague references about Plato, Hume, Judaism, Umberto Eco, the Levant -- all in the first two chapters alone.

-He simultaneously calls himself a philosopher yet dumbs down -- and thins out -- the material until it's damn near unreadable. Philosophers don't use exclamation marks. Taleb uses five on every page. Philosophers also don't brag about how much they read.

-I'm not reading any more of this genre of book; no more Freakonomics, no more Long Tail, no more How Proust Can Change Your Life.

A poorly organized self indulgent book. An exercise in "proof" by anecdote and name dropping.

Added on 11 August 2007:

The book is still pretty and interesting at second read. I reread the book for doing a local review (for SWA - Famous Indonesian Business Magazine), and feel elevated again. I think i even grasp something more and enjoy it very much.

I come to think that most of things really do happen with some high portion of randomness. And the Black Swan is something that always happen even at the very small probablility.

Books often available a bit late at this part of the earth, except Harry Potter 7, haha so, I always review books that are somewhat a bit old ( give a couple of months before good selling books are imported).

This book is not easy to read, and does need some concentration. It has one big concept, the Black Swan, but has plenty of small anecdotal stories that wrap well around the whole narative.

If this kind of book makes the New York Time Bestseller list for quiet a while, it is definitely worth reading. Yah, BTW Nassim's success in wrinting is a Black Swan by itself.

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Original review:

The long awaited book after the Fooled by Randomness finally arrived at my lap (this is Surabaya, Indonesia) brought by DHL, such a happy moment. I have been afraid that the second book will not be as attractive as the former, but I m wrong! This one has a better NARRATIVE ;-), and still contain so much information and thoughts that often force you to put the book doen and think.

Fooled by Randomness is a Black Swan, so does The Black Swan, things Highly Improbable, a rare event, highly sellable book that is highly intelectual as well. The book contains Hume, Popper, Plato, Kahneman and Tversky, combined with Nassim own story and life. All deliciously weaved into a readable fabric that will glue you to your seat (or bed! In mycase) for days.

There are three type of books: The How To book, the book that will show you how to do something, The Motivational book aka Self Help, and books that "Change The Way You See Things", a perspective change book, such as this one. Books that make you rethink your own perspective and change the way you see life.

With strange chapter title like "Umberto Eco's Antilibrary" (How to seek validation) to "Living in the Antechamber of Hope", you got a chockfull of delicious stuffs, in a sense like "Bitter Sweet Chocolate" ( and NOT Milk Chocolate), which for certain type of people will be the ultimate delicious read.

A warning: this is not an easy read in the usual term, although that this is an easier read compare to Fooled By Randomness and I predict that this book will go to the "best selling" fame and glory. You have to digest and think to get the full impact. For easier read, you can read "The Halo Effect" (finished in a day) which is also a great book with similar line of thought.

I thank Nassim for such an enjoyable reading week ( I read fast, yet it took a week, to finish this) which has sharpen my mind and see life in a more "correct" way. My wife keep complaining that I mention too much of "Randomness" and "Black Swans" lately during our life's activities. Gosh! The Effect of a great book.

Just listen to the publishers silly gushings:

"Taleb . . .administers a severe thrashing to MBA- and Nobel Prize-credentialed experts . . . roller-coaster passages, bordering on gleeful diatribes, on why experts are wrong. They neglect Taleb's metaphor of "the black swan," whose discovery invalidated the theory that all swans are white."

It's the poor Black Swan that takes the drubbing, beaten to senselessness by Taleb's tedious and rambling imputing of gravitas to a rather banal point of view. It was, for example, not at all a theory that all swans were white, it was an observation. So when a black swan showed up thousands of miles away, it did not turn science or anything else on its head, great thinkers did not leap from tall buildings, science was not reduced to a shambles, though Taleb would have us think so. That the appearance of occasional 'outliers', some of historic significance is the true engine of history is central to Taleb's thesis. If this perspective excites you, go ahead, read and admire it. As for me, I want my money back.

I would given this 2 stars for effort, but the author and publisher have already given this book way too much credit, so subtract a star for hubris.

Not since Gregory Bateson has a writer elucidated that how we look at the world can cause focus on the wrong things and thus be drawn to irrelevant, incomplete or incorrect conclusions that carry consequences both large and small. For Bateson focus needed to be on 'relata' rather than things. For Taleb, it is studying extremes rather than central tendencies.

For me, both add immeasurably to the discussion as to how the world may actually work. Thank you Mr. Taleb for taking the time and trouble to engage us in explanation and exposition.

It takes Nassim Nicholas Taleb almost 300 pages to say the following: "$@&% happens. And if you use the classical bell curve to predict when $@&% will happen anywhere outside of a casino, extreme $@&% will happen more than you would expect and you could be hurt by it".

That's it. Read the book if you must, but I'm saving you the cost, and pain of having to find this out yourself. The rest of "Black Swan" is just pointless pontificating by an ego with a 2 book contract whose ideas ran out 3/4 of the way through his previous book.

How I got here:
Reading John Robb's excellent "Brave New War" left me with a real desire to research the references he used in its creation. Taleb's "Fooled By Randomness" and "Black Swan" articles were among the references listed. I read "FBR" first and found it very enjoyable, informative read. He introduced the black swan concept in that book, and it was self-explanatory within the context. I picked up "Black Swan" to complete the set of Robb's references.

The review:
"Black Swan" is labor to get through. I had to force myself to finish it, where "Fooled By Randomness" breezed by. Not that it is difficult or too abstract. It's just tedious. Poorly paced, loaded with filler and pointless autobiographical notes, scattered historical references without much relevance to the topic at hand.

There were exactly 2 real-world relevant points in "Black Swan". The first is that in order to protect against financial black swans, individual investors should allocate funds according to their desired risk level, with a majority in safe havens like T-bills, with a small stake in high-risk, high-yield areas. For all of his years in the finance community, Taleb spouts wisdom you can read on a brochure for Fidelity Investments.

His second piece of advice was in a foot note, that as of 2006, he thought Freddie Mac was going to fail. Again, I'm just a nobody, but I saw this in 2003.

Really, the rest of the book is an ego stroke where Taleb uses the book as a sort of "magic mirror" to ask the audience to tell him "is he not the fairest of all?".

Historical figures and movements like Sixtus Empiricus and his Pyrrhonian skepticism, Henri Poincare and Bertrand Russell are mentioned but how they are integrated into the concept of extraordinary events happening in life beyond an "it's better to reserve judgment because you just... can't... tell.. what... could ... happen". Why bring these people in? Were they the only skeptics who advocated such thoughts? Or were they chosen to emphasize a fault in the author? (Ah ha! See my "Sins of the author point #3)

The author's sins:
But really, what put me over the top was his sloppy egotism. After the success of "FBR", Taleb must've thought he could stretch the black swan concept into an entire book. But once he got into the actual job of writing, he found he had to pad the text with many of the sure signs of reading an egomaniac's work:

1. The author refers to himself in the third person. Several times, Taleb asks himself questions "If you ask me, 'NNT, what should I do?' Well, the answer is clear ..."

2.The author uses archaic terms to describe his ancestry, to enhance his social standing. Despite clearly stating growing up amid the Lebanese Civil War, Taleb insists on calling himself of "Levant origin". While this is technically true, it's an obscure term in modern language used mostly in archaeology and history to describe the region during the Crusades. It's similar to the way that modern Iranian expatriates insist they are Persian, and not Iranian, thus creating a more romantic and mysterious character. Taleb intentionally uses "Levant" to conjure up a time when the eastern Mediterranean was populated by "gentlemen of leisure" with a high social standing, and not "Lebananese" with all of the current western-associated imagery that goes with it. I see it as a pathology of self-loathing to not admit the country you came from. I don't walk around saying I'm Prussian because I find it more romantic than saying I had German grandparents.

3. The author paints himself fighting a lonely fight against "the man/the system/the machine". What a load. Countless examples in "Black Swan" of Taleb being a rebel for the sake of being a rebel grow so tiring and again, pointless. "I never wear neck ties at my job." "I don't read the newspaper." Super Taleb. Fight the power. What about black swans again? Even his historical references are chosen to be figures who were seen as rebels in their time, because they advocated a viewpoint contrary to at-the-time popular dogma. His choice may also be almost deliberately obscure, to invoke a "I know someone you don't" childishness.

4. The author goes to lengths to paint himself as a man of the people. His assertions about of his choice of friends and who he spends his time with (and thus, implicitly assures the reader that this person is therefore more worthy of success) are "Brooklyn types" rather than stuffed-shirt Ph.Ds who Taleb imagines deserving nothing better than "a rat stuffed down their collar". This seems more Homer Simpson than "Wall Street wizard". Within the context, I understand his 2-D caricatures, but where he goes at great lengths to invoke complexity into everyday life, to paint personalities with such flat, stereotypical attributes is almost insulting. It's hack writing at best.

5. But still the author is a stuffed shirt who knows much cooler people than you do, dear reader. Guess who hung out with Umberto Eco? Benoit Mandelbrot? Various Nobel laureates? Not you. Taleb. Uh huh. Taleb, can we force you to take your arm and stop patting yourself on the back and use it to write something worthwhile? Pretty please? With some Brooklyn sugar on it?

There are more, to be sure, but let's just leave this review at "Read 'Fooled By Randomness', skip 'Black Swan'"

An interesting but somewhat obvious thesis: highly improbable events with a large impact play a large role in the world; because of this the future is impossible to predict (the 1987 stock market crash, the fall of the USSR, the rise of the internet, etc). NNT (as he refers to himself) provides a lot of interesting examples and shows clearly how 'risk management' is generally a fraud.



He attacks economics and economists for their heavy reliance on mathematical techniques that bear little resemblance to reality. He nicely shows the ridiculous assumptions made by economists, giving an example of a Nobel laureate whose model didn't match the facts. But since the model used elegant mathematics, he received the Nobel.



However, too often he says it's relatively straightforward to prove blah blah blah, but then doesn't. We're supposed to take it on faith that he's got some proof for his claim. Also, he annoyingly talks about how much smarter he is than everyone else, disparaging everyone he can think of. NNT's ego gets in the way of much of the book. This windbag could have written a 100 page book just as effectively, but clearly likes to hear himself write being so impressed with himself.

very difficult to follow. very disjointed writing. a poor follow up to fooled by randomness. reminds me of a music group with a great first hit single - the next song is a flop and the group never achieves the same results. but of course there was no reason to infer that since his first book was excellent, the second would be the same. the black swan is an example of taleb's very point about the pitfalls of inductive reasoning. but it's not like he had 10 bestsellers and this the eleventh was a failure. the flop of the second novel by the fictional author in the book is a fitting end to this book. or maybe i just missed the point of it all

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.

As most movie goers have from experience, most sequels are o.k., but rarely better. In the case of "The Black Swan", I can clearly state, as others have, that Mr. Taleb pulled the rabbit and bettered his earlier "Fooled by Randomness" which was already a great book on uncertainty and failures of Gaussian (i.e. Bell Curve) probabilities as an application.

Though the Bell Curve can explain many activities that are in relative equilibrium, it does not fit well with real day-to-day observations like the weather, markets, wealth distribution, bacteria growth, and etceteras. That is because we live in a world that is getting more complex and more "recursive" (i.e. contains feedback loops) every day. As the recursiveness gets more intertwined in society, the power laws tend to place us in the critical state which is a prime and fruitful place for Mr. Teleb's Black Swans. The fruitful place discussed is in Extremistan and far away from the Gaussian place that many (if not all) of us have been taught much of our lives. Within Extremistan, thought models of 4,5, or 6 sigma events are not applicable and lead one into a false sense of security.

As our world in which our evolutionary machinery has made us gullible to many topics as examples of, anchoring, narrative fallacy, confirmation errors, envy, and combinational probabilities (as well as many others), knowing that we don't know what we don't know is a start in the search (and protection) from Black Swans. If you liked the 1st book, you should love the sequel as a more critical narrative will keep you entertained for hours and hopefully better prepare you for a more recursive society to come.

There's no doubt that Nassim Taleb is a brilliant man. And, there's no doubt that he is frustrated by having to work among people who don't get it. What is there to get? Simply that the quest for certainty -- through mathematics, science or other logic disciplines -- may end up being the very thing which obfuscates the truth; that we end up not being able to see the forest for the trees. I think what he is saying is that there can never be certainty; that there will always be Black Swans...random events.
The reason why I say "I think" that is what he is saying is because there is so much stuff here -- a lot of which is totally irrelevant. He talks about his home town, seemingly just to wax nostaligic, though he may use the vignette to talk -- belaboredly -- about a point. Among the other stuff he presents is: an unusally high regard for the French language; too much - again irrelevant - reference to and back-story about thought leaders, and; palpable disdain for some colleagues in the quantitative field. If you can get through all of that and hold on to the nuggets, though, you will see some fresh thinking. Just his distinction between 2 different systems of thought is worth the work required. There are other presentations which may shift the way you think about things, too. In the end, it's worth reading, but you will have to focus on what's important because he doesn't.

So there are a few decent ideas in this book; it's just too bad that the author takes a million pages to make some rather simple points.

Yes, I was aware of basic psychological biases that humans have such as the recency bias and conservatism bias.

No, I don't care about NNT's childhood story, which he goes on about for pages on end to illustrate some simple points.

Lastly, NNT likes making up words and phrases that often include Latin words to explain his ideas (which aren't even new). This really over-complicates some basic points.

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.

The concept is useful but delivered in a very wordy and condescending manner. It felt like I was back in college sitting through a rambling lecture by an absent-minded, self-absorbed professor (terrible flash backs!). The whole book could have been 100 pages without losing impact or meaning.

Most investors understand and accept the persistence of fat-tailed return distribution. Not so difficult. So why does he go on as if most people don't get the concept...

Anyways, I am curious as to how he invests for himself given what he preaches. How good is his track record, or is he all talk... In his next edition, he should add just one more page in this painfully drawn out book and publish his personal track record...the way Warren Buffett and Joel Greenblatt do.

Taleb has an important but rather simple message to deliver. It can be summed up in three words: Rare events happen. That was the point of Fooled by Randomness (which is a better book), and it is the point here.

Once this main point is made (and it is irrefutable), there are any number of embellishments, examples, and explanations that can help the reader round out his or her understanding of the concept. This would be a 5-star book if the author had written it to help the reader understand the basic concept and its implications.

Instead, the book reads like an ego trip. His delivery is maddening. He seems to be filled with anger. The book viciously attacks many well-meaning, competent people in academia, finance, science, and other fields for no apparent reason, other than that they don't see (or agree with) his point.

For that reason, I found the book hard to read. Some reviewers have called it funny; I found no humor in it. Instead, what I found is an author who clearly thinks he is smarter than everyone else and allows that to get in the way of clarity. He seems to take joy in belittling those who "outrage" him by their stupidity. (Really, what kind of person gets "filled with rage" over others being unable to see an academic point?)

Another quality that makes this book hard to read is the deliberately opaque way that Taleb chooses to make many of his points. If there is a straightforward way or an obscure way to make a point, he consistently selects the obscure way...using unfamiliar references, saying "secundo" instead of "second," inventing a non-existent author to make a point about book sales rather than choosing a real-life example, and so on. Taleb seems to think such writing is "erudition" (a quality he clearly admires). I believe that it puts an unfortunate academic-style veil over the book.

I've learned from both of Taleb's books--Fooled by Randomness and this one. I've learned not only the main point--that rare events happen, and they happen more often than we usually expect--but I've also learned something about how not to write. Writing I most admire is deliberately written to be understood, not to get in the way of understanding.

After hearing of "black swans" at a highly informative seminar about the current financial crisis I was eager to read about the highly improbable. What a disappointment.

Little in BS is new. Almost all of it can be explained by the common notion that our brains grew up on the Plains of Natural Selection in East Africa and aren't ultra-rational computers smoothly dealing with the complex world around us. Onto the "deficiencies" of our frontal lobes the author bootstraps a cute image, that of the black swan. Turns out -- it's hard to make this stuff up -- the black swan isn't even a swan.

What is shocking about BS is the sheer avalanche of unsupported preaching that spills out paragraph after paragraph, section after section, chapter after chapter. The reader who instantly and uncritically agrees with the author is encouraged to pat herself on the back for being as brilliant as the author clearly feels himself to be. The reader who says -- over and over again -- "And you back this up with--what?" is roundly condemned. Fortunately, such condemnation puts one in good company as, well, everyone who doesn't agree with the author is an idiot.

The emotionality in the book is fertile ground for wonderment. When was the last time you started writing words like "scorn" on your bookmark and then, with hash marks, kept track of the number of times the word was used? First-year clinical psychology students would have a field day with BS. The answers to "What is the author revealing about himself?" would make fine reading.

In sum, I am bewildered as to how this book captured anyone's imagination. It is, in a word, trite.

Of course, I'm one of the idiots who can't park my skepticism and uncritically swallow BS.

Dr. Kirtland Peterson

I bought the book because it is on best selling list, 4 stars and an interesting topic. However, quite a disappoinment. The black swan idea is quite refreshing but it is revealed completed in the first 20 pages. The rest are just repeative garbage.

I guess the author needs to make a living too and he is obviously paid by the number of pages. He simply turned a good article into a over-weight book.

There are some great ideas in this book, but in my mind, there's too much fluff as well. Some of the personal anecdotes are amusing, but there are entirely too many - and too many created characters who don't serve any real purpose.

I feel like the message is dumbed down too much. Clearly the author has a great deal of disdain for the way many people view the world, but too much of that contempt keeps getting in the way of the story. I started to get the feeling that the author felt his readers needed to be beat over the head with his points. The points can be interesting, but just explain them to me, don't give me a bunch of 2-dimensional characters to show a simple example.

Further, I want more depth, and more insight. The ideas are there, but they could have been explained in 10 pages. Use the rest of the book to explain the implications, and how we can use this knowledge in real life. There were too many diatribes against Nobel winners and foolish economists, and too few insights, such as putting a lot of money in Bonds and a little in highly risky stocks.

Some good ideas overall, but it could have been so much better.

Much of the material is valid and enlightening; things you should really know. Sadly, the maner of presentation was too difficult for me to bear. On nearly every paragraph, the author wants to tell you that he is enlightened and everyone else is foolish. The anectodes about life in Lebanon and jokes about Frenchmen were amusing but distracting. The author's overly frequent references to himself made it hard for me to focus on the topic at hand.

Taleb is insufferable. His writing meanders around in a sort of self-absorbed epiphany, from his life story, about which he appears to have almost no self-awareness, by way of his intolerant ravings at various Nobel laureates for their blindness to their own fallibilities, a trait he shares in spades, to at last some extremely thought provoking notions on the uncertainty of things. If you can wade through all the former, you may well be rewarded by the latter. But it is a tough slog. His earlier "Fooled by Randomness" was a much better book. His ideas were less developed but at least he seems to have had an editor who insisted he write for the reader.

As with many post-modern works this volume promises far more than it delivers; a glimpse of wisdom but never anything we can really use. The Black Swan is merely the unanticipated event that screws things up royally. Taleb, Professor of the Sciences of Uncertainty, is copious with references but thin in his digesting or explanation of many. I cannot exchange one-on-one with Taleb on the tails of the financial market changes he's most concerned with but I have read his book and must admit the second half was so aggravating I was dreaming of this review.

He is correct suggesting that the media is irritatingly compelled to give, often silly, "explanations" for every Dow fluctuation. The evening news is not science. I'm convinced that daily market fluctuations are more due to people, like Taleb, traders, playing with models or guesses trying to hit it big with other peoples' money than media reasons. Randomness and distributions are involved with more than the stock market, statistics and philosophies. My problem with this book is that Taleb throws out everything and replaces it with nothing. The title invokes the wrong species; it seems clear that Chicken Little and the Impact of the Highly Improbably is a much more appropriate title.

Anyone who has tracked data (any kind, your weight, S&P500, maximum temperature, rainfall, or gasoline prices) over any amount of time knows that the progression is seldom smooth. This is particularly true when tracing the values of individual firms; which is one of the devises used by Taleb to make his points. If a particular investment firm goes belly up because they adopted an extreme strategy, honest or not, why throw out all strategies? If you want very much higher than average returns on your investments, then you must incur higher than average risks; meaning, without statistics, that your down side can be significant. But, if you're targeting average or slightly above average returns, there are strategies Prof Taleb doesn't explain except to reject in blanket fashion. Perhaps it's a statistical unworthy ancestor but why is there no mention of the central limit theorem? Gaussian, certainly but evidenced as well. Yes averaging minimizes the extreme; dismissed as "grey swan." He purposely avoids even basic technical definitions, relying on flip condemnation. But, I care less about the rarified investment world that Taleb seems obsessed with, or his lack fit with the philosophers. I find the most egregious prose in this book is leveled against "social sciences" although Taleb exhibits virtually no knowledge of the subject, not its depth or especially its range.

Consider the question of forecasting the traffic levels on a road system in Taleb's home area. This is an area of statistical forecasting shared by civil engineers, planner, geographers, and yes, economists. Taleb will prefer to drive his BMW (why am I certain he drives a BMW?) on roads whose planners have anticipated the traffic levels with a high degree of accuracy for those average days he drives to his editor to discuss profits of his newest book. The planners, indeed Taleb, will be most interested in the normal day not the one day when 12 inches of snow falls or when the unexpected meteor crashes at the end of his driveway. He will listen to the news and realize 12 inches of snow is coming, perhaps he should not venture out, or he'll creep along cursing the weather station. Or, in the second case, he could be squashed by the meteor. We live, everyday, with average and normal conditions and behavior; many of us, social scientists, meteorologists, planners, just regular people try to cope with the normal operations of society, not the unanticipated extremes of the distribution. We plan for tomorrow not someday when the "sky may fall." Yes, some days we get it wrong but most we get it right or at least come close. Being ready for the extremes is meaningful, and the notion I thought this book was going to be about, but the normal tomorrow is what I train people to deal with.

I recognize that there are extreme, powerful, random events; Taleb, rightfully, keeps coming back to war; he perhaps was closer to it than many. But, if by definition I can't predict the events or change them, what should I do? Taleb, having said I should reject virtually all "science" that helps me predict the normal, the average, and at least some of the fluctuation, advises me to be "noncommoditized in [my] thinking" and to not be a sucker. More than "postmodern" Taleb is also elitist in that he draws our attention to the positive Black Swans in that we "want" to have the benefits of picking the great new stock before it's great. He want us to recognize that the positive Black Swans are "random" and focus less on the negative Black Swans of normal process. The idea of civilization is based on a society protecting itself from the random insults of the real world. Taleb maligns social science but ignores the underlying forces of civilization - to provide protection from extreme hurt to those who don't deserve it. Indeed, the whole notion of a progressive income tax is societies way of dealing with the everyday black swans, so are dams, guardrails, and a host of normal projections of the possible. Taleb seems more concerned for the losses/gains of the super-rich.

Prof Taleb, you have told your reader to throw out most statistical theory. How have fractiles helped you cope with war? Or, better to end it? The posture of this book I contend, is "post modern" and irresponsible. I'm tempted to look at your Fooled by Randomness because I suspect you may have stretched what was left of your idea to write this one, The Black Swan, is too thin of content but way too dense of attitude. Like I said "Chicken Little" not swan-like at all.

First the negative points : loose structure, mixed styles (feels like a scientific/philosophical/narative essay à la Kundera), and very condescending and pretentious. This is pretty much a "look how brilliant I am" kind of book with lots of name dropping and personal anecdotes, but it is nonetheless fun to read if you want to think a little while you're flying to the beach. However, Taleb's lack of focus will eventually get to you, and you'll be back in a few hours after a good nap.

You'll find some interesting points on complexity economics and some wordly wisdom too. But if these two subjects are of any interest to you, I would rather suggest Eric D. Beinhocker's "The Origin of Wealth" (very rich, well structured and arrogance-free), and Charlie Munger's "Poor Charlie's Almanak" (not arrogance-free, but in a way that is actually funny and with a very convincing scorecard to back it up).

While reading Taleb's "The Black Swan," I cannot be as excited as many of those who see this as a breath of fresh air, as a new way of looking at things. The central point being made by Taleb is quite on target; there are unpredictable events that can occur that simply cannot be anticipated or predicted. We are too often overconfident in our ability to predict and try to shape the future. But I do have questions about his book. First, his thesis is hardly novel. Robert Nisbet (a social scientist, a species of being beneath contempt in Taleb's universe) said essentially the same thing over thirty years ago (Quoting from his "The Year 2000 and All That"):

"It is very different with studies of change in human society. Here the Random Event, the Maniac, the Prophet, and the Genius have to be reckoned with. We have absolutely no way of escaping them. The future-predictors don't suggest that we can avoid them or escape them. . . . What the future-predictors. . .say in effect is that with the aid of institute resources, computers, linear programming, etc., they will deal with the kinds of change that are not the consequences of the Random Event, the Genius, the Maniac, and the Prophet [which sound like black swans to this reader]. To which I can only say: there really aren't any; not any worth looking at anyhow."

That's the basic point of Taleb's book, so he's not exactly breaking new ground. Taleb says on page xxvii that he's sticking "my neck out" to claim that "our world is dominated by the extreme, the unknown, and the very improbable. . . ." What sticking out his neck? A well regarded academic said much the same thing thirty years ago and, to the best of my knowledge, Nisbet wasn't perceived as "sticking his neck out" or punished for his apostasy.

Second, his presentation misses the point on a number of matters. He mentions the punctuated equilibrium approach to evolutionary change. This view contends that there is stasis over long periods of time and then a quick burst of evolutionary change. Taleb focuses, in this book, on such punctuational events. However, most of the time, there is stasis. We cannot simply ignore what is normal over long periods of time and only focus on those rare black swans that transform things. Take elections. For a period of time, there is predictability in electoral and party dynamics. Then, every so often, for reasons that can't be predicted beforehand [a black swan event], the electoral and party system changes in a relatively short period of time. Does that mean we should ignore "ordinary politics" associated with "calm political periods"? No, that's absurd--but that's also Taleb's argument. We should ignore "central tendency" (in statistical terms) and only consider outliers (extraordinary events)? That doesn't make much sense.

He also cites people who actually undermine some of his arguments. Kahneman's work on cognitive biases is very important and supports well the book's argument. But Taleb cites (but does not discuss in detail) Gigerenzer, who argues that heuristics and cognitive biases, as a result of evolution, are very accurate, contrary to Kahneman's work. Since Taleb cites Gigerenzer, he ought to note that the latter's view of cognition moves in a different direction, in opposition to the book's thesis. In contradiction to Taleb's discussion on pages 81-82, Gigerenzer argues that intuition is at least as valid and accurate as the cognitive, thinking system.

Third, as a number of reviewers note, there's a lot of anger in this book. Sarcasm and venom directed at entire professions based on an isolated anecdote here or there seem to run against the author's own arguments about how we ought to make decisions. In Kahneman's terms, Taleb falls prey to the "representativeness heuristic" [overgeneralizing from small sample sizes], falls prey to the "availability heuristic" [using whatever vivid examples come quickly to mind, such as the dopey political scientist wed to game theory--as if this justifies dismissing the entire discipline from one example], and he obviously falls prey to "confirmation bias" since he does not challenge his own thesis and try to falsify it but focuses instead on providing evidence to support his perspective [RIP his devotion to Karl Popper]. His snide dismissal of thinkers like Wittgenstein tends to be theater with little substance. If you want to trash someone, provide some reason and logic for doing so. And while I agree with many of Taleb's criticisms of thinkers and systems of thought, I am unimpressed with his snide put downs that don't advance understanding.

Fourth, he tends to set up "straw men" and then demolish these. For instance, he criticizes planning. The idea of planning covers a lot of territory--from the old Soviet plans to strategic planning. The former? His analysis is right on. The latter? If done well, strategic planning is a boon for an organization and he is not accurate in his judgment. His statement on planning is so broadly stated that it becomes close to meaningless.

In the final analysis, the author advances a provocative and useful thesis. Black swans are important factors in change processes. How we humans deal with the world tends to make us oblivious to rare and unpredictable events and their consequences. Very good points. However, this is hardly a unique insight. And the supporting logic and rationale is sometimes not so compelling; a focus on the outliers and an exhortation to ignore the routine is unconvincing. His style of argumentation by dismissal rather than by addressing concrete ideas and theories with which he disagrees is not helpful. So, it's an intriguing book, but it has problems that the reader needs to evaluate.

I recently watched an interview with the writer on a TV show I respect, so I decided to read this book. I expected arguments about why and how we, humans are limited in our ability to really know the world around us and hense cannot predict events until they hapen. Seems this book is more of a venting of the author's frustration of the impredictability in the business world. I don't have any interest in business, so I don't know if the book's conclusions are applicable to it. Being closer to the world of phylosophy and science I can say his arguments are out of place. The world around us is not random as the writer would have us believe. It only looks random if we don't know enough about it. Scientists were able to "predict" the existance of planets, elements, bacteria based on their effects on their surrounding environment even when they could not observe these objects directly. They could not scientifically "predict" the black swan because there was no data of its existance direct or indirect. In chemistry, biology, medicine and psychology we can "predict" what will happen because we have good understaning of the underlying processes. Many times we understand the cause-effect mechanism only after the event. In retrospect neither 9/11 nor the success of Google were "impredicatble", they just looked very unlikely. Maybe we just don't know enough about economy to predict the market.

A fine antidote to gullibility - A Must Read!

According to critic Harold Bloom, Hamlet's predicament is not "that he thinks too much" but rather that "he thinks too well," being ultimately "unable to rest in illusions of any kind." The same could be said for philosopher, essayist and trader Nassim Nicholas Taleb, who finds something rotten in misguided yet supremely confident investment gurus, traders, hedge fund managers, Wall Street bankers, M.B.A.s, CEOs, Nobel-winning economists and others who claim that they can predict the future and explain the past. Like everyone else, says Taleb, these so-called "experts" fail to appreciate "black swans": highly consequential but unlikely events that render predictions and standard explanations worse than worthless.

Talebst book starts with this: Before 1697, teachers confidently taught European schoolchildren that all swans were white. They had little reason to think otherwise, since every swan ever examined had the same snowy plumage. But then Dutch explorer Willem de Vlamingh landed in Australia. Among the many unlikely creatures down under - odd, hopping marsupials called kangaroos, furry duck-billed platypuses, teddy bear-like koalas - Vlamingh found dark feathered birds that looked remarkably like swans. Black swans? Indeed. Once observed, they were as unmistakable as they had been unimaginable, and they forced Europeans to revise forever their concept of "swan." In time, black swans came to seem ordinary.

This pattern is common. Just because you haven't seen a black swan, doesn't mean that there are no black swans. Unlikely events seem impossible when they lie in the unknown or in the future. But after they happen, people assimilate them into their conception of the world. The extraordinary becomes ordinary, and "experts" such as policy pundits and market prognosticators kick themselves because they didn't predict the (now seemingly obvious) occurrence of the (then) unlikely event. Think of the advent of World Wars I and II, the terrorist attacks of 9/11, the popping of the 1990s Internet stock bubble, or world-changing inventions like the internal combustion engine, the personal computer and the Internet. Cultural fads like the Harry Potter books are the same. These events and inventions came out of nowhere, yet in hindsight they seem almost inevitable. Why?

The human mind is wonderful at simplifying the onslaught of today's "booming, buzzing confusion" of data. This makes perfect sense: After all, the brain is the product of evolution, which works with what it has, and so it has not crafted some new, ideal cognitive mechanism. The human brain is a marvel, but it is built for living in hunter-gatherer groups on the African savannah 200,000 years ago. Then, it just needed to be good enough to allow humans to survive until they reached reproductive age. Simplifications, mental schemas, heuristics, biases, self-deception - these are not "bugs" in the cognitive system, but useful features that allow the human mind to concentrate on the task at hand and not get overwhelmed by a literally infinite amount of data. But human simplifying mechanisms are not without their costs. Take stories, for example.

Stories help people remember and make sense of the past. Think of a typical business magazine profile of a successful businessman. The story begins in the present, after he has become rich beyond his wildest dreams. The story then cuts back to his humble beginnings. He started with nothing and wanted to get rich (in terms of story structure, his "dramatic need"). He faced obstacle after obstacle (perhaps he had a rival - the "antagonist"). But he made shrewd decisions and flouted the wisdom of the Cassandras who counseled caution ("Idiots!"). As success built on success, he amassed a fortune. He retired early, married a model and now has brilliant children who play Chopin blindfolded and will all attend Ivy League colleges. His virtues will be extolled in a B-School case study. Wide-eyed M.B.A. students will sit rapt at his feet when he visits their schools on a lecture tour promoting his latest book. He is a superman, an inspiration.

Now consider an alternative hypothesis: He got lucky. His putative "virtues" had nothing to do with his success. He is, essentially, a lottery winner. The public looks at his life and concocts a story about how brilliant he was, when, in fact, he was merely at the right place at the right time. This is the "ludic fallacy" (ludus means game in Latin): People underestimate luck in life - though they ironically overestimate it in certain games of "chance." Even the businessman himself falls victim to flawed thinking through the self-sampling bias. He looks at himself, a sample of one, and draws a sweeping conclusion, such as, "If I can do it, anyone can!" Notice that the same reasoning would apply had he merely bought a winning lottery ticket. "I'm a genius for picking 3293927! Those long odds didn't mean a darn thing. I mean, after all, I won didn't I!"

Not all success is luck. In some professions, skill matters (for example, if you are a dentist), but luck dominates in others. In the case of the inspiring businessman, consider his population cohort. Where are all the similarly situated people who started out like him and have the same attributes? Are they also rich? Or homeless? Usually you can't find this sort of "silent" disconfirming evidence. Artistic success provides a perfect illustration. While Balzac is famous now, perhaps countless other equally talented writers were producing comparable work at the same time. Yet their writings are lost to posterity because they did not succeed. Their "failure" hides the evidence that would undercut Balzac's "success" as a uniquely great writer. The evidence is silent, lost in the graveyard of history.

The mind uses many more simplifying schemas that can lead to error. Once people have theories, they seek confirming evidence; this is called "confirmation bias." They fall victim to "epistemic arrogance," becoming overconfident about their ideas and failing to account for randomness. To make their theories work, people "smooth out" the "jumps" in a time series or historical sequence, looking for and finding patterns that are not there. Their conceptual categories will limit what they see; this is called "tunneling." They turn to "experts" for help, but often these expert opinions are no better - and often they are worse - than the "insights" gained from flipping a coin or hiring a trained chimp to throw darts at the stock listings. Worst of all, people steadily fail to consider "black swans," the highly consequential rare events that drive history.

Taleb's style is personal and literary, his heterodox insights are rigorous. This combination makes for a thrilling, disturbing, contentious and unforgettable book on chance and randomness. While Taleb offers strong medicine some readers may find too bitter at times, we prescribe it to anyone who wants a powerful inoculation against gullibility. One of the best non-fiction books of this decade.

... but Dr. Taleb goes too far by claiming that the quantitative analysts, including statisticians, are (or even were) mesmerized by the Gaussian curve or any other quantitative concept, for that matter. Even the undergrads here at Purdue are taught to understand that the mean and standard deviation are not always descriptive of the distribution and that a single outlier can have a great impact on the fit of simple linear regression. As for PhD-level people, there are enough of us able to handle data with care and who are well aware that Pareto & Barabasi is not a cool label of Italian fashion. By the way, how come that Extreme Value Theory (at least 60 years old) is never mentioned in the book dedicated to the extreme?

I don't believe that such people as Markowitz, Scholes, or Samuelson thought even for a second that their job was to create models that would alleviate the hardship of the long-suffering investment banking community. That was never a requirement for academic promotion or the Nobel Prize, which was their ultimate goal, whether they admit it or not. Therefore, any "quant" who took those models at face value deserved all he got.

Most importantly, I believe such misguided model-worshippers have always been few in the industry, especially after 1998. MBA graduates, too, have enough sense to know what is what even after being through a Modern Portfolio Theory course. Courses like that, according to Dr. Taleb, have to be wiped out along with the academic disciples of Markowitz and Samuelson. But will that "ethnical cleansing" do any good?

Perhaps the sad truth is that in the industry both MBAs and PhDs quickly realized that claiming they can quantify any financial product generates a fat stream of immediate bonuses, although at the expense of possible (but surely very distant :) blowup. If that is the case, all those people consciously use bogus models as a front. Hence, contrary to what Dr. Taleb thinks, Nobel Prize winners and their followers in the academia are hardly to blame. So, why don't we leave the distinguished professors alone and turn to those who set the malign short-term incentives in financial institutions.

P.S. Shaping the Next One Hundred Years: New Methods for Quantitative, Long-Term Policy Analysis can be seen as a great sequel to "The Black Swan".

Nassim Nicholas Taleb is, in equal parts, enthralling and utterly infuriating. He has written a book so sure of its own certitude, that has one effective lesson: there can be no certitude. Taleb makes the enormous mistake of believing (and saying) that he's solved the eternal verities - that after millennia of philosophical, ethical, political, economic and social debate: thrust and counter-thrust - that mathematics and physics can save the day.

While there is certainly value in this book - if you can bear the cloying self-regard with which it is expounded, it's a pretty ripsnorting read - Taleb is also very, very inconsistent (or confused) about some very, very fundamental things which he doesn't seem to have read or thought nearly hard enough about. Early doors he praises the virtue of having unread volumes on the shelves of ones library: I was continually struck that it was a pity Taleb hadn't dipped into one or two of them along the way.

Firstly, he calls himself a philosopher and an intellectual, but writes off people who "took too many philosophy classes" or "read too much Wittgenstein", and who may therefore be under the impression that language problems are important, when infact such intellectual niceties have "no serious implications".

This, naturally, makes him look a bit of a Philistine, which would be okay, were it not to bear directly on the content of his book. The principle problem which Taleb sets out to solve is that of the misleading narrative discipline. Better familiarity with Wittgenstein might have helped him here. The Continental view is that we *cannot* make sense of with the world but through one or more narratives. Our daily labour is to untangle and jury rig all our working narratives so they can steer us in a broadly satisfactory path through the data. "The Truth" doesn't exist independently of our relationship to the physical universe, but rather is a function of our narratives. Narratives can't get in the way of truths; narratives are containers in which truths are packed and brought to market. Taleb might not like Platonicity, but it is the human (Humean?) dilemma that we're stuck with it.

This might seem a petty, arcane, weekend-ish sort of objection, but I don't think it is. In overlooking this, Taleb fails to recognise that beloved physics and mathematics, by which he would sweep aside the dismal gaussian-inflected social sciences, are simply narratives themselves, with no epistemic priority over the social sciences (the priority that he cites is - must be - a narrative!). Indeed, he calls himself an "sceptical empiricist", but conveniently overlooks that the social scientists tend to be far more enthusiastic collectors of empirical evidence than physicists (a point made eloquently by in a recent book by Nancy Cartwright).

Taleb's narrative is a rather quaint (and I would say uninformed) form of essentialism: He is a thorough-going reductivist who says things like "one may have a million ways to explain things, but the true explanation is unique, whether or not it is in our grasp" and seems to take it as read that all true learning, reduces to and can be extrapolated from a few essential, internally consistent logical truths.

Pragmatists like Thomas Kuhn and Richard Rorty(doubtless volumes on his Eco-esque Anti-library: his reading in the philosophy of science seems to have stopped at Karl Popper) had a radically different (and to my mind more compelling) view about essentialism, but would agree about the pitfalls of what he calls "Platonicity", but would mark them down as facts of life. Taleb, curiously, isn't entirely antagonistic to Platonicity, and is happy enough to fall into it when it suits him (reductivism/essentialism about science is hard core Platonicity, in this humble reviewer's opinion).

Taleb is also a contradictory on the value of the narrative. For example, he rails at length about Platonocity - to mistake the map for the territory - by dint of which we privilege "crisp constructs" over "less elegant objects with messier and less tractable structures": this is the sort of data compression that encourages the observation of "fraudulent" gaussian distributions - yet uses the opposite argument when warning against overly-detailed empirical "knowledge": "listening to the news on the radio is far worse for you than reading a weekly magazine, because the longer interval allows the information to be filtered a bit". That is to say, I suppose, that sometimes allowing a little bit of narrative weeding helps the Platonic garden grow.

Such inconsistencies make Taleb seem like a buffoon (but not quite so much as his own needlessly self-aggrandizing tone does!), and his repeated harping about the injustices of the Nobel prize process suggest a bruised ego somewhere on the way.

The fundamental point is that it's in the very nature of *any* intellectual or scientific enquiry to impose some order and organisation - a narrative - on otherwise unstructured data - we have to, to separate the significant from the irrelevant. The dilemma of induction is precisely that, ahead of time, it is impossible to know what will be significant, so the exercise of making that call, QED without evidence, is inherently fraught. Taleb would benefit immensely from reading Thomas Kuhn's wonderful and classic book The Structure of Scientific Revolutions. Without that insight, Taleb's much vaunted "sceptical empiricism" amounts to not much more than saying "expect to be surprised".

It might, as he points out, seem rational to calculate the forecast proitability of a casino on the odds available through time at the tables, but that is to ignore the risk of something unexpected happening such as a bomb going off in the lobby. But the nature of unexpected things is that you can't anticipate them. That's what it means to be unexpected.

That's ultimately the conclusion of this unnecessarily long book: "Stuff happens". The interesting material is mostly covered in existing books written by more talented and less egotistical authors (I would highly recommend Philip Ball's Critical Mass: How One Thing Leads to Another) and the implication of the power law on the behaviour of markets is the subject of Benoit Mandelbrot's very good The (Mis) Behaviour of Markets: A Fractal View of Risk, Ruin And Reward.

The Black Swan certainly rollocks along, but its author isn't talented, rigorous or informed enough to rate this book as a serious entry.

Olly Buxton

This book is a rambling discourse on the obvious by a self-aggrandizing author. The book gestures at the profound but only skims along the surface, and provides no insightful perspective on universal forces.

I'm not great at writing book reviews, and those of you who are thinking of buying this book will just have to take this for what it's worth: you can get all you need from reading these reviews.

It was a fairly easy read and I got the point in the introduction: nothing is predictable, and everything can be explained after the fact. We love to "predict" with hindsight.

Understanding that, what do I do with it?

His first book was better. Simple thesis here, that one should expect surprises in life as well as in investing or trading securities. In his first book I remember reading that the author resists editing, which both books cry out for. He is talented and smart, but not a good writer. He also exhibits an ample ego and rambles, so I cannot commend this book.

Nassim Nicholas Taleb opines in his book that a great honor that could be bestowed upon him is if some scholar took the time and effort to auther a rebuttal book titled "The White Swan." Unfortunately, I will disappoint Mr Taleb and offer only an on-line review written by a decided philistine and usurp the title for this brief critique.

Mr Taleb is certainly correct on many of his contentions: that improbable "off-the-radar" events shape our world, that "professionals" in the prognostication industries (e.f. financial analysis and advice, economics, CEO's) are collectively charlatans, and that the human mind is biased through millennia of mammalian evolution to believe in causality and embrace the narrative where only random events may exits.

But his book is lacking in a number of respects. The most prominent forms of evidence which he offers is to cite either his own superior intellect, life-experience, and erudite approach to life (and the repeated narcissistic autobiographic references do become very tiresome even within the first 20 pages) or to engage in demagoguery. He draws parallels between himself and those he respects and emulates (like Poincarre) and dismisses his critics and foes as philistines (hence my self-description above). Indeed, I have no doubt that most financial analysts and CEO's are philistines. But that fact and allusion to that fact does not constitute evidence to support Mr Taleb's arguments.

Second, he gets some concepts and facts painfully wrong.

He casually and repeatedly dismisses "the bell curve", and does so inaccurately. He implies that the bell curve does not allow for rare events. That is incorrect. The "tails" of the bell curve extend to infinity and encompass the numerically improbable, but inevitable events. Any element that can be quantified (wealth distribution as one example Mr Taleb reference several times) can and will have examples of rare outliers, which nevertheless exist within the bell curve. Bill Gates' wealth is at the far extreme right of the bell curve, multiple standard deviations from the mean. But it is not outside the bell curve. Some variables are not "normally" distributed but these two can properly be described by appropriate skewed methods, such as nonparametric analyses. Granted, the principal type of "Black Swan" that Mr Taleb describes is the qualitatively unpredicted event (e.g. jumbo jets crashing into the Twin Towers) that falls well outside the realm of the bell curve, but many, many of the "exceptions" that he cites are within the bell curve. He is simply wrong in dismissing the bell curve.

Though Mr Taleb dismisses facts and knowledge as irrelevant (and is thus free to draw any conclusions from any observation, no matter how incorrect his facts are), there are some readers who will insist that he gets his facts correct before he cites fictitious scenarios. To wit: at one point he states that doctors will avoid prescribing drugs which may be proven to offer benefit to a large proportion of patients because of the fear of uncommon side effects and their potential attendant lawsuits (the "Black Swan" of this example). He is wrong. In this era of evidence-based medicine, the entire medical profession has devoted enormous effort in exactly the opposite direction. The Federal government now scorecards hospitals on the same. The risk is much greater that a physician failing to prescribe such an effective medicine will be sued for failing to adhere to "standard of care" than be sued for the rare "Black Swan" side effect.

As another example: research and discovery. Correctly, Mr Taleb cites important examples of serendipity in scientific discovery (Alexander Fleming and penicillin). But Mr Taleb is clearly ignorant of planned discovery and development. Most medications which have emerged in the last two decades did not come about via serendipity but through a concerted process of target identification, receptor mapping, chemical synthesis (guided by knowledge of what side-branches impart what properties of absorption and solubility), with preclinical and clinical testing to follow.

He insists that the automobile and the atom bomb are the results of accumulated serendipity. Perhaps that is true for one or more of the key elements that led to the invention, but let's not ignore the Manhattan Project nor the incremental engineering developments that have evolved the automobile from the Model T to its modern counterpart.

For Mr Taleb, facts are inconvenient items because they fail to support his hypotheses.

Finally, the writing in general is quite poor. Again, Mr Taleb invokes an intellectual giant such as Poincarre to make the point that digressions and other irrelevancies are an example of a superior mind and only an ignoramus editor would dare suggest otherwise. Ever the philistine, I will offer that flight-of-ideas is also a symptom of some forms of psychiatric disorders. A poorly constructed chapter with random allusions transparent only to the author is a form of literary autism.

In conclusion, worth a read, but borrow this book from your library, don't buy it.

Black Swan is without doubt the most disappointing book I have ever read in my life.

That I actually feel compelled to submit a review (for the first time in a decade) is testimony in itself. I hope that it will help somebody else avoid the utter waste of time and money that this book represents..


The key problems with this book are:

1. The complete lack of structure and flow. Imagine listening to somebody who digresses ad infinitum. At each turn in their storyline, at each anecdote, you're wondering "ok, where is this going? how is *this* related to the overall message you're trying to communicate?". But no, they continue with the next little incomplete anecdote ad nauseum.

2. The intrusion of the author's personality into the book itself. And from what I've gathered, the author is a self-obsessed bore. All the references to himself, the people he's met (often with no explanation of the pertinence to the storyline), name-checking obscure philosophers & economist ('obscure' to the layman anyway) for seemingly no reason other than to appear intellectual. The author spends so long pointing out others' mistakes and showing how others are so stupid and he's so smart, and it's simply not nice to listen to people like that.

3. Poor writing style. As mentioned already, this really needed an editor.


I laboured with it for hours but eventually had to put it down when 60% of the way through.

I persevered that long because I thought there must be some pay-back further along the line; but no ... no amusing or insightful stories/anecdotes to make the medicine easier to swallow - this is simply a long, dry, dull read.


If you are looking for an enjoyable and insightful read along the lines of Tipping Point, Blink, Freakonomics, Outliers etc then this is definitely NOT it.

This book is a Black Swan. It certainly doesn't owe its success to the content.

(I actually bought it on a whim based on its position in the bestseller list and Chris Anderson describing it as "mindblowing... a masterpiece" - shame on you, Chris).

Actually, it's not a Black Swan... it was just well marketed. Shame about the product.

I was prepared to love this book; I bought it with great anticipation. I got it home and started reading it immediately, but it was so repetitive that it got boring fast. Taleb's thesis boils down to this: social reality will produce a big punch out of nowhere and it will have a big impact, usually negative. Duh!!! Taleb bemoans Gaussian Curves, and normalized this and that; basically he seems to scramble mumbo jumbo in a word soup that is confusing and not very well argued. Taleb seems to be saying that same thing in tortued prose what Spencer Johnson says in very simple prose in Who Moved My Cheese? And Johnson's book is much cheaper.

Taleb tries to explain human decision making but winds up writing confusing explanations. In place of Taleb, I would recommend Gilbert's Stumbling On Happiness. Stumbling is very well and simply written and it's funny. Taleb's tends to take himself a little too seriously at times and he name drops and is a little precious too, and those tendencies make him a little boring to me.

NNT's book about extremely improbable events and their outsized effect on our lives, is worth the price. For anyone who reads constantly, this 366 page $27 book is about a 3 day effort, at most. It's entertaining and mildy useful. You'd better realize that the stock market is a large casino. All we are doing is gambling, nothing else, since we can't even enumerate all of the risks, let alone assign correct values to them. We "don't know what we don't know". The worst of situations. For that fact alone, I recommend the book as worth reading.

Taleb's introduction of a fictional Nero (and that other female character whose name escapes me) seems like a foray into novel writing. Taleb is indeed a polymath, he's mastered nine languages and multiple sciences. People operating with that level of intellect tend to realize early in life that they are way more intelligent than the rest of us "American Idol" viewers. The next obvious step is for a person like that is serious academic research. Taleb has succeeded at that, too, holding various professorships in Mathematics around the globe. They often say to themselves, "Hey, I'm way smarter than these people, what can I conquer next"? They inevitably try writing. Every person wants to write the great American novel. This isn't it, but Taleb seems to use his extensive knowledge of various subjects to experiment in the field. I'd like to echo M. Strong's review from July 23rd, "Taleb the thinker deserved a far better writer than Taleb the author."

I purchased this book for the insight of the Gaussian Bell curve hypocrisy I was taught in undergrad. I tend to believe and trust Taleb's assertions, but have a few questions of my own.

1. Black Swan events are stated to have shocking consequences for all of us. The classic example is the 911 disaster. Were we all totally shocked and thus exposed to a classical Black Swan? I suspect to the people that planned it, it was no shock or Black Swan at all. I submit to you that a Black Swan is a relativistic concept. Subjective, not objective. Your financial Black Swan may be a mere inconvenience to me, and vice versa.

2. Gray Swans are introduced later in the book. Less catastrophic, and less clearly defined. They need more rigorous study.

3. Mandelbrot's Fractal geometry won't help you on the market. But then again, very little will, either. It makes no predictions. Why would it? If there ever was a reliable sure-fire way to make money, then that information would be disseminated at the speed of light and everyone would know about it. But how can we all make money at the same time? Where are all the people we are to make money from, when everyone knows the sure-fire technique (fundamentals, technical analysis?). The answer is of course, is that there is no such technique. It's emotion driven. Mostly speculation.
Good luck!
-jeff

I read Taleb's previous book with great pleasure and interest, and looked forward to this one.

Unfortunately this one is a jumble, with important ideas wrapped in piles of repetitious ego-driven extraneous stuff. He makes the same points over and over again, without clarifying them after the first presentation or two.

Taleb boasts in the acknowledgments about how he got his editor to spare him the attentions of copy editors, whom he claims ruin the exquisite rhythms of his prose and make too many irrelevant corrections. Too bad, as they would have spared him many obvious errors in usage and grammar as well.

Don't bother with this one. Read the previous one.

A book full of conceited, repetitive, self-serving twaddle, based on a single mundane observation. The observation is simply that "attempts to measure risk using historical data and/or the assumption of (Gaussian) Normality will fail spectacularly sooner or later, because of extreme outlier events". While an important observation, Taleb is nowhere near the first to make it. The padding required to blow this observation out to an entire book is enough to supply the global mattress industry for the next few decades. Taleb's repeated insinuation - or in some cases the bald statement - that almost all academics except himself are fools starts out simply offensive, but rapidly becomes boring.

The only interesting parts of the book are Taleb's memories of Lebanon, before and after the onset of civil war, a fascinating first-hand reminiscence. What a pity he didn't stick to that subject.

Apart from the annoying boasting, whining, repetition and "look at me" tricks, the book's major flaw is that it has nothing constructive to propose. It is easy (and trite) to observe that all models are simplifications of reality and will err in extreme conditions, but that is a long way short of a convincing argument that all models and theories should be discarded. Without models and theories we would have no computers or telephony (the sources of one of Taleb's favourite 'Black Swans' - the internet), no electric grid, no space travel, no hydraulics or water supply, no genetics and very few modern medicines.

I bought this book because I had heard that it was ground-breaking, insightful and influential. Influential it may be, but it is neither of the other two. I would recommend people considering buying it to instead just consider and adopt the maxim 'be sceptical of [but not outright hostile to] all theories and models', then save themselves the time and the money by not buying this book and instead reading something by Douglas Adams (a much more entertaining sceptic) or Evelyn Waugh.

I come to this book later than the other reviewers, but I have seven pages of notes and my review will both summarize the book, and relate the critical knowledge of this genius author to our most pressing concerns. I've decided to do a very long review, as this is one of the most important books I have read in the last three years.

Bottom line: asset managers should focus on consequences, which can be known, rather than probability, which you cannot know.

Black Swan events are unpredictable, have a massive impact, and after the fact are "explained" in a manner that leads people to believe "if we had only known X, we could have predicted."

The author says that both 9-11 and Google are Black Swans. On 9-11, I think the author overlooks both the fact that it *was* predicted by the Hart-Rudman Commission, but I will delete other commentary in order to allow all of us to focus on this specific book and its huge importance.

On Google, the author is assuredly correct. No one could have foreseen that small investors would be so enthused by Google that today they are earning $1 for every $10 million in small investor cash they spend. No Wall Street firm would ever have made that mistake. Google may also be the first tri-fecta Black Swan, next and second, by devastating Wall Street when it consumes the banking, communications, entertainment, computer storage, and publishing industries (five years out, see the analytic study, "Google 2.0: The Calculating Predator" but if you don't find it via Google, use another engine--they are known to be manipulating what people see); and then third, when its computational mathematics, undocumented and without regulatory oversight, crashes unexpectedly and takes the economy down with it (ten years out) or, equally possible, every person on the planet uses CISCO AON to put the Googleplex out of business, and human social networks scale to the point that math is left behind.

This is quite an amazing work of pragmatic scholasticism. I am seriously impressed, and believe that this book is most valuable to the managers of asset portfolios, hedge funds, and pension funds. As the author himself notes, portfolio managers tend to exclude "Black Swans" as a risk.

In the author's view, Platoicity (Plato's Cave) mistakes the map for the terrain. I have found this problem endemic in the secret intelligence world, which would rather believe a satellite than a human on the ground. To illustrate the point: in one instance, the human reported an operational temperature of X and the satellite said Y. It turned out the satellite has been programmed to average the three different temperatures. It is that kind of mistake, buried deep in Google's computational mathematics, that should be scaring everyone to death right now, and especially Amazon, Apple, CISCO, IBM, Oracle, SAP, Motorola, and Nokia, not to mention banking and publishing and Hollywood.

The author, of Greco-Syrian descent from Levantine (he shares the disdain of Philip Atlee in The Health of Nations: Society and Law beyond the State for the concept of a nation-state, and I share his affection for Lebanon], tells us that the Earth requires us to have more imagination and not limit ourselves to what we can "see" and to historical extrapolation.

The triplet of opacity:
01 Illusion of understanding
02 Retrospective distortions
03 Overvaluation of factual information

He does not add corruption and other impeachable or indictable offenses that are all too common on Wall Street and in the White House as well as Congress. His crisis scenario is strictly objective and assumes good character among all concerned.

He says, "History and societies do not crawl, they make jumps. They go from fracture to fracture, with a few vibrations in between."

He says that other than diaries, which are true history as seen at the time by the subject, all history is absurd or biased, with clustering, categorization, and simplification, not to mention cultural and other biases.

He learned at Wharton directly from the most powerful CEOs on the planet that they literally do not know what is going on in the world (p. 17)

While the author worries about the highly improbably consequential event, I worry about the high probable consequential event that our political and economic elites refuse to acknowledge: Las Vegas running out of water, Exxon failing to invest in a five year Marshall Plan to cut oil needs in half, the elimination of chlorine, mercury, the restoration of Iowa corn to people instead of cattle, and so on.

Fascinating discussion of quant and platonic folds, by his own description a mix of mathematics, engineering, and statistics.

He concludes that we suffer from an inbred psychological and biological blindness, and I was pleased to see in the footnotes his recognition of E. O. Wilson, who in Consilience: The Unity of Knowledge answered the question: "Why do the sciences need the humanities?"

Black Swan is induction. See also Don Beck on abduction, Spiral Dynamics: Mastering Values, Leadership and Change.

+ Asset managers must be able to recognize cosmetic profits (or in the case of Google, cash outflow disparities in relation to cash inflow), and to discover hidden risks, e.g. in the case of Google, the forthcoming demise of the companies iterated above, and banks, if the current economic leaders do not come together and bring Google to the table in a deeper more candid manner than is now the case.

+ Empiricists without philosophers are dangerous, and vice versa.

Five sources of blunders:
01 Focus on pre-selected data
02 Fool ourselves
03 Human nature not programmed to imagine Black Swans
04 History hides many Black Swans, he calls this "silent evidence. See also Fog Facts : Searching for Truth in the Land of Spin (Nation Books) and Lost History: Contras, Cocaine, the Press & 'Project Truth'
05 We tunnel, focus too narrowly.

The author is consistent with, but does not reflect, the Natural Capital Institute work on "true cost," which corporations externalize by burning future sustainability for current profit. Consumers are now becoming aware, and I believe that "true cost" information delivered to the cell phone at the point of sale is going to change entire industries within five years.

+ We are 22 times too comfortable with what we know or do not know

+ Information is bad for knowledge. This is correct, but the author might enjoy a discussion about commercial intelligence (legal ethical decision support) in which tailored intelligence can kill a $5 billion deal or buy a future $10 billion value for $100 million. Since I founded OSS.Net in 1992, I have been saying that "Information costs money, Intelligence makes money." I believe that much good could come from merging the author's gifted analytic model, and the one that I have which studies the ten threats, twelve policies, eight global challengers, and also dissects indigenous environments along political-legal, military and law enforcement, socio-economic, ideo-cultural, technical-demographic, and natural-geographic. There are no short cuts in the commercial intelligence business, but there *are* very rewarding insights that all the others miss because they fail to "cast a wide net." See The New Craft of Intelligence: Personal, Public, & Political--Citizen's Action Handbook for Fighting Terrorism, Genocide, Disease, Toxic Bombs, & Corruption

I *really* like the author's discussion of false versus real experts. The government recruits experts based on their clearances, associations, locality, and convenience. I find experts based on citation analysis, direct examination, and referral What really grabbed me was the author's explicit inclusion of both stock traders and CIA intelligence analysts as false experts (p. 146). I am reminded of flying back from the Middle East with a World Bank executive for Africa who told me that the CIA analysts visiting him were young and inexperienced, and "they put forward hypotheses that are frightening in their ignorance."

The author quotes Bacon, saying most important advances are those "lying out of the path of the imagination." This is one reason I made "Cast a Wide Net" one of the rules for the new craft of intelligence. We need to be doing all information in all languages all the time, going back into history (e.g. tracking every Chinese statement on the Spratley Islands for the past 100 years).

He works from Hayek, who believes that a true forecasting system is done ORGANICALLY by a society or system, and that one single institution, neither CIA nor Google, can aggregate knowledge. I have been saying since 1992 that in the age of distributed information, "central intelligence" is an oxymoron. Same same Google.

I am provoked by the author into reflecting that while we cannot predict the future, we can shape it, and in choosing to obsess on secrecy, scarcity, war, and money, we have forsaken all we could have done by waging peace. See The Fifty-Year Wound: How America's Cold War Victory Has Shaped Our World and The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic (The American Empire Project). The UN has told us we have 7 years to stop the growth of emissions from today (2007). That will not happen unless Wall Street recognizes the value of legal, ethical Commercial Intellligence, and the urgency of harmonizing the 12 policies against all 10 high-level threats, at the same time that we embrace the concerns of the eight major players (visit Earth Intelligence Network for the whole picture).

Some closing take-aways:

+ Distinguish between positive and negative contingencies.

+ Cast a wide net for weak signals, not a narrow net for strong signals.

+ Seize any opportunity, or anything that looking like an opportunity (I am still asking myself the question: what could IBM buy across the spectrum of emergent opportunities, in place or, or in addition to, Cognos?)

+ Beware of precise plans by any government.

+ Do not waste time fighting forecasters, stock analysts, economists, or social scientists.

+ The world is moving into extremeism where a small event can have cataclusmic effect.

+ The bell curve in gone.

+ Most large companies die. Only 75 remained in 1997 of the 500 in 1957.

+ Our business schools are training leaders for the past, not the present or near future.

+ We learned nothing from the LTCM bust. See chart on page 284, two ways to approach randomness.

He ends with a philosophical overview:

01 Micro minds cannot understand much less evaluate macro consequences.

02 Our economic and financial systems are BROKEN (Alvin Toffler would add, as are all our others systems--political, educations, media, religious, labor)

03 Non-commoditized thinking is good (oops...there goes Deloite et al)

This has been one of the most enjoyable, absorbing, and provocative reads I have had in some time. This is extraordinary thought, spanning a range of disciplines.

Amazon will only let me link 2 more books.
Blessed Unrest: How the Largest Movement in the World Came into Being and Why No One Saw It Coming
A Power Governments Cannot Suppress

Admin notes:
The bibliography is astounding, one of the best I have seen other than E.O. Wilson's own work.
Tables on page 36 and 284 are alone worth the price of the book.
Pages 123-130 provides a superb account for four outside the box hits that a casino took when they focused only on controlling what was inside their box.

Really can't understand all the great reviews of this book. The author THINKS he's witty, when he's really just showing off his arrogance. Trust me, he's no Larry David....as one other reviewer seemed to think.

But the real letdown of this book is his foggy writing, which is almost always a sign of foggy thinking. And to MAKE UP one of his prime examples (the author with the unpronounceable Slavic name) and then to continue to bring up other examples using "her" is simply lazy research and writing. If his premise is so true, surely he can find real life examples to share with us. He probably intimidated his editor so much that this really annoying writing style was not challenged by the publisher. A layperson can find many better books written on the subject of randomness.

NNT (as he calls himself) has some fascinating points and some interesting turns of phrase, though he does rather go on and on and on.... Leaving aside the long-winded somewhat self-absorbed writing style, NNT makes some interesting points that he illustrates well. He discusses the problems with the fact that humans seek validation for what they think (rather than challenging themselves) and why we cannot predict well in many circumstances. He spends a lot of time discussing the problems inherent with the use of a bell curve to predict things where the impact of extreme events really matter. Finally he spends (too little) time on what to do about all this. I took a few key points away from the book:
- It is better, perhaps, to try and be generally right rather than precisely wrong
- Beware of looking for more rules than really exist
- Watch out for a tendency to prepare for "last war"
- Rare and consequential events can be much more important than the "normal" stuff in the bell curve
- Some things (that he calls "mediocristan") are such that the most typical is average and single instances don't impact the total much
- Others (he calls these "extremistan") are more winner-takes-all kinds of environments where extreme events matter most
- He makes the point that a thousand days cannot prove you right but one can prove you wrong

There's more but it's a very long book and I am not going to attempt to summarize the nuggets spread throughout it here. Be prepared for a slog if you want to get everything you can out of the book - it goes on and on. 3 stars to average out 1 star for length and incoherence in places and 5 stars for some great content.

Taleb states the difference between JK Rowlings, author of the Harry Potter Series and a "baker". He sais that when JK sells a book, millions read it. She doesnt have to do anything else. When a baker bakes a cake he has to do it each time for each customer. Never mind the author may never make a buck after spending hundreds of hours on a book, and waiting years to get discovered by a publisher while the baker can 1) purchase a house sooner 2) pay his larger bills, 3) and send his kids to Ivy League schools if he has too! Furthermore dunken doughuts and cheescake factory also make millions. In Talebs' calculations he is not allocating all resources used in production, marketing and sales. The book though produced by one author is backed by huge publishing empire behind which is spending millions on advertising. Further the book chains also get a piece of the pie. Just like an invention or patent might be backed by millions in resources to bring it to market. Sometimes they (authors and publishes and patent owners and their backers) win and sometimes they (god forbid ) lose. The recipe for cocacola resulting in coke the drink will continue to sell in many magnitudes more then all of JK books combined. So I don't know what Taleb is trying to explain. Is this book about the Highly Improbably or a poor description of what success is or what is a succesful company and or how to mass produce and sell a product? The author is confused. why is he talking about JK Rowlings in the first instance - and again how does this relate to what the book is about in the first place?

Taleb then amazingly compares 9/11 and Google as being incredibly outragious events. I guess he must know nothing about all the attacks or events of destruction in the last 15 years around the world as if everyone expects those to occur on a daily basis. He also seems to know nothing about the many other successful companies around the globe. Of course since he probably uses Google (or is impressed by its ability to) store documents and email on its servers, and at the same time give itself (Google) the opportunity to peak inside so that they can advertise to him, he is impressed with them !!(shhh. there is nothing extraordinary here !).

Again, what is the point of including Google as an example? Someone commented that Taleb included it as it has affected the world more than other companies have in the past 15 years. Sorry, this is not the case. If you want to talk about effect over the past 15 years please look at -

1) Internet Explorer, Microsoft - Used by millions
2) Very thin notebooks (2 Lbs and less, made by various vendors - Used by Millions. Faster computers - Used by millions
3) Wireless (capabilities - used by millions - specifically - Air card - Sattelite Broadband - Blackberry - capabilities that permit receipt of internet/ instant email almost anywhere in the contiguous 50 states and other parts of the world. Further there may even be other or better examples than those I have listed ! So why has Taleb included Google as an example in this book?

In another chapter, he compares a prostitute to a speculator and several others. Why include a prostitute as an example in a book of the improbable. Interesting. Don't waste your money on this book instead buy those extra groceries so you dont have to come by the store so many times. At least the book is written at the same intelligence level as his prior book Fooled by Randomness and thus you can be more than sure he wrote it and not a ghost writer.

This is one of those books that demands a lot from the reader, but the investment is well worth it. A background in statistics, at least at the rudimentary level, is almost a prerequisite. Taleb is a pragmatic, down to earth philosopher and thinker, and each page contains delights and new perspectives. He writes extraordinarily well and the book contains many laugh-out-loud moments (I particularly enjoyed the description of f.y. money as that sum which enables you to say this a few seconds BEFORE hanging up the phone, rather than a few seconds after!). The book covers not only statistics and the stock market, with an emphasis on what is called behavioral finance, but also human nature and perception. Taleb enjoys being a gadfly and on occasion toward the end of the book takes a bit too much delight in his squabbles with others in the field, but overall this is a 10-star book. I only wish there were more like it published on a regular basis.

2007 is only 1/3 done, but the year's best business book is already clear. Taleb's book is about black swans---highly improbable events that have a big impact on the world. Think 9/11, the East Asian crash of 1997, or the collapse of the Soviet Empire. Taleb's claim is that there are so many potential black swans that even though each one is very improbable, one or another hits on a regular basis. We are blind to the black swans ahead of time because each is unlikely. More importantly we are blind after the fact because we learn about the details of the black swan that actually hit rather than thinking about all the thousands that could have hit and did not.

Taleb is a scholar and an iconoclast, skewering many sacred cows while explaining his claims and backing up his ideas. Plus this book is a lot of fun to read.

This is one of the most annoying books I have ever tried to read. Perhaps this is because I have a Ph.D. in economics and know something about the topics covered, but could also be because Taleb has a self-indulgent, self-referential, inchoate writing style that would drive any discerning reader crazy. His arguments are almost always tendentious, his expositions seriously flawed, his conclusions spurious. You will learn little or nothing from this book, and may find the experience of reading it highly annoying.

Let me add that I am sympathetic with the conclusions, I just find the writing poor and the exposition tendentious and tedious in a way that I call "bogus mystification," which involves frequent sloppy self-contradiction with the intention of sparking an interruption from the interlocutor which can then be interrupted by the speaker, a middle-Eastern conversational style that fares poorly on paper. Nowhere in this book are the principles explained clearly.

There are some good points and some good perspectives in this book. None-the-less it is so filled with bile, acrimony and failed research that I came out stupider for having read it. The author makes up dozens of terms for things that already exist (e.g. "Silent Evidence" for what is commonly referred to as "Survivorship Bias"), rambles on for pages with personal diatribes and interjects fictional narratives as a truthful support for his points (one of which is that narratives are misleading).
There are better places to get the same information. Books that are better researched, better written and less smug. Read those instead.

Now that I'm finished reading Nassim Nicholas Taleb's latest classic, The Black Swan, I need to take a few days off to let my brain decompress. Taleb is brilliant and his writing style helps the reader look at trends, markets and information in general in a completely new manner. I read Taleb's previous book, Fooled by Randomness, earlier and there are plenty of correlations between it and The Black Swan; you don't need to read Fooled by Randomness first, but it provides a good foundation for what you'll find in The Black Swan.

What's so special about Taleb and his books? He's a master storyteller and seems to have an excellent example for every point he's trying to make. Most authors couldn't pull off the cynical and oftentimes sarcastic approach he takes; I find it one of the most entertaining and engaging aspects of his work. I love the way he's able to pinpoint the poor logic that we're all guilty of at one time or another and how we often hear only what we want to hear. For example, he notes how when a doctor says "there is no evidence of cancer" we often misinterpret that as "there is evidence of no cancer"; obviously there's a huge difference between the two, but the latter is impossible to state with 100% certainty.

Think about this excerpt the next time you ask your investment specialist for advice:

"Our inability to predict in environments subjected 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."

In that one paragraph you get a great feel for the biting commentary Taleb provides throughout this excellent book. That, and a bit of humor at no extra charge.

Those of you who spend way too much time forecasting and spreadsheet-jockeying will love this insight:

"(In the pre-computer days)...the activity of projecting, in short, was effortful, undesirable, and marred with self-doubt. But things changed with the intrusion of the spreadsheet. When you put an Excel spreadsheet into computer-literate hands you get a "sales projection" effortlessly extending ad infinitum! Once on a page or on a computer screen, or, worse, in a PowerPoint presentation, the projection takes on a life of its own."

Later in that same chapter Taleb writes:

"It is often said that "is wise he who can see things coming." Perhaps the wise one is the one who knows that he cannot see things far away."

If you're interested in the book publishing world you'll find The Black Swan particularly fascinating. His stories and examples feature numerous observations of book publishing, best sellers and market dynamics. Regardless of what business you're in or hobbies you have, The Black Swan is an wonderful book that will cause you to re-think all your assumptions.

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.

Definitely worth a read (along with fooled by randomness) for the ideas it presents. However, the author is deeply and passionately in love with every aspect of himself, his ideas, his ancestry, his lifestyle and his friends and is not afraid to express his feelings. Despite the author's commments that editors are worthless, this book is Exhibit A in their defense.

The book starts well with challenging the readers to be skeptics about most everything. One should try to turn the pyramid upside down - the anti library, etc.
The author does correctly point out that power laws dominate several aspects of our life where we assume things to be normally distributed - stock market, etc.
It is also somewhat correct that we try to find causalities where we are not capable and thus draw incorrect reasonings.
But in reality the book should be no more than 25% of its original size. The basic idea is that predictions are not always correct. Labor makes little difference while luck is the real reason behind major successes - inventions, discoveries, serendipity.

Other than that, the author comes across as a real jerk - pompous, arrogant and foolish at times. His analogies do not hold correctly. One should not read newspapers because a newspapers are full of crap. Then he talks about rats under radiation and prisoners in Siberia and how they are similar. Rats are tortured physically and are thus weaker, prisoners are mentally traumatized and thus can get more dangerous. This is a well known established fact.

According to the author, we should be prepared for all the unknown - i.e. infinite number of situations and not for the known situations. He also warns how theories laden with stories and unnecessary scientific evidence and this is exactly what the author is doing though out the book. There are unrelated anecdotes like random thoughts through out the book.
It seems that he and a limited close circle are the smartest people who have ever walked the earth, while the rest have no idea what is going on.
Also information seems to have little or no value. Clearly he knows nothing about 'Kelly's Criteria'
The author continually criticizes 'quants' financial engineers since are supposedly so full of it. And what was he on the wall street?
I can go on about inconsistencies in the book. Please spare yourselves and if you really want, read one of the two books

Fooled by Randomness
Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street

I first heard Mr. Taleb on a radio interview on NPR, and was fascinated by the discussion. I made it half-way through his book - it has the hallmark effect on me of all good books, in that I found myself wondering often of the ideas he writes about and their effects on me in my daily life.

... Except I could only make it half-way through because of his insufferable snobbery. 329 pages is too small a soapbox for such a bloated ego. From time to time I encounter such books that make reading a chore, and I begin to question my own abilities to concentrate and absorb the written word. Periods like these usually end when I find books I can read effortlessly - I've just picked up "Outliers" by Malcolm Gladwell and read 100 pages in a morning. It took me at least 3 weeks to get that far in Black Swan.

Gladwell understands that he is not nearly as interesting as his subject, and dutifully lets his topic speak for itself without snide, arrogant commentary on "experts" and businessmen.

Half way through Black Swan and I'm breaking up with it. Life is too short. And no, Taleb, it's not me; it's you.

I loved Fooled by Randomness. I recommended it to friends, colleagues and candidates. Beside thought-provoking comments on chance and financial markets, Taleb's previous book was a cheerful but cruel variation on the theme of the confusion between success and luck, a subject which has been discussed to death in literature, and which comes down to the question which has probably agitated people ever since ambitious young men walked the streets of Sumer and Akkad, and possibly earlier, being: "Why Am I Not More Successful ?".

In Black Swan, Nassim Taleb abandons social critique to focus on philosophy, which unfortunately was the weakest part in Fooled by Randomness. We get several hundred pages of anecdotes and curiosities about Taleb's life, statistics, finance, and more about Taleb, all in a pretentious tone, which I found repetitive and boring (but which some apparently find entertaining). In my view, his main weakness is his poor sense of History - which could come in handy in the study of dynamic phenomena over long periods. While plodding through Taleb's ramblings, I had the impression that what's really missing is having an historical (rather than statistical or mathematical) perspective on events. As for the "Black Swan" concept, it is theoretically worthless: since any event can be explained ex-post, a "Black Swan" is merely a pretentious term for "unforeseen event with major consequences". Incidentally, I find it paradoxical that someone who endeavours to write on uncertainty should be so certain of himself.

And don't try Taleb's approach to risk management, which is essentially forgetting about unfavourable events since they are not predictable. I seem to understand that the author takes a dim view of planning, but he should think again. Planning is what people do when they have to prepare for an uncertain future (like the military does, for example). One of the keys to good planning is general knowledge: reading the newspapers for example, something Taleb takes a misplaced pride in not doing.

So it wasn't a book that was so horrible that I put it down and never touched it again (just sat there for 6 months partially read), but it was a disappointment.

As I saw in another person's review - this book could have been much shorter. The same point was hammered home again and again, but instead of increasingly enlightening ways (if I didn't get the message the first time), the repetition got increasingly more confusing.

I read a lot of "fluffy" business/economics concept books that also rarely have a lot to say, but they at least touch upon a lot of interesting points along the way. I don't feel like I've taken a walk through every pet peeve, animosity or feud the author has had in the course of his life. Split half the book into an autobiography and use the rest to make a more interesting and relevant book.

I can save you the price of this book-- and the time it would take you to read it-- by summarizing its main point: Hard-to-predict events are hard to predict, and because they're hard to predict, we often fool ourselves into thinking that we can predict them. But we can't.

Seriously, that's pretty much it. I was very disappointed by this book, mostly because the reviews were so good, and the author is both a serious academic and a Wall Street star.

After spending hundreds of pages explaining that we can't predict rare events very well, mostly because they're rare, the author slides into what I assume he believes is proof that essentially, everything that happens comes down to luck. Why did Rome fall? Blind luck. Why did Microsoft defeat Apple in the marketplace? Blind luck. And so on.

Of course, over the years, we've developed explanations for those events and most other things that have happened. The author airily dismisses all such attempts to explain historical events after the fact as "narrative fallacies." Well, no, not always; sometimes those explanations are actually explanations of what clearly happened.

The author even offers what he claims is the sole practical way to deal with the Black Swans we encounter in the operations of the financial sector: We should invest at least 85% of our assets in risk-free T-bills and the remainder in very high-risk investments, such as junk bonds. This idea is an old one, and computer simulations consistently show that it will return less than the 60% stocks and 40% bonds allocation that most financial planners have advocated for many years.

Finally, I didn't care for the tone of the book. It comes off as smug and almost cutsie at times. This is a serious subject, and it deserves a serious treatment. Of course, this is my personal, subjective reaction; others may not be as bothered by the tone as I was.

In summary, I found this book to be uneven and disappointing. Why not one star? Because the chapters that deal with how we let the bell curve seduce us into erroneous thinking are actually quite good. If only the rest of the book had been so good...

As others have observed, there are a couple of good ideas in this book. The style, however, makes it practically unreadable. I actually listened to the audiobook; one of the editorial reviews comments that the reader salvaged the work somewhat by softening the sarcastic and annoying tone; I did not find that to be the case. It's hard to blame the narrator, as he seems to have captured more-or-less the author's intent.

The "couple of good ideas" are fairly straightforward. One, don't assume that you know the form of the probability distribution of any given social or economic phenomenon. That's good advice. It's often easy to find a function and a set of parameters that appear to fit a given historical data set; but just because the function appears to fit historically doesn't mean it's going to be predictive. Two, if the form of the distribution is unknown and unknowable, then computed measures of "risk" are not reliable, as risk is in fact incalculable. So, a good investing strategy is to avoid assets whose valuation depends on risk estimates, and seek out certain other assets. Following that strategy would have kept you out of a lot of the asset classes that have melted down recently.

The most frustrating problem with the way the book is written is its lack of self-consistency. For example, there is a long discussion of "silent evidence": just because you don't observe something doesn't mean it's not there. Then, over and over again, Taleb tries to assert that no one in business, or the social sciences, or this or that domain understands a certain issue correctly. Even if we assume for a moment that Taleb's understanding of the point in question is correct, and that he is therefore qualified to pass judgement on who is a Right-Thinking Individual, the fact that he has not encountered any Right-Thinking Individuals does not mean they don't exist. He may not have met them; or he may have met them and not been listening when they spoke; or he may have met them and presented his ideas in such a contemptuous way they chose not to engage in conversation, concluding there would be no value to themselves in it.

Then there is the rant against the bell curve that occupies the last chapters of the book. Kind of silly to get angry at a mathematical function. It's like criticizing a hammer for not being a screwdriver. In a few places the author does draw the distinction between appropriate uses of the bell curve and inappropriate uses, which is of course the (perfectly reasonable) point he is trying to make. Most of this section, however, is written in a much more sloppy and imprecise way, so that any sentence or paragraph by itself comes across as criticizing the hammer. To make sense of it one has to keep saying to oneself "well what he really means is that there are certain people who misuse this tool, and they shouldn't."

Similarly, the assault on academic economics and the Nobel Prize. Not many people would argue that idealized models are predictive of reality. That's not the same as saying they are without value; it just means one has to know what to use them for. The author does find value in behavioral economics, but somehow when attacking academia seems to forget that a) behavioral economics is all the rage today in academic circles, and b) the Nobel committee, who Taleb considers so clueless, awarded Kahneman the economics prize for inventing it. [Another self-consistency issue here: after a very lengthy discursion on the value of empiricism and the fallacy of oversimplified models, Taleb confidently repeats numerous experimental-psychology and behavioral-economics results as "the way we behave," where by "we" he means all of humanity, excluding perhaps himself the Enlightened One. In fact, most of these results are based on very small samples, so while they are indeed interesting, the authors generally go to great lengths to explain that what they have observed COULD have a certain meaning or cause, but that the data are not conclusive, as other causes could have led to the same observations.]

Great books are like great friends. Even when they challenge your ideas, you want to enage with them because it's such a pleasure. This is not such a book. The ideas, while interesting, are not as controversial as the author claims, and they aren't worth the pain of struggling through the writing.

Taleb claims the book 'practically wrote itself;' what he really means, is that he just lifted some ideas from old philosophers and let Word do the rest.

The Black Swan provides an interested reader with important insights, no doubt, but they are nothing new. Indeed, possibly the most frustrating aspect of this book is how vainglorious its author is. He claims he felt 'vindicated' on Black Monday ... How? All Taleb has done is taken others ideas and repackaged them. While he was correct to believe them in the first place, there is little of the author in the book. Worse still, the author disregards his own rules. Early in the book Taleb claims that with respect to foreign affairs, the best answer is, "I don't know," (because there are so many unknowns it's best not to assume them away). A little while later, however, he goes on a tirade against the use of the phfrase "Hardened by the Gulag." Taleb claims that the Gulag did not harden the mobbsters, instead it simply selected teh most physically fit (because all others would die), who were also the most aggresive to begin with. Notwithstanding this latter assumption, he also implicitly assumes no psychological component was present; a clear violation of his 'don't assume' policy. While this is relatively minor (although extremely aggrivating given Taleb's hubris and constant patronization) it is a clear example of Taleb's consistent lack of vision. Moreover, he constantly uses inappropriate and verbose language (indeed, it seems the Taleb wasn't honest at the beginning, and instead it was the book, PLUS Word's thesaurus who wrote The Black Swan).

Readers, I implore you, save yourself some money: get some Russel, Hume, and Bacon out from your local library and bookmark an online thesaurus. Whenever you think you may want to read The Black Swan, just take any sentence from the above philosophers, pick AT LEAST TWO words and use the thesaurus to find their synonyms and from those, pick the largest everytime and replace the origional word. Now you will be, for all intents and purposes, reading the Black Swan.

I would not recommend wasting you time on this book. It is a quite mediocre recital of what has been already known. A lot of trivia delivered with a pretense to be a revelation.

On face, The Black Swan may be the worst book I have ever read. The author comes across as a pompous jackass. He rambles on. His examples are muddy. He praises his sources, using annoying terms like "uberphilosopher" repeatedly.

But after thinking about it, I believe this was all INTENTIONAL! Taleb is laughing his way to the bank at people foolish enough to take this book seriously.

Taleb admits to enjoying childish pranks like slipping ice down someone's shirt. The Black Swan is one huge prank! Taleb proves his point that books sell based upon contagion, not because they are any good. Bravo!

the writing is witty, overly-educated and researched to the hilt, but what, practically, have i really learned? the point of the whole book is simply: 'what you don't know CAN hurt you' but other than reminding us that we all walk around with blinders on, i really don't get the point.

to be honest, i didn't finish it (half-way through), but if i haven't learned something that i can really apply or know how not to apply, you're asking too much of me.

In some ways, I find this book is poorly indexed as "Uncertainty (information theory)" or "Forecasting". More importantly, this book is an autobiography of someone who has clearly spent a lot of time being exposed to risk, and has interesting observations to make on how he handles that.

Taleb is criticized (unfairly, perhaps) for the inclusion of fictional examples and for "taking on" the establishment enshrined in many Nobel prizewinners. However, he's not interested in coming up with a sophisticated "theory of everything" and is very mixed in his emotions about whether "black swans" are a good or a bad thing. In some ways, he feels that he has his own answers as to when a black swan is a good or a bad thing, but leaves it to the reader to learn from the tales in the book and the tale of his life. The reader must then apply the knowledge, and to learn how to not be a "sucker", a person who is going to be victimized by the occurrence of black swans, and the book admits there are likely many paths to either suckerdom or success.

Whether you ultimately agree or disagree with the theories and suggestions of the book, this will be a fun book to read. His narrative style is engaging, and there are a multitude of small stories and interesting concepts and name-dropped characters for you to fill your imagination. He's more concerned about the ride than the destination, and even though he is constantly "getting there", making points as he goes and draws to a brilliant conclusion, you don't feel as though you've had to endure the ride to get there. It's not about nail-biting, hair-rasing uncertainty, but about looking at life as an adventure, where you accept big losses by making small bets, and collect as many free rides as you can in the process without feeling you have to bet the entire farm on just one big thrill. Unless you want to.

This is a careful, brilliantly humanistic book- it does not resort to moralizing nor feels the need to attack those who moralize either. Its enemy is the "ludic fallacy"- the tendency of "nerds" to mistake the simulation, the game, for the real thing, the map for the territory. It's a reminder to live life, and is endlessly upbeat despite having full awareness of the fragility and improbability of happiness.

That said, it is not devoid of philosophical sophistication. He does not reject science, mathematics: he is reminding you not to be fooled by overly precise models. If there is any weakness, it is that his mathematical models that he gives as examples sometimes seem to easily drawn, "straw men" to his argument. Nonetheless, it's not about what is right, per se, but about what works. In some ways, that it has worked for him is a black swan in and of itself, and this book is entirely humble, self-aware of that fact.

As long as you are willing to accept that, I feel this book is entirely a worthwhile read and an important addition to any library. The book is well referenced and topics are readily found, for when you forget and want to recall Sextus whats-his-name and need a quick place to look before digging for more information. As such, it is a handy nexus book for a more deep delve into the world of philosophy, without haughtily deigning itself to be an encyclopedia of philosophy. That said, few encyclopedic texts of philosophy could do better, and be more worthwhile, as an introduction to the Popperian perspective of thought... even if you tend to hate Popper, as much as I do!

He seems to be so in love with his own views, and with the idea that people don't understand his views, that he won't stop trying to convince you of them long enough to tell you how they effect you. It was an interesting read at first, but the further I got into it, the less there seemed to be.

Taleb has an important but rather simple message to deliver. It can be summed up in three words: Rare events happen. That was the point of Fooled by Randomness (which is a better book), and it is the point here.

Once this main point is made (and it is irrefutable), there are any number of embellishments, examples, and explanations that can help the reader round out his or her understanding of the concept. This would be a 5-star book if the author had written it to help the reader understand the basic concept and its implications.

Instead, the book reads like an ego trip. His delivery is maddening. He seems to be filled with anger. The book viciously attacks many well-meaning, competent people in academia, finance, science, and other fields for no apparent reason, other than that they don't see (or agree with) his point.

For that reason, I found the book hard to read. Some reviewers have called it funny; I found no humor in it. Instead, what I found is an author who clearly thinks he is smarter than everyone else and allows that to get in the way of clarity. He seems to take joy in belittling those who "outrage" him by their stupidity. (Really, what kind of person gets "filled with rage" over others being unable to see an academic point?)

Another quality that makes this book hard to read is the deliberately opaque way that Taleb chooses to make many of his points. If there is a straightforward way or an obscure way to make a point, he consistently selects the obscure way...using unfamiliar references, saying "secundo" instead of "second," inventing a non-existent author to make a point about book sales rather than choosing a real-life example, and so on. Taleb seems to think such writing is "erudition" (a quality he clearly admires). I believe that it puts an unfortunate academic-style veil over the book.

I've learned from both of Taleb's books--Fooled by Randomness and this one. I've learned not only the main point--that rare events happen, and they happen more often than we usually expect--but I've also learned something about how not to write. Writing I most admire is deliberately written to be understood, not to get in the way of understanding.

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.

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.

I did find reviewing this book very difficult, it is filled with big ideas but is harder to read than Fooled by Randomness.
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

Taleb's main point is that the world is largely ruled by "Black Swans". Those "Black Swans" are low-probability events with large magnitude. i.e: stock market crashes, earthquakes, the success of Brad Pitt, Google.

There are 2 worlds: Mediocristan and Extremistan. Mediocristan is largely modeled by the bell curve and Extremistan is modeled by power laws or by unknown distributions. The danger lies in using bell-curve (Mediocristan) thinking in Extremistan. The book will make you think about human nature and statistical distributions. Some reviewers seemed upset with Taleb's perceived arrogance, I would say that his disdain for middle-of-the-road thinking led him to write this very book...

...unless you can't predict it.

This book is the antithesis of the market predicting books that make everything seem so predictable. It is a refreshing change for those of us who don't think everything is as simple as we wish it were.

Frank Scoblete: author of Golden Touch Dice Control Revolution! and Golden Touch Blackjack Revolution!

It's quite an experience to finish reading _The Black Swan_ during the week in which one of America's most storied investment banks implodes and the wheels appear to have largely come off for the entire banking and (purportedly) hedging industry. I've also just read an article in the FT (from 17/03/08) in which Greenspan attempts to shift the entire blame for the meltdown on to poor risk models. No kidding?

So on one level, current events seem to be bearing out the core argument of _The Black Swan_: that years of 'careful' investing (Bear Sterns made its first lost since its founding this past quarter) can be obliterated by a single unforeseen event (sub-prime mortgages collapsing and taking the credit markets with them as everyone shuts down lending).

So, the relevance of this book goes a long way towards redeeming its arrogant style and irritating structure. I suppose that arrogance is fairly standard in the financial sector (and see where that got the banks!), but I tend to prefer a *little* humility in my books, especially when they talk about the underlying uncertainty in markets and in life. I also felt that at times the book resembled a kitchen sink of ideas -- it jumps between power laws and firm reputation without so much as a 'by your leave' -- and that a good editor could have forced _The Black Swan_ into something a bit more rounded and (at times) coherent. I would advise, for instance, reading _Six Degrees_ before reading _The Black Swan_ so as to be able to make more sense of the random pages that cover networks and network theory.

In spite of my issues with the *format* of _The Black Swan_, I still found the *content* to be extremely valuable for someone with a modest background in statistics and a level of conceptual comfort somewhere between 'cocktail party' and 'cocktail party with financial types'. So with several paperback versions now in print and daily evidence from the financial and real estate markets of the critical effect of "it'll never happen here" scenarios on the real world I'd strongly recommend a trip down to the local bookshop to pick up a copy.

I first saw Mr. Taleb at PopTech, a conference of big thinkers that I went to yearly in first half of this decade, the people that spoke there were all smart, leaders in their fields. Taleb's story was different, he was debunking the core beliefs in the area of investment banking.

Simply put, he is the best thinker in the area of Karl Popper's teachings that I've ever met, George Soros is a more well known proponent of Dr. Popper's teaching but I've never been fortunate enough to meet him.

Black Swan will help anyone that has to make critical decisions concerning investments, and if you think the ideas through maybe other areas of life, better and without emotion. Emotion is the fog of the investment world and Taleb is blowing his foghorn for all to hear, if you invest, read this book.

Learning how the mind filters input in order to accomodate the way the brain organizes information and derives meaning is essential to learning to transcend the belief in causality which is a big part of what keeps us slaves to fallacious belief systems. This book is an entertaining approach to seeing how this works. I will probably go for a third reading of this book.

The "black swan" is something I've intuitively understood for a while living on internet time. 5-year plan? Who knows what will happen in 5 years, show me what you are doing right now. Beyond internet, I've noticed the spread of unpredictability into my friend's lives, with everyone moving, scheming, doing something completely different every few years.

So, I was looking forward to reading this book. It took persistence to finish it. Every time he'd go off on a tangent, talking about Lebanon, how people are wrong, wrong, wrong, and his own very thoughtful life, I found myself skipping. If this stuff hold your attention, you'll have no problem getting through it. He bragged about lack of an editor, and I found myself thinking "Your book is exactly why we need them". Personally, he bored me most of the time. Where was the good stuff, the deep look at emergence of black swans in the modern society? Never got to it. NYTimes review had it right.

3 stars for ambitious subject, and making me weary of the Gaussian.

Like other reviewers have already stated, the author seems so full of himself and his eruditeness that it clouds the message he is trying to convey. I understood his points, and he did a credible job explaining, that forecasting is worthless, the Bell Curve is not to be worshipped, and Lebanon is a mess. But he really lost me when the bankrupt philosophies of atheists Bertrand Russell and Richard Dawkins were trumpeted. Atheism is really the religion of materialism and since Taleb is keen on figuring out what is probable in the finite world, he is on the same page as them. The problem comes when these guys try to figure out the infinite world. With their circular reasoning, they can't do it.

But Taleb tries. He rolls out the the religion of evolution. The author cannot figure out where the generator of randomness comes from so the bankrupt "theory" of evolution is shlepped out to cover that argument. For all of Talebs obsession with proving and testing models, he keeps talking about evolution as if it has been proven. All the author had to do was ask one of his science buddies who study DNA to tell him that the DNA of a gorilla cannot mutate into a human or even a simple step towards it. If it did, the result would either be sterile or dead. In the end, when evolution doesn't work as the generator of randomness, we learn that Microsoft was the result of "luck".

Also, Pascal's faith in God was already on solid ground. He didn't need his comment to an unbeliever to make his faith. Pascals reasoning was simply another support (or justifier) for his already existing, deep faith. Taleb needs to read Pascal's book again.

Taleb is a smart and intelligent man, but he needs to become a wise man.

There are several good ideas in this book that warrant a revisit or a redescription but unfortunately, pearls of thought are often diffused by the litter of anger, snide comments about this and that, and the author's habitual prose of discontinuing the argument with side remarks and personal rambling. While I have no problem with Taleb's prose--and it was cute just before the fifth bracket containing these rambling; and by the way, please use the double dash--they become especially burdensome when you have to read through multiple pages like that in a 329 pages book excluding the bibliography wondering where you were the last you read sensibly. These continuous streams of side remarks and rambling certainly make the reader feels like an unwilling audience chained in following Taleb's own wanderlust through nothingland. But Taleb did warn the reader somewhere in the beginning that this was his own private novel--a device for synthesizing his thoughts. I guess this caveat should have been part of the title--think "The Black Swan: One Man Search for Understanding"--or this tome sent to the fiction section.

If I have only but one content criticism reserved for this book--and it is not Taleb's wayward reading of Popper's Poverty of Historicism, which he concisely but mistakenly summarized as Popper's thesis that prediction for the social world is impossible because we are unable to predict technological innovation (gosh!)--then it is his major claim on the fallaciously severe, knowledge-impeding concept known as the narrative fallacy.

Unless I am mistaken, Taleb seemed to have made one self-contradicting claim here. For only through conjecturing--the act of constructing a series of explanations of some phenomenon that may resemble a narrative--can less robust conjectures be refuted and new knowledge constructed. But if like Taleb, one argues that narratives are fallacious for aiding knowledge growth, then there remains no other way for us to reconstruct some explanation of the past, and by doing so, nothing to be refuted and therefore no knowledge gained.

Unless of course, Taleb understood this point outright and mangled the book in a way such that no major argument, even less a narrative, could be gleaned from it after many frustrating but precious hours of a reader's time.

I give one star for the attempt at tackling an interesting topic that in the hands of a more committed, and yes, more grave thinker with better command for the jewels of thought littered across human history, would have been a mind-warping work; and I also give one star for the excellent and extensive bibliography that has been underserved as a pretty vase for this book.

For such an interesting topic with major repercussions for the existence of human beings in the coming ages of grave uncertainties, who would want to take such an entertaining but unthoughtful approach? For this Taleb should learn something about representation from the book jacket artist, whose designs I give one star as well in both editions of this book.

For any serious person thinking about tomorrow (and beyond) this is a must read. The basic idea, i.e. that much futurist analysis is trapped in Gaussian thinking when the real world changers are found in the "fat tails" of the unexpected is straightforward. While Taleb is a serious mathematician, the book is readily accessible to the layman. He is literate and writes brilliantly with a wry sense of humor that makes the book a pleasure to read. The examples are well researched, and the lessons are thought provoking. One of the best reads in years.

The author is absolutely right. Banks manage risks simplistically, foolishly. Having been in the business myself I often posed questions about the models being used. But when I asked, "Why should the probability follow a Bell curve; what if the context is discontinuous?" the risk management team leaders would call in their math experts and march on.

The Black Swan is also a fun read. The range of the material from the personal to the professional to the philosophical makes for quite an enjoyable experience. The only critique I would offer is that Nassim (or is it Nero) tends to make light of the serious. But then, if you visit his site, he openly says that his favorite pastime is toying with the academics who lead us out on a limb with their epistemological certainty.

David Hillstrom

NNT could have fully explained and supported his ideas with 10 percent of the words and pages. For high efficiency in capturing Taleb's insights, you can read his "Fooled By Randomness" first, which I wanted to be longer, and then scan the first and last chapters of "The Black Swan".

In a remarkably long-winding book with numerous supposed-to-be-insults against anything French (may be the jokes were written during the 'Freedom Fries' movement), Taleb just about manages not to squander his reputation from his previous book. The point(s) made by the author is no doubt a refreshing look at how things "evolve" (they only jump). But the background discussion about that single point, however important it is, is painfully long and very tangential at times. Very unorthodox methods for eliciting reader interest include 'citing' examples about a fictitious author. Some of the points regarding observation biases mentioned in the book can be obtained in any traditional book on behavioral finance as well. Regardless, the book is an above-average but laborious read. Fans of the first book may be disappointed at the seemingly tangential discussions in this book - a black swan of sorts for the author.

There is a lot of great stuff in this book, and it's fun to read. I particularly enjoyed the discussion of Mandelbrot and fractals, without being able to explain why. It is rare that someone would tackle a topic like this, and it is clear that the rarity of discussion is related to the fact that this idea is not a very attractive meme.

But besides that, here is the problem with the book. It is long on problem and short (or vague) on solution. I think that the anecdotal exposition of the problem wasted too much ink, because it is pretty intuitive to understand. (I skipped pages 160 to 200 without missing anything).

Now when you get to the solution (or at least, the alternative approach), you get a fascinating description of fractals, but unfortunately, I don't think the book actually ties this approach in with the problem. I can't see how anyone is going start a hedge fund based on Mandelbrot, but maybe that's the point.

His real life approaches are actually more effective, but he brings them in too briefly. Basically, he prescribes living with a lot of little failures in order to maximize the chance of a big win, while protecting against the big failures (in investing, for example). We need more exposition on that.

His argument is basically that life is the only real game of chance, and it is probably impossible to compute or predict. And I think he needs to spend more time saying, "But cheer up; it's not so bad (and this is why)."

Why do I give a book I call "Vastly Entertaining" only one star? Taleb likes to demonstrate his contempt for journalists by calling them mere entertainers. This is one of his best insights. I'm often reminded when I see the "body language" expert on Bill O'Reilly's show of Sybil The Soothsayer from the prophetic movie "Network". Taleb himself is an entertainer although he might dispute such a characterization. He likes to portray himself the one wise man in a sea of fools. He fashions himself a deep thinker who is cultured and sophisticated unlike the boring MBAs he has to deal with. He is "a legend in his own mind".

In the first book "Fooled by Randomness" he argues that too much editing by book publishers spoils the author's unique style and cadence. The consequence of this opinion is that that book is very poorly written. The Black Swan is better written or better edited. It is much easier to follow. The first book had very few ideas and not many citations. It was personal. We learned a lot about Taleeb - not so much about randomness. The first book is personal. It reads like musings by a man who thought a lot about math and the way it is used in commerce. This second book is rather different. I reads like an issue of "Psychology Today". It is a compilation of research anecdotes from the literature. These stories are mostly entertaining. Taleeb the journalist.

What I learned from Taleeb is that a good living can be made from being a pop guru. He admires Alfred Korzybski and Malcolm Gladwell both of whom wrote this kind of pseudo scientific bestseller that appeals to the reader's vanity. Gladwell you may remember is the genius who assures his readers that they could have been as rich as Gates or as influential as Mozart if they had just practiced more. Korzibski wrote that war, discord and mental illness were just bad grammar.

The great joy of reading this book is to uncover for yourself all the errors. I will confine myself to three examples. Taleeb at one point illustrates some point or other by invoking the Maginot Line. He says the Line showed the stupidity of the French because the clever Germans just went around it. The French indeed made mistakes but the Maginot Line did exactly what it was supposed to do - make the Germans go around. The French never expected the fixed fortification to completely block the Germans - that would have been very stupid. The Line was supposed to channel the expected German tank led invasion to the west where they could oppose them on more favorable ground. The French tanks at the time were more numerous and advanced than the German. The Maginot Line worked as intended it was the French tank doctrine that failed. This is a shocking missunderstanding of history from someone who tells us on every page how much smarter he is than everyone else.

The second example is all the puffery about the normal distribution. He thinks it's evil or at least a major source of man's suffering on this earth. He refers to it as another example of Platonism. Apparently the "ideal form" of the normal curve has seduced many into error. How silly. How Platonic.

He claims that people who have never taken a course in statistics are better off for not having been mislead by the Gaussian distribution. Notice that this is an assertion about the external world but he makes no effort to demonstrate it empirically. Taleeb is an empiricist only to the extent that it allows him to disparage others. It never occurs to him to actually test any of his own assertions. I guess he doesn't watch "Mythbusters" on TV.

All he really does is demonstrate that if you use the wrong math tool you get into trouble. What a revelation! The normal curve is found in frequency distributions. Taleeb mostly uses examples from times series analysis. If someone confuses these two very different analysis domains he will indeed usually be wrong. Taleeb knows all this very well. One wonders if he's being sincer or if he's just engaging in hyperbole to sell books.

All his exhortations about learning statistics makes very little sense. Beginning stat students come to the first class armed with knowledge of how to multiply, add, subtract and divide. They all know about percentages even if they can't calculate them very well. The only real analytical tool they have is the ability to calculate an average. If they are attentive at the end of the class they will learn that the arithmetic mean is sometimes the wrong tool. They will learn that differences between two results may or may not be meaningful. They may learn correlation isn't causation. All these insights are useful but elementary. MBA students enter their first stat class not knowing much math and leave it knowing only a little bit more. That's the reality. Taleeb doesn't want to cure the ignorance he wants to exploit it. Exploitation of ignorance is fine with me as a trading strategy. But Taleeb no longer trades. He quit trading and went into the guru business.

My final example is with his strategy for trading. He prides himself with his deep thinking. He lectures businesspeople about how much randomness and unpredictability there is in the market. At one point he tells us how his lecture attendees often ask him for his sophisticated trading strategy that he developed in the light of his understanding of randomness. He says with ill conceived contempt - they didn't really understand me if they asked such a question. Of course from the attendees viewpoint they want to know what is the payoff for enduring this blowhard's bloviation. When they find out that he has no formula and no worthwhile advice for making money they get mad.

In the first book he tells a long story about how his neighbor across the street made much more money than he did but eventually lost everything in an unexpected market downturn. He hints at how his superior knowledge and appreciation of randomness saved him from a similar fate. In his second book - The Black Swan - he divulges his formula. He doesn't bet all his money every time. He keeps a lot of his working funds in treasury bonds. So he can lose all his "play" money and still pay his mortgage when a Black Swan event happens. Maybe I should have issued a spoiler alert. That's it. That's the punchline. Don't bet more than you can afford to lose.

His neighbor seemed to bet all his funds every time. When his luck was rolling his way he got rich. When his luck turned bad he lost everything. Taleeb has no insight into how to see a Black Swan coming - he makes it clear that that is impossible. And his only advice is to not commit everything you have. He survived the Black Swan turn down because he never used all his funds. Limiting your risk exposure isn't bad advice but readers and lecture attendees expect a whole lot more.

Taleeb believes that there is no way beat randomness except by refusing to be exposed to it. He lives his own advice. He played in the market long enough to benefit from good luck but quit before the bad luck had a chance to wipe him out. Now he writes books and gives lectures. But I already knew that gambling led to trouble. It's called "Gambler's Ruin".

For being yet another Big Idea book, this book is so horribly organized and the idea so incompletely explained that it utterly fails to impart much besides a few simplistic mental models that would have taken about two pages to summarize.

The best part of this book is the concept of the title, which is unfortunately something that he never completely fleshes out in a way that you can usefully apply. Instead, "NNT" spends a ton of time talking about the history of many "slighted" historical thinkers, a club he proudly includes himself in. In order to elevate the status of these maligned heroes, he spends great effort tearing down most commonly recognized philosophers, economists, writers, etc.

There were the kernels of some interesting ideas in here, which never got polished. The editor utterly failed to help focus the text and explain things in a coherent way. As an example, there are long diatribes about the plight of his ancestral home, many jokes about the French, spiteful slurs against Nobel laureates, especially in economics, and a very ironic soapbox speech about the uselessness of editors that "distill one's message until it has lost all value and consistency." Funny, that. We get that you think the Bell Curve is a Great Intellectual Fraud. Fine, fine, but get to the point already and stop ranting like a blogger.

I agree with other reviewers also about the narcissism and delusions of intellectual grandeur. But my main complaint is that the practicality of the distinction between white, black, and gray swans was never really painted clearly. For example, it would have been really interesting to know the details of how he applied the Big Idea to the real-world financial trading he supposedly is really successful at. He doesn't seem interested to divulge the details. If a magician won't reveal his tricks and this book is an essay about NNT's "magic trick" that he doesn't tell you the secret of using, then why buy this book?

This is my first encounter with Taleb's work, and I have to say that I'm pretty unlikely to read any of his other stuff, it being so negatively colored by this waste of time.

By the way, it's not as long as it seems -- the back 20% or so is all references and bibliography. The best feature of this book perhaps, not because I used it, but because it was a welcome end when I thought there was still 100 pages of rant left to endure.

Not only did this book not live up to the expectations I had for it, it was downright lousy.

A "black swan" is Taleb's name for an event that is unexpected, profound, and for which attempts are made to explain it retroactively. The book purported to be about why it is so difficult for us to anticipate such events, and presumably what to do about it. However, like The Tipping Point, the book never got beyond this initial premise and actually said anything. There wasn't much to disagree about in the book and the author shares my overall sensibilities about the random way the world works, but there were absolutely no insights provided, and nothing to take away.

On top of this, the author himself appears to be a certifiable megalomaniac. I've read works of fiction written in the first person where the word "I" appears less than in this book. Almost every page is bathed in the author's reminiscences, anecdotes, unsubstantiated personal views, etc. -- none of it even remotely interesting, funny, or informative. On top of that, the author shows remarkable and clearly enunciated disdain for just about every scientist or researcher, particularly those in the field of economics. There are two or three exceptions of people whom he has personally elevated to the level of demi-god (of course these are all relatively obscure folks). He essentially says that winning the Nobel prize should be viewed as a badge of shame. What a supreme moron!

Good book but I actually enjoyed far more Peter Cave's Can A robot be human. Both books make you think but Cave's is far more fun and accessible.

Mr. Taleb makes some interesting statements but I'm glad I didn't buy the book. What comes across in a most repetitively annoying way is an enormous axe to grind instead of an argument to make. "Only I know" seems to be what shouts from every page and after a while it masks the important contributions his book could have made if he sounded a little less like a know-it all adolescent.

Mr. Taleb seems to be caught up in other people's past evolutions. Another reviewer points out correctly that the Gaussian models have lasted so long simply because we lacked the computing power to develop more accurate models. Other models certainly exist now and we should play with them, but making blistering rebuttals against people whose contributions were limited by the physical and mental technology of the time seems to me like calling Edison an imbecile because he didn't go straight to the development of the MP3.

I'm not a computer whiz, mathematical modeler, or Nobel prize winner. I'm just a speculator who has made a living at being right in the markets for over 30 years, all of it the result of self education through observation. Maybe I would have made more money over the years by being more mathematical. But I've found that it isn't the mathematics of the market that is as important as the psychology....what people think of their models of the market. If people want to believe in Black Swans, Myron Scholes, or Ed Thorp I really don't care. What I make money on, what every speculator makes money on, is the fact that I know what model is predominant in the minds of most other traders regardless of any connection to any so called objective reality. What speculators make money off of isn't models but other people's belief in them. Which explains why despite waiting for the next unforseen event....which by definition can't be predicited...we mere mortals watch the EIA reports, and employment numbers, etc. because other people are making decisions based on them. Are they right? I don't know nor care...I only know that I ignore their beliefs at my peril.

Speculators understand that our knowledge of the markets is imperfect. We know that our failings aren't the result so much of failing to see answers but failing to forsee relevant questions. We are all at some time blinded by our model/map of what is there...the quest for exact knowledge blinds us to systematic wisdom. We all tend to over estimate what we know, or can know and so overestimate the permanence of our current trends or models upon which they are built. A speculator like me may not know the mathematics of dynamic hedging and how it should fit in with chaos therory but I know that my judgments of necessity must be "fuzzy" enough to allow for the possiblity of the "unplanned" model that is or maybe unfolding in the market. In this sense I agree with Mr. Taleb's apparent goal to expand and evolve new models. It's just that he could have done it with a little more grace and with a simple respect for the ideas upon which he will inevitably build his own models.

I'm 94 percent through reading Nassim Taleb's remarkable book about random events having higher than expected occurrence throughout history. I'm an unusual reader however in that many of the people he's met, read about and formed friendships with, I've also had the opportunity to meet, read about or write to. Being the "loner" that I am however, unlike Mr. Taleb, I didn't form friendships with these guys. Didier Sornette and Benoit Mandlebrot are two of his hero's if I can use poetic license, whose works I've followed throughout the years and as an applied scientist working first in the aerospace and auto industry, and now in finance, have had a chance to apply their work and ideas to real world problems. However, I've also been a student of Newton, Kelvin and Einstein all of whom would and did make room for the "Gaussian" curve that Mr. Taleb has disgust for. I would also fall into one of Mr. Taleb's cohorts with whom he has high disdain, since I also was educated in physics and mathematics in the usual academic curriculum. This being the case, I feel I have some credibility to offer a secondary review of his work having used the tools of "Extremistan" as he calls it.

To begin, there are many statements in his book that I agree with. The Nobel self-congratulatory awards, the assertion of many academics to request a mathematical proof of his "theory", the view that mathematics exists only in the mind for nature offers neither a true square, diamond, or triangle, the lack of an explanation for the observation of highly probable events and his continued persistence that an explanation isn't necessary are just an example of his high intellect that in the "real world" we all come to appreciate and assume some brotherhood with this smart-alec of a man. However, there is clearly a mischievousness in his demeanor that snickers at anybody who disagrees with him that is uncalled for. This appears as high arrogance that rightly his mother ascertained from his character when she said to him, "if you can get people to pay you what you think you're worth, instead of what you're really worth, then you've got something".

Let me make a thoughtful empirical criticism which underpins Mr. Taleb's ranting and raving in the book. Mr. Taleb says on page 281 of the Black Swan, "you need one simple deviation to reject the Gaussian, but millions of observations will not fully confirm the validity of its application. Why? Because the Gaussian bell curve disallows large deviations, but tools of Extremistan, the alternative, do not disallow long quiet stretches". His overall argument fails on this one simple account: there are more than one cause in effect for almost all known observations of any phenomena in the universe. What's typically done in physics is to attempt to understand the strongest influencers of an outcome, not ALL of the influencers of an outcome. He fails to understand that it's not one distribution or one cause in effect, but always multiple causes occuring. Extreme events have a different mechanism that triggers cascades while every-day events, those occurring that aren't extreme have a separate cause. One only enters into the conundrum of explanation when you try and link all observations, both from his world of Extremistan and Mediocracistan together into one cause. This is never the case in any phenomena I've ever dealt with or heard about, from weather forecasting, fluid dynamics, heat transfer, chemical kinetics, or the financial markets. There are competing effects going on, not just one. Some trigger daily and can be observed regularly, some trigger every 100 years or more.

Take for example his principal teacher of Black Swans, the financial markets. Okay, so thirsty bubbles, credit crunches, LTCM, October 1987, August 2007 occurred and weren't explained by the "Gaussian" model. Well, for ease of explanation, say there were two underlying distributions with two completely different mechanisms involved. One cause of market movements say, results in a distribution of returns modeled like a Gaussian and the other cause, is best explained by some distribution that has extreme tails, infinite variance and allows for discontinuous jumps. I have yet to meet a physicist or mathematician who wouldn't agree with this and it satisfies Mr. Taleb's points exactly. What he fails to comprehend I believe, is that multiple causes are in effect simultaneously in any problem I've ever encountered, each resulting in its own distribution of outcomes. What's not separable and creating havoc in explanation, are the multiple causes that create the underlying distributions and/or which cause has what distribution?

As a practicing computational and modeling scientist since 1987, I see Mr. Taleb's book as delightfully playful, but certainly amateurish. His understanding of science is quite ignorant really. I was amazed at the name dropping, though he continually disavows making a habit of it. And why Mr. Taleb can't see to find anybody but Herr Dr. Professor Mandlebrot to agree with him is beyond me? Perhaps the physicists he did find who agreed with him, weren't quite as famous as they needed to be, to be quoted in his book. Lastly, being a student of history that Mr. Taleb purports to be, I was amazed he didn't dig up these two quotations, one from the supreme empiricist Isacc Newton and the second from the best theorist I know, Albert Einstein:

Thus far I have explained the phenomena of the heavens and of our sea by the force of gravity, but I have not yet assigned a cause to gravity. I have not as yet been able to deduce from phenomena the reason for these properties of gravity. For whatever is not deduced from the phenomena must be called a hypothesis; and hypotheses whether metaphysical or physical, or based on occult qualities or mechanical, have no place in experimental philosophy.
I. Newton

Newton forgive me; you found the only way which in your age was just about possible for a person with the highest powers of thought and creativity. The concepts which you created are guiding our thinking in physics even today, although we now know that they will have to be replaced by others farther removed from the sphere of immediate experience, for we know that science cannot grow out of empiricism alone.
A. Einstein

I would say that one can't predict extreme events so one doesn't model them generally. It's not a failure of "modelers" as Mr. Taleb suggests, but of tackling simpler problems first. We didn't throw Newton out when his laws failed to account for relativistic velocity; we shouldn't throw Markowitz, Merton, Sharpe, Black and Scholes out either for their early contributions. Sure, they'll be overtaken by Rachev and the Levy-Stable distribution function but in 1968, who could compute a numerical basis function on a piece of paper since computers were hardly around! The Gaussian was used simply because you could compute it; it had a closed form analytical equation.

I found this book highly entertaining. I love the way he writes, his sense humor. But I was very disappointed to see him press repeatedly his complete rejection of the Christian/Judeo understanding of the history of man, the history of God's plan for man's salvation. Ok, he has not the gift of faith. That's ok, perhaps one day. But when I purchase a book on the markets, economics, etc. I expect just that. Not repeated remarks (page 100, 118, etc.) about the non-existence of miracles, how the human race is a mere accident. Why should he be selling this ? Why should I accept his assertions ? On faith ? He's a good man wrapped in a self-contradiction of skeptiscism. I just wish his editor had filtered these things out from the final MS.

Do you agree that being hit with a tsunami has a totally different effect from a normal high tide? If so, you'll be glad that Professor Taleb has decided to point out that all tsunamis (low probability, high impact events) need special attention, even if they occur infrequently. His advice: Minimize exposure to large potentially harmful events while taking maximum exposure to large potentially helpful events.

I was particularly thrilled to see that Professor Taleb points out the foolishness of economists in preparing theories without checking the data to see if the theories work in practice . . . the greater foolishness of the Nobel committee granting prizes for such work . . . and the greatest foolishness of relying on the advice of such economists.

Why all the fuss? Many phenomena display high predictability and the differences from the average usually don't make all that much difference to you and me (that quality is captured by a statistical display called a bell curve where most cases cluster near the average and vary symmetrically from the average). But in some cases, there are rare events that change the reality so strongly (like a tsunami can do on the negative side or a selection as an Oprah book of the month can do on the positive side) that it would be the height of foolishness to ignore the possibilities.

When it comes to assets, wealth, book sales, athlete pay, and lots of other places where there is lots of competition, there are geometric rewards for a few while the mass do poorly. These are long-tail events (the way statisticians talk about lots of variation from the norm). But almost all human decision making assumes that there is little variation from the norm.

The book concentrates on helping you understand why such a potentially harmful bias exists (brain structure plays a large role). We also assume a continuance of what's in front of us, even when there's obvious evidence to the contrary.

I was pleased to see these descriptions. I constantly run into the same problem with executives who are subject to stalled thinking and don't see opportunities right under their noses to accomplish 20 times as much. I liked Professor Taleb's points about overcoming our ignorance of antiknowledge . . . our tendency to discount what we haven't experienced or measured. I frequently see executives estimate that the best anyone will ever do at a level that someone already exceeded in 1880. In fact, in many important areas such as herbal health remedies, our actual knowledge is receding very rapidly, turning into antiknowledge.

To help break you free of how you think now, he uses a metaphor (a black swan -- is that really a swan?) and new terms (Mediocristan -- where the bell curve is the right way to think about things and Extremistan -- where powerful in effect black swans lurk). I found this tendency to be both helpful and not. It made it clearer to me what he was talking about the first time, and then made things seem muddier after that.

I suspect that for most people, the metaphor itself will be the biggest problem. Do you really care about black swans, per se? I don't. I think Professor Taleb would have done better to use two metaphors (one positive -- perhaps like formation and attraction of wealth to the Bill and Melinda Gates foundation and the foundation's effects on world health, and the other negative -- perhaps like a tsunami) than to focus on one that is mostly about definitions (black swan).

If you agree with Professor Taleb's main points, you will probably want to get lots of advice about how to do so. He's specific only in regard to two areas (wealth management and book publishing opportunities). That's a shame. Perhaps he will write a future book that will go more into solutions.

I was surprised to see that the book pretty much ignores the scenario work that many organizations use to identify the large impact, unlikely occurrence events and to devise strategies that work better under all possibilities. If that subject interests you, I suggest that you read books like The Art of the Long View and Inevitable Surprises by Peter Schwartz, Scenarios by Kees van der Heijdan, and The Irresistible Growth Enterprise by Carol Coles and me.

I was pleased to see that Professor Taleb also feels that many black swans can become "grey swans" by employing new prediction methods (although we cannot predict specifics, we can often predict up or down reasonably well in some situations). That has been my experience is seeing that Modern Portfolio Theory makes no sense in unsettled market conditions while more refined methods built stock-by-stock can be quite predictive over the short run in identifying over and under performers, even during unsettled market periods.

Check your models before you use them each day. Otherwise, you've just checked into work without your brains intact.

Keep your eyes and ears open whenever you are away from bell curves!

Taleb is impossible. You could hate him. But if you read him you will never view the world the same way again. It is rare that I read a book where I underline something on every page. This is such a book. Get it, read it, and then you will reread it.

First of all, I agree with the general point of the book. Taleb is right, no doubt about it. The bell curve is inadequate to describe most real world situations, even (or perhaps especially) those to which it is most commonly applied.

There are plenty of reviews here that will describe everything that is right about the book -- and there is a great deal. However, I lost patience early and had a hard time makingmy way through the book. Here's the primary reason why:

It's not well-written.

Now, at first, I did not notice that, because the writing is fluent and of an appropriate level of complexity to be compatible with the ideas being discussed. The problem is something more structural. I'll give only one example.

The author refers over and over again to "black swans" but if you don't read the preface, he never gives a definition of this term. Moreover, even there, he gives only a cursory reference to it. When I read the preface, I figured that the impossibly light treatment of his core metaphor was acceptable because he would undoubtedly define it or explore it in somewhat more depth in the body of the book. No such luck.

If you are a person who skips over prefaces, this book would leae you confused as to what his central metaphor is. Moreover, it's an extremely powerful metaphor. It deserves more than two sentences to describe it.

Near as I can tell, the author's anger got in the way of structuring this book more robustly. He had an enormous amount of important stuff to say, and he couldn't wait to say it, even though the notion of a black swan is both arresting and useful. So he skipped grounding that image in the reader's mind, and made the reader work too hard.

This is one example of ways in which the book's structure interfered in the clean presentation of his very powerful ideas. There's too much repetition, too much anger, too many digressions that look like they should matter but whose relevance is left unclarified.

I still think everyone should read the book. I just wish that was tantamout to a recommendation to work harder than everyone should have to work, just to follow the arguments the author makes.

A compilation of pretentious citations from historical literature and anecdotes, this book is an intellectually hollow basket delivered with a bombardment of flamboyant arrogance. It is a lengthy elaboration of an obvious problem that is widely recognized, consciously or subconsciously, by anyone with some basic analytic education: Total prescience is simply unattainable and thus any model attempting it is inherently defective (recall Gödel). In other words, there is no absolutely correct model -- including those of hard sciences such as relativity and quantum mechanics, but that doesn't make them worthless. A popular analogy among the revolutionary physicists at the turn of the last century makes the perfect point: Models are like Austrian train schedule; you can't trust it to predict exactly when the train will arrive, but without it, how would you tell if the train is late? The moral is, the fact that all models are defective is no reason to abolish modeling altogether; rather, it is a perpetual process of improvements. The author seems deliberately choose to ignore -- it's unlikely he is oblivious of the reason why math models, or for that matter, human knowledge exists.

Thanks to Dr. Taleb -- unmistakably a smart and well-read man but of questionable ego and judgment, for glorifying a trivial observation (the unpredicability of rare events) and canonizing it as the "Black Swan" problem. The trouble is, after being fed with all the model-trashing, it is only fair for the reader to expect an alternative, if not better, approach from the author. That, after I reached the closing period of the book, is still as far from sight as at the time i turned the first page.

To his credit, his two books are selling very well. Fooled by Randomness is #2986 and Black Swan is #104 on Amazon. There were 400+ reviews on them. Many people do not like his writing or his ego, or whatever....

My PhD thesis in Chemical Physics, used least-squares-fit model, employing Schrodinger equation to match the 20,000 spectral lines of Lithium molecule, on the IBM mainframe. The model is definitely not Gaussian.

If you do MBA or PhD work in Physics, Chemistry, Statistics, Finance, Math, Engineering, Social Science..., you already know that Gaussian bell curve is the normal distribution. There are hundreds of non-normal ones, Taleb called them Black Swan. It is a great title to sell books.

The book has shown his ego, everywhere. He bashed everyone, and yet he contradicted himself on many pages.

Top three of the ten principles for a Black Swan-proof:

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks - and hence the most fragile - become the biggest.
2. No socialization of losses and privatization of gains. Whatever may need to be bailed out should be nationalized; whatever does not need a bail-out should be free, small and risk bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organizations staffed with economists) lost its legitimacy with the failure of the
system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.
---------------------
I corrected his spelling of organisation, to organization. His speaks French, oui, oui oui. His French writing is probably better than English. On #3, how do we find the smart people whose hands are clean?

Taleb's PhD adviser, Benoit Mandelbrot of U Paris examined thousands of time- series data sets from many countries since 1950. None of these data sets was normal. The normal distribution is a special case of the Cauchy-Lorentz distribution (CL), named after Augustin Cauchy and Hendrik Lorentz. CL is a continuous probability distribution.

In 2008, Universa funds (managed by Spitznagel, as Chief Investment Officer, and advised by Nassim Nicholas Taleb, as Senior Scientific Advisor) scored returns of over 100% from the global financial meltdown. Is this credible?
I could not find this info from Hedge Fund or Forbes, or any other source.

Look at the Universa website, you get UNIVERSA INVESTMENTS L.P., 1414 2nd Street, Santa Monica, CA 90401, phone 310.566.5560, fax 310.566.5561. But nothing on their client portfolio or investment strategy.

The fact the Taleb is famous on CNBC, Wall Street Journal, media circuits, attracted many new investors to sign up with Universa in 2008 and 2009. Investing in the long tails, CL, non-Gaussian? This is just pure sales-talk and gimmick.

Taleb is a professor that projects his clean-hands image. Hedge fund is not regulated. Taleb and Spitznagel do not have to disclosure anything. Non-disclosure hedge fund is one of the major causes of the 2008 meltdown.

If you invest with Universa or Taleb, be careful. Universa claimed it made 100% return in 2008. Therefore you automatically assume that you will make money when you invest with Universa, Gaussian theory. But if you lose money, it is due to Black Swan.

Is Taleb the "smart and clean-hand" person in finance? He is better than most Nobel economists. Why? Because Nobel economists did not have the black swan to fall back on, when they bet wrong.

The premise of Nassim Nicholas Taleb's book on probability, "The Black Swan", is simple: humans are poor predictors of significant future events, because of the fallacy of our narrative organizational nature, the tendency to ignore outlier markers, and because of the presence (absence?) of silent evidence.

Having never read a book on probability, Black Swan reads easily--it is full of narration, stories--itself a strange fact for a book suspicious and critical of the narrative role in information organization and categorization. Oddly, if you were to remove all the "narrative" illustration, the book would be one-tenth as long and (in my non-scientific opinion) a million times less interesting.

I suppose I could summarize the book, but that would actually be the very hubris that Taleb is so critical of. And so, instead, I'll look at some of the fallacies of a book that is aimed at the identification of fallacies.

First, there is the fallacy of interpretation. In explaining what Taleb calls the narrative fallacy, he uses the story of an Italian Toddler in the 1970s to show how narrative compels. Taleb shows how the Lebanese people--entrenched in a period of sever war--were more in tune and engaged, more compelled, with the plight of this Italian child, thereby proving Stalin's statement, "One death is a tragedy; a million is a statistic" (80). The problem of interpretation is that it is not uncommon for individuals in places of extreme stress to fixate on places of insignificance or personal irrelevance, as a mechanism for dealing with an immanent threat. Severely wounded soldiers have been known to fixate on unrelated events in the moments leading up to their death: worried more about the dirt on their buttons, or the mud on their gun, or a dropped photograph, than on the immanence of their own demise.

Does the Italian child offer supporting evidence for narrative fallacy? Only if there are no other postulant alternatives to why a war-torn people would care about a child some 1300 miles away. Taleb in no way accounts for these interpretive differences. Nor does he give any evidential research--of which he is so proud and insistent in other examples. Which proves one thing: the narrative fallacy isn't just limited to the way we organize information; it's how we use stories to prove it.

Secondly, there is the fallacy of non-equivalent comparisons. In his section explaining the problem of silent evidence, Taleb takes a journalist to task for stating that Russian mobsters were more tough and brutal because they were hardened by the Gulag. Taleb writes, "The sentence jumped out at me as...profoundly flawed..." (107) He goes on to compare prisoners in a Gulag to rats subjected to radiation.

The problem is that rats are mere physicality (body) and impulse--and radiation both weakens and kills both. Humans are both philological and cognitive--but, while radiation kills us physically, it may actually harden us cognitively (ignoring for a moment the period of time that cognition continues past exposure). Gulags were (are) harsh, corrupt and brutal prisons in Siberia--which could, but do not necessarily kill (else we would never have an ex-Gulag prisoner).

If we accept that Taleb's comparison is accurate, we should be able to prove that to increase the amount of radiation (for the rats) and the time in a Gulag (for a Russian) proportionally with the same effects. I am certain of this: increase radiation to rats indefinitely, and 100% of the rats die as a result of the radiation. Increase the amount of time that a Russian spent in a Gulag proportionally and indefinitely, and (yes) the Russian would die (because all humans die)--but not necessarily as a result of time in the Gulag. The example of the rats would be more accurately compared to the World War II German labor camps: radiation and nerve gas are anti-life agents. Harsh conditions and environments in Sibera aren't necessarily (in punctiliar events).

As such, Taleb dismisses that certain harsh environment can harden the will, resolve, and intent of some humans, while also breaking or killing others. Of course, he can draw this conclusion because of his carte blanche endorsement of an evolutionary framework that under girds his premises (something I'll address toward the end). And yet--history is repute with groups, tribes, and individuals who are "hardened" by their exposure to difficult scenarios (the Islamic fundamentalists of 9/11?).

Thirdly, there is the problem of erroneous correlativity. In the same chapter of the book, Taleb writes, "Katrina...got plenty of politicizing politicians on television. These legislators, moved by the images of devastation and the pictures of angry victims made homeless, made promises of `rebuilding.' Did they promise to do so with their own money? No. It was with public money. Consider that such funds will be taken away from somewhere else... That somewhere else will be less meditated. It may be privately funded cancer research.... Few seem to pay attention to the victims of cancer lying lonely in a state of untelevised depression. More of them die every day than were killed by Hurricane Katrina; they are the ones who need us the most..." (111).

Note the assumed relationship: money spent right now to feed staring and shelter exposed people, and money spent on cancer research, are equitable and equally efficacious. However, as long as humanity has been researching cancer, we have yet to have a cure. In reality, the money spent on Katrina victims does in fact (provably) provide for their immediate needs: food today, shelter today, clothing today. On the other hand, all that money spent on dying cancer patients might produce new treatments, or might develop a new line of cancer-fighting drugs, or provide more insight into the origins of cancer. Then again, it might not. At the end of that money and the cancer research, there might be nothing to show for it--nothing but silent evidence that is. Sure, the people in New Orleans might be dead from hunger, exposure, and diseases that come from stagnant water and blight--but at least we now know something we didn't know about cancer two-hundred billion dollars ago: these treatments don't work.

That's the problem with temporal causality: we can't know any other outcomes for decisions that we didn't make--whether we call this the "road less traveled" (Robert Frost) or silent evidence. But there I go narrating again, offering cause where only data should be. Since I'm at, though, let's at least note the narrative language Taleb uses in his own story-telling. These aren't just people dying of cancer. They are "lonely" cancer patients, lying in "untelevised depression" (see the sensational effects of narrative on page 76). Insignificant? Not since "the Devil is in the details."

Isn't this a contradiction of the propensity that Taleb is so critical of? Of course it is. But Taleb is okay with contradiction. Consider on the one had his suspicion of evidence, and preferential treatment of silent evidence. While showing how predictive modeling actually allows for Black Swans, Taleb discusses a casino's attempts to prevent loss through the implementation of sophisticated technology. However, Taleb writes, "It turned out that the four largest losses incurred or narrowly avoided by the casino fell completely outside their sophisticated models.... Conclusion...these Black Swans, the off-model hits and potential hits I've just outlined, swamp the on-model risks by a factor of close to 1000 to 1. The casino spent hundreds of millions of dollars on gambling theory and high-tech surveillance while the bulk of their risks came from outside their models."

What is wrong with Taleb's evaluation? It doesn't account for the silent evidence to which he is so dedicated. Here's the real question: how many millions (billions?) of dollars did the casino save through the implementation of the high-tech surveillance? Suppose they had insured against random tiger attacks and angry contractors (two of the causes of these Black Swan events) but not against loss from cheaters? Would they be better off?

It's a question that can't be answered--and yet it is a question that very much lies at the heart of the argument of the Black Swan. A Black Swan is any significant event that lies outside whatever system you are using for predictability. This assumes that the events that can be seen--a random tiger attack--is a Black Swan because it was big and because it didn't fit into the model of prediction. But what if the real Black Swans--say, the total losses and collapse of the casino due to termites, cheaters, and sudden-flooding in Navada--were all avoided. In light off these things, the four Black Swans the casino actually faced were more White Swans with black speckles.

Let's suppose that the casino risk management had taken into account four of the events that resulted in their great loss--1000 to 1. Then let us suppose that an unpredictable event results in losses 500 to 1. That becomes the Black Swan. And what if that was prevented, but an event that resulted in losses 100 to 1--that becomes the Black Swan. At what point does the ratio cease to have Black Swan effects? 50 to 1? 25 to 1? 10 to 1? Maybe the "four largest losses" are Gray Swans, or Tan Swans, or White Swans that got a little muddy, when compared to the silent evidence of what causality served to prevent. Taleb at least accounts for this early in his text when he writes about "not knowing what we don't know".

The final issue with Taleb's argumentation is his aforementioned uncritical, non voco in dubium, acceptance of evolutionary theory. He becomes the myrmidon of that master, and rests much of his presuppositions. He mentions it regularly--for example, on pages 66, 67, 69, 85, 87, 94, 109, and 133 to list a few--and expounds on this philosophic-religious treaties on pages 117-118. Let it be known that in this day an age, to accept evolution as a working basis is as "clustered" an acceptance as deism was in the 15th century. All the more reason he should be critical of it.

And yet, he uses his argument from silent evidence to surmise the existence of humanity, and life in general: "Consider our own fates. Some people reason that the odds of any of us being in existence are so low that our being here cannot be attributed to an accident of fate... However, our presence in the sample completely vitiates the computation of the odds... The problem here with the universe and the human race is that we are the surviving Casanovas... So we can no longer naively compute odds without considering that the condition that we are in existence imposes restrictions on the process that led us here" (117-118).

The argument is a classic tautology. Regardless of the outcome, the conclusions would be the same. If we were a planet of one non-reasoning (single-celled) life-form, we would be the lucky 1%. But as we are a planet of such vast, diverse, and disparate life-forms, we are nevertheless still just the lucky 1%. There can be no proof for the supposition: we are the proof. And if we find life on another planet, that too is the proof.

It's at this point that we see Taleb stray farthest from his philosophical-mathematical predictive modeling. Despite his dismissal that "there are so many significant dangers to worry about down here on the planet earth," Taleb has a religious--as in narrative explanation of causation concerning the presence (or lack there) of life--agenda.

Taleb writes, "We are not manufactured, in our current edition of the human race, to understand abstract matters." I disagree. Our problem isn't abstraction. Our problem is that, as temporal beings, time and causation are linear. Maybe in the newest Star Trek movie, Admiral Spock and rogue Romulans can go back in time, destroy Vulcan, and utterly rewrite history. For the rest of us, there is only what happened (and what is). And what happened either has no meaning--the collection of words glued together to constitute a 500-page book" (68)--or it means something--like his own book.

To apply this further, Taleb's assessment must account for the possibility that the words of his 368 page book (plus indices and notation), randomly thrown together could become his book--without his help. Without the help of any author. Without error or mistake or omission. (Ironically, his book isn't even without error or omission--can you find the missing "have" in the first section of the book?)

In summary, if what happens (visible evidence)--even in the origins of life--matters, then maybe data isn't the most basic and unrefined (raw) assessment of reality, and narrative just a computational corruption of that information. Maybe it's the other way around. Maybe data only results when there is narrative causation which can be striped of detail and hermetically isolated for study. Maybe it isn't our dependence upon narrative, but our misinterpretation of it, and our further error-ridden reduction of that interpretation into spreadsheet data that is the greatest cause of Black Swans (158).

The subject is interesting enough, even though not exactly new:

- "All terrorists are Muslims" does NOT imply "all Muslims are terrorists"
- Not all random events follow the Gaussian Distribution
- Absence of Evidence is not the same as evidence of absence....

and the author has some interesting examples, where people do not take these facts into account.

The whole book however is marred by the terrible arrogance of the author. At least 15 times, we are reminded, that he can speak French very well, at least once ( in my recollection), that he also speaks German...(and of course English, Arabic.....)
Istead of simply telling something, he must point out, that this happened on his business class flight from Singapore to Paris (or Munich to Saigon, or.....).
Then it gets repetitive: As he apparently had many important trips (or parties or conferences...)which he must tell us about, and not that much of substance to say, he simply repeats the substance.

Without the arrogance (and hence 150 pages shorter) it would have been a good, maybe a very good book - but not as it is!!

The Black Swan: The Impact of the Highly Improbable A highly disappointing text from an erudite and capable author. The book is fallacious, misleading and mischievous. The abuse of simple statistical distributions alone warrants not taking it seriously. It is oversold by the blurb and does not do what it says on the cover. Extremely disappointing.

Kudos to the folks who rated this literary garbage "one star". Taleb is an arrogant, intellectual bully who contradicts himself several times in an disconnected diatribe that could've been shortened by at least 300 pages. Talk about needing an editor. Read this book at your own peril...but don't say you haven't been warned.

"The Black Swan" may seem to be a simple concept, but the implications are more complex and deep than may appear at first glance. The leap from commonplace beliefs to the realization that many of them are just that: commonplace and wrong is as difficult as the leap was for physics from linear Newtonian systems to Quantum physics and non-linear systems. This means waking up to the fact that market crashes, bankruptcy are not freak events but part of the system, it mean that the heroes and idols are due to a perverse feedback mechanism of the media, it means, more importantly, that our complacency about how we treat nature and the environment carries with it risks we cannot even imagine.

I recommend it.

I teach about crisis management and thought this book might be useful in portraying the need to plan for unlikely occurances. Try as I might, I have not been able to get myself to read more than 75 pages and I had to force that. The author apparently made a fortune as a derivitives trader, and wants the world to know about it. He came up with the phrase, the black swan, to describe unlikely but seminal occurances. So far so good, but the rest of the 75 pages anyway has been about how great he is and how his insights have made him rich. Good for him. I have better things to do with my time than read about his unlikely good fortune.

NNT's use of a "narrative" strategy based on a questionable premise (did the sighting of the first black swan in Australia really impact the world?) to attract readers has paid dividends and his book has attained Grey Swan status among Amazon's Business & Investing bestsellers. The author, as he admits, has clearly enjoyed the writing experience which, besides dealing with the Impact of the Highly Improbable, has enabled him to sideswipe individuals and groups he sees mired in a world of Gaussian illusion.

On reading the book for the second time I kept asking myself "is this new to me?" and, if it is, "what is its relevance to me?". On reviewing one's own life to date, as the author recommends, it is clear that much of it has indeed been determined by high-impact unforeseeable events. This does not come as a great surprise - but then Taleb says that it never does, in retrospect! This contrasts with the chilling realization that there are almost certainly more such occurrences ahead. It is interesting to read explanations for why humans "don't know they don't know" they live in an extreme world but many, without realizing it, will already be familiar with psychological phenomena such as "platonism", "tunnelling", "confirmation bias" and the "narrative fallacy".

Interestingly, Taleb seems to miss what could well be the main reason why individuals "don't know they don't know": they just don't want to know they don't know they don't know! It seems to be a natural human reaction to put one's head in the sand when faced with the possibility of unforeseeable, high impact, possibly negative, events - particularly when they believe they can do nothing about them.

What, perhaps, is newer and more relevant to many is the fact that the professionals apparently rely on defective tools for analysing their particular piece of reality. Having some knowledge of the financial world and its questionable mathematical models, I can readily believe that many professionals - and even Nobel Prize winners - are led astray by the humble Bell Curve, as Taleb suggests. In fact the reasonably experienced small investor already has little faith in market "experts". On the other hand this same investor does not automatically transfer his scepticism to experts in other important fields, such as the social sciences, economics, environmental studies and military planning, where predictive errors can be far deadlier.

Besides peppering his text with the names and contributions of important thinkers - apparently a deliberate technique to achieve greater credibility - Taleb gives us some fascinating theory in the shape of non-linear relationships, the limitations of the Gaussian distribution, and the ability of so-called "power laws" to turn some Black Swans into Grey Swans. However this review stops a long way from demonstrating that life is largely determined by full-blooded (i.e. totally unpredictable) Black Swans.

Although I don't think that Taleb will make us see our lives in a totally new light it is important that he reminds us - in case 24-hour world news ever allows us to forget - that day-to-day affairs can be subject to unforeseen, and potentially devastating, modification. He also offers us the flip side: some ideas on how we can take advantage of positive Black Swans. It may be due to a lack of imagination but, not being a venture capitalist or a "quant", I couldn't immediately see measures of easy application in this area. Defence against Black Swans seems easier, namely diversification across very disparate fields. Taleb himself suggests a portfolio composed of up to 90% of extremely safe financial instruments (like Treasury bills) and as little as 10% in leveraged speculative bets like options (ideally involving "venture-capital style portfolios"). His general advise is more homely: learn to recognise undertakings exposed to positive and negative Black Swans, don't be narrow minded, seize opportunities, be wary of government plans, etc.

Many interested in the impact of randomness will find the book a good, if fairly demanding, read. In the end, however, it is not entirely satisfactory. This has something to do with the fact that rather than be carried long by a limpid river of reasoning we are subjected to an avalanche of opinionative observations, some relevant, some less so. Some readers might also find many of the chapter and section headings irritating: "The Vagueness of Catherine's Lover Count", "How many Wittgenstein's can dance on the head of a pin?", etc. I suppose its all part of the relatively successful effort to make randomness fun. But although we'd enjoy seeing pompous academics and self-satisfied hedge-fund partners squirming with mice down their necks is it really necessary to rub the long-suffering French up the wrong way?

My girlfriend was working towards her MBA and received the following assignment. She was too look at the stock performance of a company over a period of time, compare it to news reports and formulate an explanation for the rise and fall of stock prices. In other words she was asked to predict the past. Ah, Economics. `The Black Swan' is about rare and unforeseen occurrences with massive repercussions that prompt `experts' to quickly explain their cause in order to justify their titles as `experts'. We can then all feel secure that our lives aren't controlled by the capricious winds of events beyond our control. The author unleashes an attack on statisticians, economists and others like psychiatrists, college admissions officers, and councilors who claim a high level of knowledge but predict at about the level of a layman. It took about half the book before I felt that I might be starting to understand the authors point and even after putting the book down I'm still not sure I get it.

The number one target of the authors wrath is economists stating that, "the Nobel medal in economics has not been good for society or knowledge" calling the prize "a public relations coup by economists aiming to put their field on higher footing than it deserves" To that I would say "AMEN". Economists have been obsessed with placing economics among the hard sciences. The Chicago school and supply-siders are all convinced that economics can be boiled down to equations on a black board under the assumption that human actors will all operate according to predictable patterns. However the author writes, "If people make inconsistent choices and decisions, the central core of economic optimization fails. You can no longer produce a "general theory," and without one you cannot predict". This is the crux of the problem. Many of these Adam Smith, `Invisible Hand' economists have a worldview built on a faulty premise, that human's will always or even generally make reasonable or logical business decisions. The other assumption is that economics are predictable rather than dominated by Black Swan's but as the author writes, "In the last fifty years, the ten most extreme days in the financial markets represent half the returns" That's a pretty staggering pronouncement.

Be forewarned that this book gets exceedingly technical in later chapters particularly when the author argues that we live in a world based on Mandelbrot's fractals rather than the Gaussian bell curve. The book is also a rallying cry for skeptics and as someone who picks up every issue of Skeptic magazine I found it quite refreshing. Skepticism is more than disbelief it's about questioning conventional wisdom and carefully deliberating the truth or falsity of a statement or idea. It's a lot easier said than done. I have to say that Mr. Taleb exhibits a bit of a mean streak throughout the book. He does not suffer fools lightly and frequently lists people by name that he disagrees with (and believe me when he disagrees he REALLY disagrees). Most of these people are probably only known in the statistical or economic circles and it seemed a tad excessive to call them out in a best selling book. The author admonishes those who engage in Ad Hominem attacks but some of his definitely skirt the edge. That aside The Black Swan is a book filled with great philosophical musings even if I'm still not sure I totally get it. I give it high marks.

This is a very important book for decision makers - it helps explain fallacies of common thought, and suggests ways to avoid these problems. It's written in a style that highlights the achievements of doers over false philosophers and thinkers who encourage this mistaken style of thinking. Fooled by Randomness teaches us the importants of understanding the impact of random events. The Black Swan teaches us not to be fooled by attempts to measure them.

2 big core concepts drive the book:
- Where models (mental or computer based) are used, people too often resort to using "Bell Curve" based models, which dramatically underestimate the occurance of extreme events.
- Even if the right model is used, many events simply aren't able to be modelled. The biggest extreme events aren't contained in the model's parameters or output.

There are several complaints levelled against the book:
- Practioners at least know about #1 - and in the financial markets they don't trust the bell curve. The author would likely admit to this, and takes more issue with academics wedded to the bell curve.
- The author is too pompous and arrogant - It is hard to make a book about mathematical modelling interesting. I suspect with a flatter tone, none of us would have even heard of the book.
- It's too long. All in, it's much more than just a 1 idea concept book like "The Long Tail" or "Blink" - it explores the ideas further, and demonstrates them across many fields.

The book is easy reading, but not to be taken all in one sitting. Mulling over a chapter or so a day will leave the reader understanding some powerful concepts.

I am in the field of psychology and found much of interest here. Taleb's writing about logical fallacies which ALL humans tend to make about the information presented to them was spot on. I have taken some basic courses in statistics (geared towards psychology, of course) and was generally able to understand his points about the bell curve and outliers and his "black swan" concept. His off-hand style of writing did not bother me in the least (I know it has bothered others), in fact the conversational tone of his writing made it seem much more personal and heartfelt. I suppose my main reservation would be that the book seemed a bit repetitive...after a few hundred pages, he seemed to be making the same point over and over again and was not adding anything new to the discussion. This is a minor shortcoming though, and I thought it was a really nice touch that at the end, he thanked the reader for reading his book. I freely admit I have no business background and yet I was able to understand and relate to much of this book; I found the book to be much more of a philosophy essay as opposed to a business primer. Recommended, but a bit repetitive (perhaps I should go back and read his first book, which people have said is excellent).

I finished the book last night and, having read "Fooled" previously (as well as "Dynamic") I liked it a lot. The topics the author explores will be heavily debated by scholars, practitioners, proto-philosophers, philosophers, and others (including Zegna-tie wearing, dark suited men of commerce).

I found that this book explored more of the human side of Taleb than "Fooled". The reader gets some insights to his life, his past (good and bad), and his passions. His story-telling (to make a particular point) is fantastic and very relevant (even if you disagree with the outcome) but that is precisely what makes this book very relevant.

I disagree with some of the readers' comments posted here - and quite frankly they are starting to sound more "bloggish" than informative - this is not a book for newbies, the material is elegantly written but only to those equally elegantly open-minded. In my view it offers a glimpse into a different way of thinking (of living, of trading, etc.) than the standard fare.

I liked it, it's been a very long while since I've seen or read anything original or thought provoking and this fit the bill. I highly recommend it.

This was the most eagerly awaited book this year for me. The US release was on 17th April and I managed to pre-order with a local bookstore (in India) and receive it on 20th April.

The book does not live up to the heightened expectations after "Fooled by Randomness". The 1st few chapters give a background and the author's perception of the "Black Swan". For the rest of the book he keeps flogging a dead horse. Honest and crisp editing was what the book needed.

This book is the best book on philosophy that I have read since Hume. Indeed, the book, like Hume's philosophical writings, is informal. Nevertheless its erudition is prodigious, as indeed is the intellect of its author. The book also contains a half-decent introduction to Levy statistics and similar processes. As I discovered, in physics, the uselessness of Gaussian random processes in the theory of spectroscopy forty years ago, it was a shock to realise that my pension fund is probably managed by people who regard Gaussian processes as an a priori given.

Nassim Taleb's book is amusing, or perhaps droll, as well as profound and erudite, and his stories of growing up in Lebanon into the beginning of the civil war there are fascinating.

A book not to be missed.

I made a genuine effort to get all the way through this book, but life is too short to waste on such vacuity. It's strange that the author, being so intelligent and well-read (as he never tires of telling us) didn't realize that the sum of his work has been merely to lift some ideas that have been around for millennia, for example, in Buddhist thought, and rebrand them with management buzz words. Or maybe he did.

Worse, his exploration of these ideas, which he claims as his own, fails to rise above the level of platitude. Endlessly repeated platitude.

Verbose and unbearably pompous, Taleb takes close to 500 pages to say `man doesn't understand the universe' (with the exception of himself, naturally).

The book has merit as an autobiography - a portrait of the type of hubris that rules world financial markets. In this respect, a different title would be more appropriate: `Look How Clever I Am.'

There are some very interesting insights in this book, but it is a tough slog. The writing is sloppy and encumbered with too many self-absorbed side-tracking musings. A good editor might have made this book good. The good news is that it is very easy to put down and walk away from it, so the commitment is not too overbearing once you start it! The concept of a Black Swan as an unexpected event might well become incorporated into common language, so kudos for this.

When I first heard about this book and its premise, I was quite eager to read it. Unfortunately, the book disappointed me.

The premise is quite interesting and the book contains many good ideas. However, the book is marred by the Taleb's ego. I found this really sapped my enthusiasm for reading further and extracting those good ideas.

Also, his criticisms of other ideas are often wrong. For example he criticises economics for not being able to deal with differentiated products when it does.

At the end of the day, I found this book difficult and frustrating to read. It had some good ideas that I have taken away, but I wonder whether it was really worth the effort.

Lastly, I couldn't resist making a very pedantic quibble about the cover - black swans have read beaks with a white band across the front, not orange beaks with a black tip like white swans. It seems the cover designer and editors are victims of the black swan effect.

It is obviously a difficult exercise to write a popular book about (applied) Science without turning into a populist pamphlet, especially for an upper class intellectual, and it is almost inevitable to end up oversimplifing one's discourse by emphasizing a few examples over others and making theories out of those examples, but I think the book overdoes it! By a fair margin. Worse, by attacking modelling tools like the Gaussian, models and modelers (as a conglomerate of "charlatans"), the Black Swan contributes to the anti-Scientist discourse that is unfortunately so prevalent today. Being a skeptic is commendable and scientists should never cease questioning their models, but throwing all models to the winds and using only "facts" to drive one's decisions is not very helpful. As put by George Box (or by someone else before him), "all models are wrong, but some models are useful" and statisticians can devise tools to assess how wrong and how useful without falling into the "statistical regress argument" (p.310). Encouraging a total mistrust of anything scientific or academic is not helping in solving issues, but most surely pushes people in the arms of charlatans with ready answers.

Idiom: "Don't let success go to your head"

Dear old Taleb, what an ego, and such Cheneyesque arrogance.
This was my first Taleb book, and after the initial thrill of finding someone who shared my concerns about "statistical methods", I realized that this author, rather than being informational and thought provoking, was on a tirade. Not simply an occasional rant, but a continual outpouring of ego and insults to many accomplished mathematicians and thinkers.
I'm sorry that Taleb failed to heed the idiom above, but too many of us do allow success to go to our heads.
As an engineer, I have successfully applied the "white swans" to the design of aircraft wings, aircraft engines, and several other products we use today.
Taleb, I'm sure, was grateful that the work of some of the people he criticised (indirectly) helped to keep his airplane aloft as he flew around the world promoting his book.

I am not ashamed to admit that I only discovered one black swan during my research years in England - a discovery which happily led to my being invited to work at three of the world's major aerospace companies.

Regarding this book, I would recommend saving your money - BUT if you do want to fund Taleb's comfortable lifestyle, then limit yourself to his first book (which I decided to borrow rather than buy - just in case!).

Book Review submitted by: Stephen J. Hage, SteveH9697@aol.com

In this book Taleb uses the term black swan as a metaphor for the unexpected. He chose it because, before Australia was discovered, people in the Old World were convinced that all swans were white.

The bombing of the Twin Towers in New York on 9/11 is a perfect example of what Taleb means by the term black swan. Other examples are best selling books by unknown authors and insanely popular new restaurants. He also points out that another type of Black Swan is the highly expected event not happening.

The defining characteristics of black swans are puzzling; a combination of low predictability and large impact.

Taleb's central theme is since Black Swans are unpredictable we need to adjust to their existence and that trying to predict them is futile. The best way to do that is by focusing on antiknowledge, or what we don't know. This advice provides the grist for his engaging, thoughtful and thoroughly provocative expository mill.

Taleb is an iconoclastic polymath who lays bare the futility in our belief that we actually can predict the future with any degree of success. And he shows this to be true by demonstrating the abysmal track records of those high priests we rely on like stock market analysts of every ilk including the mathematical economists or "Quants."

The true and lasting value of this book is Taleb's ability to write by telling stories that deal with subjects that are complex, abstruse and difficult to understand. But, not to worry; the stories are easy to read, fun and highly thought provoking.

The subject matter deals with almost any situation imaginable and identifies techniques we can all use to protect against being hoodwinked by "experts" willing to advise us on how best to handle complex situations and how to position ourselves to collect serendipitous Black Swans of the positive variety.

I strongly recommend you read this book. And, if you do, I promise you won't be disappointed.

I'll save you the trouble and the money. Here's the message (if that's what you'd call it): Crazy things happen...be prepared...if you can. There, aren't you happy you didn't waste any piece of your life reading this book, like I did?

Taleb wants to tell us about 'Black Swans' - highly improbable events that have a disproportionate impact - and the subject couldn't be more timely, in light of the global financial crisis, and especially in view of his (2006) comments on the precarious state of Fannie Mae. He makes the point that much statistical theory (and certainly economic modeling) assumes normally-distributed data, whereas the real world ("Extremistan" in his parlance) contains significant outlier events that can create havoc with models - and, as we have seen, with shareholder value.

Another bonus is that he is widely-read, widely-traveled, and eclectic in his sources. So he should be worth listening to. Unfortunately, he spends most of the book telling us about himself, and in particular how only he and a select few academics (Benoit Mandelbrot comes in for particular praise) really 'get it' as far as probability is concerned. He is a self-described 'erudite' whose exotic background (Lebanese Greek Orthodox, with several languages) gives him special insight that more pedestrian practitioners lack. Taleb spends much of the book reiterating how fraudulent, foolish or ignorant most economists, mathematicians and philosophers are; and how 'NNT' - as he prefers to call himself - has, through his empirical work as an options trader and his wide reading, achieved insights that the Nobel laureates have missed. (Nobel laureates are especially scorned.)

Apart from the self-aggrandizing and repetitive nature of his prose, the book's main failings are that Taleb tries but does not succeed in making the case that stock-market returns are fractal in nature (sorry, Dr Mandelbrot - this was discredited some time ago), and he offers virtually no useful advice on the central problem he raises. That is, given that Black Swans are so far outside our normal experience that they cannot be readily modeled or predicted, how should be prepare ourselves for the worst (or the best)? Taleb's answer: think outside the box, pursue potentially 'good' Swans, and hedge against bad ones. Oh, and 'don't be a sucker'.

I was - I paid money for his book.

I read several chapters and had to stop because I felt I was losing my time in hopes that something interesting would pop up in the next paragraph. But it didn't.

There is nothing really original about the "black swan" idea. Not all events fit a bell curve, ok. Taleb claims that there are more black swan events than we think, that they shape the world, but we underestimate their impact etc. All of these are petitions of the principle. There seems to be no sound reasoning in the book.

Taleb is rightly critical of people who make induction from a few examples. But he makes inductions from a single instance, instead. In the discussion on "scalable" vs "non-scalable" work, he proves to have limited knowledge in economics. Maybe this is too severe : Keynes and Knight are briefly cited, and Hayek is discussed. Well, I will stop here.

If you read Fooled by Randomness, or have an ounce of statistical knowledge or common sense, dont bother reading this book. Theres nothing new here. It could all be said in about 10 pages.

Also, the arrogant writing style is really annoying.

I have to admit a large bias.

I really like Nassim Taleb. I definitely don't agree with everything he says, but I understand why he is trumpeting his views. Perhaps it is because I trade the markets too.

I have been trading through the same time period as Nassim. We trade with similar utility functions, in that we primarily profit from outliers. It is a terribly difficult way to profit, but the benefit is you understand the true nature of the human race the way it truly is, a jungle.

We need to make sure we are not the prey.

When he writes, he is often irritating. It is a device to make people think. Thinking is hard, and he knows that. But crucial.

Does he agree with many of the standards of measure that dictate "business as usual" in today's commerce? No, very few. Because he believes, and proves, that the normal limits that business and typical education instill on the rest of society are limits that you likely can't afford.

For example:
A belief that might only be incorrect just once in your lifetime better not be one that can cripple you financially when you are 68 and can't recover. Or even a whole generation at the same time.

Thanks to Nassim Taleb's Black Swan, there is clear indication and warning that the world's foundations of thought, money and finance are not built on reality, but a form of "reality" that benefits a narrow slice of recipients.

He does believe in 2 plus 2 equalling 4. But, he gives clear evidence that there is too much reliance on "what everyone takes for granted" structures which can evaporate overnight when it doesn't work for the "powers that be".

Far from being a conspiracy promoter, Black Swan exposes the culprit that makes one feel overwhelmed or victimised by unexpected events to be OUR unwillingness to accept the fact that life isn't a risk-free gesture and YOU have the responsibility to think for yourself. Or risk potentially dire consequences.

Joel Rensink
Archimedes Investments

I couldn't get past ALL the grammatical errors, a split infinitive on every second page it seems, and the sexist langauge, always using "he" as the generic reaslly put me off. Didn't this have an editor? I bought 2 copies, 1 for me and 1 for a present, and BOTH books have black splotches of ink all over the pages in at least 30% of the book! Not impressed at all. It was not an easy read - he bashes philosophers (I have no problem with that), but then seems to fall into the same philagonist tone as those philosophers with whom he takes exception! Facts were great, but an editor would have helped! Did not enjoy, most disappointing. The publisher's fault, poorly presented.

As a professional portfolio manager and CFA charterholder, I found this book to be of utmost importance in understanding the true risks we face in today's markets. With several 3 and 4 standard deviation events in the US stock markets this year alone (Gaussian standard deviation implies probabilities for these events such as 1:15,000+), it is obvious that we must strive to understand risk in a new scientific way.

Nassim is brilliant, and this book will become a classic!

I got a great many headaches trying to keep focused on Taleb's book--yet enjoyed it immensely. It was, to be sure, challenging reading. It gives me hope (a forlorn hope, granted) that publishers might take heed and slow down the constant stream of "get rich quick by following my formula" and "C'mon, C'mon Get Happy" books. The white swan proclaims that if one poor boy can get rich, so can you--by buying his book. It also says that if the grinning guru on the cover with the dove on his shoulder has found nirvana, so will you. We so love that.

Sadly, people the world over want to believe there are only white swans. Budding young writers want to believe "quality" is their assurance of publication when in fact it is chance (or privileged status, of course). Politicians who merrily predicted the outcome of the Iraq War now have a big black swan staring in the window at them. The workings of a jury, the terrorist eluding `perfect' security and `controls' over world economies will never follow the sagest of predictions. We'll dance naievely on, however.

I'm not a great intellectual and yes, Taleb's style at times made my teeth ache, but this is a book that will stand the test of time.

by the author of "The Swan" at www.SwanTales.com

The title of this book is bound to attract attention of even those who are not interested in ornithology. Well, the least expected event is what this book is about and the contents are much more interesting and exciting. Nassim Nicholas Taleb is at his best once again and this time one is not to be "fooled by randomness", but be prepared to be taken by total surprise by the extreme impact of the totally unexpected event.

Literature, business, history, statistics, anecdotes and lots of humor, are no longer the surprising polymath capabilities in Taleb's writing style. Intellectually stimulating and conceptually innovative, this book is bound to engage and challenge all the grey cells of an average reader, and I consider myself one amongst this crowd. But then most of us belong to "Mediocristan" where a single large deviation in the observation or measurements is not likely to impact the outcome of the whole population. This is perhaps why I used the term "average", meaning a "normal" distribution of readers. We always expect the "average" and deviations are considered errors from this expectation. Taleb describes our tendency to "Platonify" various observations, restricting the scope to see beyond limited space and hence to miss out the possibility of "Black Swans". We tend to "normalize", using a popular mathematical distribution that Taleb terms as a Great Intellectual Fraud (GIF). An exclusive chapter on this topic including the photograph of the German mathematician Carl Friedrich Gauss on a Deutschmark bill, firmly "bells" the cat. (Statisticians beware; do not read this book unless you have lots of patience and tolerance.)

If this is "normally" the case, welcome to Taleb's "Extremistan" or the land of Black Swans. Three principal characteristics of Black Swan events are: "rarity, extreme impact and retrospective predictability". By this definition, 9/11 was a black swan and so was the collapse of the US Stock market in 1987. But the good news is that Black Swans are not necessarily negative in their impact and results. The Personal Computer and the Internet are clearly Black Swans of the last century, though their impact had been relatively gradual but certainly very high. The positive Black Swans tend to be of such nature compared to the sudden impact of the negative kind.

This book is about the great opportunity that lies in developing our ability to see the Black Swan phenomenon and gain from it rather that being caught in the trap of limited knowledge created by existing models.

I found the concept of "scalability" of professions another very good take away from this book. A good surgeon for example needs to perform a hundred surgeries if he has to earn a million assuming he makes ten thousand bucks per incision (and is fortunate in not being sued for doing it the wrong way). On the other hand a new product design or a book that becomes a craze can make its owner a millionaire overnight since the cost of reproduction and global distribution is miniscule (assuming that we are operating in markets that respect patent rights) and does not require any of his additional effort.

The glossary at the end of the book is very helpful to understand some key terms used effortlessly and appropriately by the author.

Reading a lot of the reviews, it strikes me that some people have missed Taleb's point---the book isn't really about statistics, or economics, or finance at all. It's more of a lifestyle guide---how to live in the presence of unknown unknowns. Simply put, one should be humbler about what can be known---don't fall into the obvious traps of epistemological arrogance about what can be known, or what Taleb calls the `ludic fallacy'---stop trying to fit things into a Gaussian box because things are computationally and philospohically more tractable that way, and go for things that all long odds. Most of the time you'll lose small. But when the big one comes around, you're made for life (or completely undone). One can apply this principle all over the place, the most mundane example being investments, or going on dates, or reading books, etc. Overall I enjoyed TBS, but really enjoyed Fooled by Randomness, which I think is better written. It's just as smart as TBS though. Taleb's Dynamic Hedging, btw, is the best finance book I've ever come across. I teach financial economics straight out of it to undergrads, and they get it. Personally I'd love to take a course from him. As another aside, Tabeb's site, www.fooledbyrandomness.com, one of the ugliest on the net along with Neal Stephenson's, has some lecture notes/technical papers/podcasts/etc.

This is a brilliant book--fascinating thesis, and great exposition. In terms of understanding reality and how the world works, Taleb has made a genuine and important contribution, the real deal.

Probable events occupy our minds. Improbable events (black swans) are oft-ignored, yet can have huge impacts on all of our lives. That is the insight of this book. Hardly seems worth an entire book, unless the black swans are coming to get you, and me, and thee. Then it might be worth a read.

Statistical improbability is clear: the needle differs from the haystack. A big event can be rare and widespread -- think of a tsunami, a market crash. By their very nature, these events are not factored in, as we go about planning our daily lives.

This book argues that this aspect of human nature is a form of ignorance. That these rare events occur in a quite regular fashion, a few each generation, and more are coming, as our society grows in complexity and unpredictability.

Therefore, if we accept the idea of a black swan, we can calculate strategies, hedges, which protect against them. If one bad hurricane hits your hometown every thirty years, then at age 30 you need to buy hurricane shutters.

In that this insight should inform investors, Presidents, home builders, and insurance agents, this book is valuable. Rather than relying on our gut instincts, we need to seek the counter-intuitive. In that the author tries to be folksy and is instead sort of smug (his snide aside on Bergson for example) and sort of irritatingly repetitive, a reader will begin to wish this was a long New Republic article instead of a book.

(As a final comment, a reader begins to slowly sense that the author is not adequately representing the statistical sciences, and their take on the unlikely. There is a sense that what is being attacked is statistics 101, and maybe statistics 301, and not anything more complex than that... almost as though his insights must be claimed as unique in order to validate his book sales strategy, and that perhaps a few counter-texts are being over-looked here? That wouldn't be too improbable now, would it...)

In _The Black Swan_ Taleb holds forth on topics relating to chance and our understanding of them like a pompous college professor who enjoys hearing himself talk. He often does so knowledgeably and interestingly, providing anecdotes from business, history, and science. He falters when trying to sum up whole fields, like economics, or makes generalizations about all the social sciences or hard sciences.

I enjoy this book for its observations and erudition, and even more so its original thought. On the other hand, the content is at times a little self-indulgent. So I am grateful I can take in its contents in book form rather than having to receive the large ego of the author in person.

When you see a Black Swan coming, duck! This book is a must-read for any investor or business owner who wants to survive the next market meltdown!

The best I can say is do yourself a favor and read all that has been eloquently stated in the one star reviews. This book is a rambling, arrogant, piece of trash. It was the only book I brought on a month-long Arctic expedition and I eventually burned it rather than have carry it one step further.

After seeing Taleb interviewed on television, I thought I would give his book a try. After 60 pages I realized how much I was hating this book. His cutesy style, the digressions and occasional partial sentences started to drive me to distraction. He needs a better editor to show him how to write clearer. I returned my copy to the library without completing it.

Terrible book! I've read a little statistics and cognitive science so, I was enthusiastic about this book when I first heard of it. I tried to get into it but found it so poorly written that I abandoned it. For me, this is rare. I usually just put something aside and tell myself, I'll get back to it. Here, however, no interest. Then, I heard Naill Ferguson praise the book so, I figured I'd make a second attempt. Taleb's facts are pertinent and accurate but, his style and interpretation is akin to juvenilia. Ferguson's poor judgement here confirmed for me a growing suspicion that he too is more air than intellect.

The ideas are interesting and relevant. Unfortunately,
the author can't get over his own ego, this makes it
an annoying book to read, where it could have been
a real pleasure.

I just finished reading the Black Swan by Nassim Nicholas Taleb.

The book is about the disproportionate effect on our world of highly improbable events, and the difficulty of predicting those events. The name comes from David Hume's observation that many generations of Britons' only seeing white swans was not proof that there is no such thing as a black swan (which do, in fact, exist).

I found the book very disappointing. It started out with so much promise; I looked forward to reading all sorts of anecdotal stories of these so-called black swans, and about the disproportionate effect on our world.

Instead, what I got was a 300 page diatribe by one statistician against all the others in the world who disagree with him, punctuated by an occasional gratuitous insult of the French.

After enduring several hundred pages of personal stories about the author's quest to make his statistical theories known (which are not quite as controversial as he would make you believe, by the way), finally in Chapter 15 it seems that he will get to the meat of the matter. Unfortunately, even though the next three chapters were laden with graphs and figures, I encountered no such explanations. Or, if there were any, they were muddled at best.

Even the anecdotes were disappointing. I was excited to start reading about a great vindication of his - the collapse of LTCM in 1998 (which was run by several of his statistical nemeses) - expecting to find a wonderful explanation of what went wrong, and all the financial turmoil which resulted. Instead, he simply stated "it went bust." Duh.

I have no idea why this book has been so highly touted. Perhaps it is because it came on the heels of 9/11, and just before the credit turmoil which started in 2007. But it's not worth your time.

First of all, I must say I agree with most of Taleb's philosophy. The book shows the deep understanding of the human epistemology and the overlapping fields, and a certainly proper way to see the uncertain. However, everything is over at this point. His philosophical thoughts could be condensed in a fraction of the book, and Taleb could spare us a lot of digressions, pointless cultural references and dull stories. In addition, the writing style is hard to follow, somewhat boring and bombastic, and not necessarily cultured, and it displays a (maybe exaggeratedly) notorious cockiness. Mandelbrot's popular works (being him one of Taleb's heroes) state many of these ideas, proving other people wrong (or going against them), without being so insulting.

The impression I had, while and after reading the book, is that Taleb's intention (or desire), maybe hidden and unconscious, was aimed at writing a compendium of his thoughts, much like the work of all these philosophers he tells us about through the book (Popper, Hayek, Huet, Montaigne...), capitalizing on his previous best-seller and his reputation as a leading quant-finance professional. But he fails, giving too many distant stories and a lack of structure that does not match the depth of his philosophy. The book ends up being a narration, precisely one of the things the author warns us against (a fact already noted in the preface).

In conclusion, a badly conveyed but great philosophy.

Nassim Taleb has written a very enthusiastic book, and provides some very tasteful food for thought. The problem is, Taleb himself is far too pleased with his own work.
Talebs confidence in his own ideas helps him write a book which is easy and fun to read. For an economist, interested in the philosophical background of the science, he offers plenty of very interesting references. I will most certainly dig more into the thoughts of Karl Popper and Benoit Mandelbrot.
But Taleb's confidence also helps him make several rather banal mistakes. His main adversary is the statistician Gauss and his normal distribution. Taleb is right that many economists and financial analysts rely far too much on normal distribution. But figure 7 on page 238 reveals that Taleb himself does not understand the concept pretty good: "..as your sample size increases, the observed average will present itself with less and less dispersion".
His confidence also makes Taleb jump to conclusions and make banal errors (the French Maginot Line, the main line of defence built in the 1930s, was not built where the Germans attacked France in World War One). Taleb even goes in his own primary trap: the confirmation bias. Every little thing happening by chance is counted as evidence of his Black Swan theory. But the story of penicillin is famous just because it was sensational, not because it is the normal way of making major medical breakthroughs.
It is probably not worthwhile to read this book, although there are grains of gold in it. The book is written in the spring of 2007, before subprime. In a footnote Taleb is writing about the risk of Fannie Mae: it "seems to be sitting on a barrel of dynamite." Touché!

I have a lot of respect for Taleb having read his first book Fooled by Randomness (2001) to which I gave an enthusiastic, if critical, review. But this book is so self-indulgent and so breezily written that I just want to throw up my hands and say, "Get an editor that has the ability to edit you!"

What has happened--and this happens frequently--is that Professor Taleb, still basking in the success of Fooled by Randomness, has gotten so arrogant that he believes he can just write what comes into his head and presto! it's a work of art and erudition, and so obviously a fine guide to right thinking that we should all applaud. Because of his prior success his editor spares the blue pencil even though Taleb is verbose, repetitive and digressive to the point of exasperation, and seemingly unaware that some of his pearls of wisdom are pinto beans. The irony is that this book's sales will easily exceed those of Fooled by Randomness, and his editors and publishers will think this is a better book when it is not.

I think what he was trying to achieve is a style that he credits to one of his heroes, Henri Poincare. Taleb eulogizes, "The grand master wrote these wonders as serialized articles and composed them like extemporaneous speeches. As in every masterpiece, you see a mixture of repetitions, digressions, everything a 'me too' editor with a prepackaged mind would condemn--but these make his text even more readable owing to an iron consistency of thought." (p. 174)

I think in Taleb's case it is an iron redundancy. But then on the other hand I found in his unorthodox expression ideas that wondrously tense the mind and make for an interesting read, so that on balance I have to say the book is definitely worth reading.

In my review of Fooled by Randomness I wrote:

"The central image of this interesting, erudite and somewhat self-indulgent book is the "black swan," a metaphor for both the rare event that eventually will happen, and for the fact that you can't prove a negative (the problem of induction) because no matter how many white swans you count, you do not prove that the next one won't be black."

Well, I could write exactly the same thing in a review of this book. The Black Swan is an elaboration on his previous book. What is different about this book is the number of (fictional) stories he uses to make his points. This is somewhat ironic since he dismisses what he calls the "narrative fallacy." (But I'm sure the nimble Dr. Taleb has an explanation.) This book has more characters than some Russian novels including Fat Tony, Nero, the author himself ("NNT"), Casanova, "Yevgenia Krasnova" (who apparently exists but not by that name), the nerdish "Dr. John," etc.

A notable addition is his notion of "Mediocristan" and "Extremistan." The former is a fairly predictable place. Two examples are casino games and human life expectancies. There is no possibility of black swans. In Extremistan, however, where there exist stock markets, politics/war and other highly complex real world entities, black swans are always lurking, ready to fly into your face with complete capriciousness.

Some high (or low) lights:

On page 155 Taleb claims that the "practitioners of something called game theory...are no better at predicting than university students." No doubt he has some reference in mind, but I couldn't find it in the endnotes--which brings me to another problem, the endnotes themselves. They are in a bizarre form without page or text reference. They are arranged by chapters, but there is no way to tell which page the note refers to. Taleb explains "I separate topics thematically; so general references will mostly be found in the chapter in which they first occur. I prefer to use a logical sequence here rather than stick to chapter division." But what I think happened is that he just didn't bother to keep track of his references and when he was told by his publishers that he needed them, he came up with this dodge. Annoying.

A nice take on complexity is this billiard ball example from page 178: The first impact is fairly easy to access with enough information about the balls, the table, the force of the cue ball, etc. The second is more difficult, but "to correctly compute the ninth impact, you need to take into account the gravitational pull of someone standing next to the table." (!)

Taleb sees "nerd knowledge" or the overestimation of our understanding as a disease "severely ingrained in our institutions. It is why I fear governments and large corporations--it is hard to distinguish between them." (p. 180)

"...[L]anguages grow organically; grammar is something people without anything more exciting to do in their lives codify into a book." (p. 182)

Perhaps part of the genius of Taleb's intent is to write wildly while insulting lots of people, especially anyone wearing a suit or having a corporate address, and especially anyone working on Wall Street. This way you invite not just book chat comment but the slings and arrows of outrageous indignation and affrontiveness. People write nasty reviews, people become incensed, Taleb replies in kind, etc., and the sales totals rise and book biz execs take notice.

An addendum on induction: the reason we cannot put black swans neatly into the bell shape curve that Taleb so rails against or assign a probability to their occurrence is that we don't know the denominator. We know for example that a certain event--say a 10k-wide or bigger meteor hitting the earth--is very rare, the last one perhaps hit the earth 65 million years ago. So we know the numerator (a small number, maybe even only 1), but we have no idea what the universe of possibilities might be. The denominator is obviously a large number, but HOW large? We don't know.

The book discusses a technical aspect of the nature of risk, one which is widely misunderstood and which, as a result, leads us to make bad choices in our investments, our careers and more generally in our lives. It deals with mistakes we make in drawing inferences from the past and using these inferences to take decisions whose effects will be felt in the future. The example is given of a turkey born in early December. The turkey enjoys 300 near perfect days in which its every need for food, water and health care are met by its generous keepers. Now this turkey, if it were a thinking turkey, would develop nothing but affection for his keepers kindness and generosity, an affection that would be confirmed with each passing day until one nightmarishly horrible day in early November. In helping us to understand the limitations on "over-inferring" from past events, the book has an enormous contribution to make in helping us to manage the risks in our lives. However, author Taleb does not live up to the challenge.

The problem is not that Mr. Taleb does not understand the material, he does. However, an overconfident Taleb, driven by his intelligence and dominion of the subject matter, but sadly not by any sympathy for his readers nor patience to edit, has made a mess of a book that is very difficult to get through. The book is more dictated than written and one wonders what the dozens of experts effusively thanked for reviewing earlier drafts actually did.

Finally, Taleb has created his own language to define the concepts he is trying to describe. It is maddening. What on earth is an "Apelles-style strategy" or a "bildungsphilister"? The glossary of terms in the back of the book only serves to compound the confusion.

Bush publicly stated that The Black Swan made an impression on him (while addressing a large gathering of decision makers, engineers and defense representatives in a recent conference). I, instead, simply enjoyed reading this irreverent, if not iconoclastic, account of probabilistic aspects of social, economic, and political systems; they are all afflicted with Black Swans which are events with low probability but extreme impact.

Contrary to the the conventional wisdom which has wholeheartedly adopted Gaussian models (the famous bell curve) in harnessing uncertainties inherent in economics, stock markets, social dynamics, and political (in)stability, Taleb makes an erudite and entertaining case for the extremes in real life. Stochastic processes displaying large variances (occasionally referred to as with heavy tails, self similarity, or chaotic behavior) are commonly utilized in technical fields such as communications packet networking. In (so called) sciences such as economics it appears that the academia is still trapped in the normal probability distribution stronghold which Taleb describes as dealing merely with mediocristan. This ignorance is dangerous as it can underestimate extreme variations and risks. Just re look at the 1987 wall street debacle, 1997 money crisis, spectacular hedge fund implosions, and more recently the sub-prime mortgage meltdown which is still playing itself out. No one predicted it! Taleb would rather take shelter in empirical bottom-up approach instead of depending on elegant and respected academic models built with false premises.

Taleb is a witty writer with exotic background (born and raised in middle east as a minority with training and professional stints in US and Europe). He takes a direct and convincing shot at some well established names especially in the field of economics, some even bestowed upon with Nobel prizes. According to Taleb (and it is difficult to disagree) almost all of them are suffering from this shortsightedness in platonic-ally simplifying the true random nature of these human institutions and disciplines with simplistic bell curves. For example, human height is normally distributed as most people are centered around the average height. However, such normal models cannot describe individual wealth which has extreme distributions with large variations! Taleb eloquently analyzes such inadequacies in Gaussian economic theories, models, and publications displaying professional dishonesty, ludic fallacy and epistemological opacity (the last two terms seem to be Taleb's gift to the English language). Despite these blatant insults to economics, you have to really read this book even if you are or aspiring to be an economist. For the former it will help you bring closer to reality and for the latter you may be motivated to rethink your career options.

Unlikes many other non fiction bestsellers, this book does not provide a recipe for making more money for the practitioner or getting a Nobel for the academics. It is one of those increasingly rare writings that deal with a complex topic with an unconventional style, but are thoroughly unique and a sheer joy to read.

P.S. It is not Bush but one of his brothers who had read this book and talked about it in a public forum.

Taleb may be the Ayn Rand of the twenty first century; A clear thinker who is not afraid to buck conventional wisdom which is generally, well, usually wrong. In fairness, if you read "Fooled by Randomness", there is not a lot new here - but an expansion on that philosophy that the world is a fairly unpredictable place in everything from finance to geo-politics.

An example of his "Black Swan" logic is this: Consider that a prescient politician decided in the summer of 2001, at great expense to the airlines and traveling public, to harden all cockpit doors in commercial planes for fear of a takeover-style hijacking. How would that have altered history on 9/11? Perhaps another type attack occurs, but for sure, the politcian gets labeled an alarmist big spender and probably loses his next election.

It is actually more interesting to read the reviewers who don't like him or the book. Descriptors like arrogant, man of leisure, or insinuations he is just schlepping a book are laughable considering his own web page advises he will not speak at your rubber chicken dinner for any amount of money. You can always find a celebrity or other fuzzy thinker to show up and pontificate about how smart they are, and how everybody else is wrong.

In short, if you are a fan of Rand, the Austrian School of Economics, and epistemology in general, you will love Taleb. If you are a patchy elbowed professor of Marxist theory, or you think someone else is responsible for global warming and everything wrong in your life, better wait for the next book club recommendation.

I thought that I will get a book on chance or probability, but I found out that I have an autobiography written in an attempt to understand ones self and life path.

The idea of the black swan is very intersting, and to me it has alot of truth. It is interesting to note from reading the book that the authors life story is filled with black swans. If it was not for a back swan success in the financial markets the author himself might not have been able to afford to live as he says he leads in his book.

As I read the book, Taleb makes you feel as if you are his best friend and that he is confiding in you to tell you what he thinks of life and people. I also felt at time as if I was his psychotherapist and he was expressing his frustration and hidden agressions towards certain prototypes of people that he is not fond of. Interestingly...he criticizes or so I understood empty suites and social climbers but yet he associates with alot of them as apparent in the multitiude of stories he presents.

In conclusion, this is mind opening book on philosiphy...yet written in a very interesting " I want to open up to you" fashion. The author really succeeds as branding his own style of writing.

After reading this book I am inclined to categorize NNT as he refers to himself in one par of his book as a philosipher of the " people philosipher" brand.

Having the book on CDs is a brilliant idea as the author makes it quite easy to read the book in todays very busy life.

In conclusion...A GREAT & UNIQUE BOOK

Thoroughly enjoyable. I particularly liked his sense of humor and cantankerous approach to conventional ideas of probability and their (mis)application in areas like economics. It's refreshing to have the forecasting performance of so many social sciences, especially economics, so completely trashed, and it's a fascinating explanation of why forecasting has been such a failure. My only beef is that Taleb could have gotten his arguments across in 100 fewer pages without losing much substance. And his arguments are not always sewn together very tightly. But that's OK ... it's still easy to read, even if you're not sure you got it all. Read it and enjoy someone taking a shot at the intellectual establishment. It's fun!

Taleb's book is a fascinating look at the limitations of our knowledge as a
species - and our incapacity to factor these limitations into our thinking.
His core idea, that big events that are unpredictable by definition matter
most in the worl, and that consequently much of the businesses of forecasting
and predicting is largely useless - has profound consequences. This is a
disturbing message bound to anger some, but also a liberating one -- don't
sweat what you can't control, focus on what you can, Taleb argues. And
Taleb explores the many folds and nuances of his idea in an utterly engaging,
erudite, often hilarious way. The style of this book is unique, often
self-deprecating, generally impassioned. I couldn't put it down. It's a
book that makes you think, and think about the world in a fresh way and
there's an "aha!" insight on almost every page.

Having read and integrated Taleb's Fooled by Randomness into my thinking, I was very interested in what The Black Swan would hold. Taleb is right on point and I found the philosophy combined with the empirical data to support his assertions to be logical.

I highly recommend this book.

Nissim Taleb is an options trader/statistician turned philosopher and so his THE BLACK SWAN: THE IMPACT OF THE HIGHLY IMPROBABLE doesn't fit neatly into any one category, but will equally interest libraries with patrons concerned with business, philosophy, science, and more. A Black Swan here serves as a metaphor for an unpredictable event with massive impact - and they underlie almost everything about our world. They can occur in personal lives as well as affect societies as a whole. The blend of philosophy and social analysis makes THE BLACK SWAN a wide-ranging discussion suitable both for college-level and general-interest library lending collections.

Diane C. Donovan
California Bookwatch

Very few people who haven't been in law enforcement or combat reach the conclusions that Nassim has reached. We know that we can do everything "right" and still catch a bullet. Excellent book

There are many long reviews already here, so I will provide a more concise perspective. I usually drive into work (though I know it's not a very "green" thing to do) because I have to commute into lower Manhattan and the decrepit 1970s cars of the Metro North system are truly an insult, and the subways are worse. Then I bought this book and I loved it. I bought a monthly pass on Metro North just to read it. And I've been riding the trains since. So you see, The Black Swan has already made a positive contribution to the environment. You must read it!

The ideas behind Black Swan are intriguing and interesting. What person would not like to learn how to spot the unpredictable, consequential, and clearly seen once it happens? The funny thing is that Nasim Taleb spends three hundred pages discussing why it is hard, if not impossible to predict a Black Swan. An issue is that Taleb does this using a rhetorical style that is unfamiliar to business books - stream of conscious. You get a delightful mix of well thought out insight, personal observation, pet peeves, and ranting. In that regard I feel that I have now had dinner with Mr. Taleb after reading the book.

This book is rapidly becoming the "hot" book for the pseudo intellectuals in business. People sending copies out to others drive sales but do not change thinking or the way people work. As a case in point, I talked with a business man on a plane who was reading this book and said "I am thirty pages in, and not getting much out of it."

If someone gives you this book, I would suggest accepting their gift and commenting how thoughtful they are. I would not suggest re-gifting or buying and distributing to other colleagues. If a consultant comes to tell you that they can help you find the next Black Swan be aggressive and point out that by definition they cannot be seen, cannot be predicted, and ask the consultants to put 100% of their fee at risk based on the revenues you will generate from capturing the Black Swan idea. If that does not cause them to run away, then they have either not read the book, or more likely not understood what it says.

This book runs the significant risk of being a nice book for the bookshelf and never read. In that regard it will become a peculiar part of Umberto Eco's library -- a book I have but have not or could not get through. In either case it becomes part of the anti-library in terms of books I have not read. Does that make it an anti-book?

This book is not written, nor edited for that matter, for public consumption. It is a peculiarly academic book from someone who lambastes academia. Unfortunately you need to know a fair amount in order to understand and extract value from this book. For example if you do not know who are Popper, Hayek, Samuelson, Poincare and several other people else you will not understand what Taleb is talking about. He leaves out many people who I thought he would have been a fan of, such as Milton Freidman and others who take a market based approach.

This book is part philosophy, part business and all Taleb. If you are a fan of his great, if you are trying to understand his ideas, then I would look to the article in the New York Times.

The idea of the Black Swan is compelling, easy to understand, and easy to talk about. That is the allure of this book, but that is not what this book delivers. Black Swans are now the rage of the intellectual discussions, dinner parties and a way to one-up each other by being in the "know". The irony here is that Taleb goes to great lengths to point out that by its very nature you cannot know, nor predict the next Black Swan.

Feel free to use that as an antidote to the black swan when it comes up at your next cocktail party.

I found "The Black Swan" by Nassim Taleb to be fascinating. One reason I was interested in reading the book is that something appearing to be analogous to "Black Swans" (i.e., rare and important events) may be found in turbulent flows and in the heterogeneity (extreme variability of certain physical properties) in natural sediments. Just as with Taleb's applications to economics and politics, scientists are attempting do describe the statistics of the variability using non-Gaussian, stochastic fractal, concepts. Some type of mathematical/physical chaos seems to underlie all these phenomena, which results in unpredictable behavior with a deterministic component. Taleb's book "The Black Swan" does a superior job of explaining and illustrating the basic ideas using economics and politics, topics with which many people are familiar.

If you loved Fooled By Randomness, then you'll love this sequel to that story even more. This book is the exception to the general rule about sequels.

I'm tiring of this book quickly. Simple ideas are expanded into entire sections that add no illumination that a simple paragraph could convey. Nassim is obsessed with using large words when a simpler, clearer word would do twice as well. Many sentences should have been cut out. For example:

"I said that I will get into a more thorough examination in Part Three, so let us focus on epistemology for now and see how the distinction affects our knowledge."

What the hell is that? That offers absolutely no new information and doesn't clarify anything.

Nassim also loves using the same, pointless cliché sentence structures over and over. For instance, this cliché is used at least three times in the first 38 pages:

"X implies Y or maybe X doesn't imply Y!"

Wow, Nassim. Golf clap for you. "Maybe Fruit Loops are delicious. Or maybe they aren't! SO AMAZING AND CONFOUNDING."

What a piece of junk. I hate you, Nassim. I paid money for this over-wrought slab of ego tripping.

If you make money in Wall Street, whether it be in derivatives or hedge funds (as Taleb made his fame), you will probably want to be read another book written by Taleb, "Dynamic Hedging" written in 1997. Otherwise, I have a few other suggests for you at the end of this review.
I read this book with interest, but I now wish that I didn't buy it because I regret the dollars that I spent in support of someone so shamefully irresponsible, dishonest and unethical. To Taleb's credit, the book is well written and it contains many good examples and good ideas. However, I found many comments throughout the book to be inaccurate, biased and offensive. The book is riddled with contradictions that seem to be purposely included in order to sell books with sensational (yet inaccurate) messages. He makes ridiculous statements like ". . . the bell curve . . . is [the] . . . Great Intellectual Fraud." I am appalled at the extreme bias this book has toward statistics and statisticians. Taleb often starts with a good idea, something that statisticians are very much aware of, and then criticizes statistical theory and statisticians in general with broad statements that are simply not true. Much of Taleb's style is like saying Newton was a moron and a fraud because quantum mechanics has proven him wrong. Keeping with this analogy, Tabeb would have said that you wasted your time if you studied Newton in school--as he suggests about anyone who took a statistics course in college. Here is an excerpt from the book.."If you ever took a (dull) statistics class in college, did not understand much of what the professor was excited about, and wondered what "standard deviation" meant, there is nothing to worry about. The notion of standard deviation is meaningless outside of Mediocristan." The only problem is that much of our world does fit well with what he calls Mediocristan as he admits himself just 6 pages later, and in other places of the book. So why say that you wasted your time taking a statistics course in college? Taleb uses many examples from empirical psychological research to make his points throughout the book and says that psychologists are "...lucky, since most of their variables allow for the application of conventional Gaussian statistics." So, how can the Gaussian distribution be the "Great Intellectual Fraud" if it is a major player in good psychological research--even good enough for this statistician bashing author to site numerous times throughout his book? Unfortunately, there are far too many of these unacceptable statements in the book to mention--many of which are more egregious than what I have mentioned. I was so outraged by this book that I considered voicing my complaints in writing. Fortunately, that has already been done by many people. I urge anyone to read the August 2007 (volume 61, issue 3) issue of The American Statistician before they read this book. Some of the inaccuracies of the book are outlined in the journal and, as a contributor to the journal issue, Taleb clarifies what he meant to say in the book--or at least rephrases his message more accurately and concisely. After reading the few short articles in The American Statistician, you will learn most of what the book has to offer. Statisticians give Taleb credit for highlighting the lurking dangers of extreme outliers and the fact that some things, like the stock market, are susceptible to these Black Swans. As Taleb points out, statistics based on the Gaussian distribution do not work with this type of data. In this respect, Taleb is on the same side as statisticians. Taleb and statisticians alike are hard at work trying to educate people on this point. Essentially all statistics textbooks and statistics classes include precise statements about the assumptions of statistics and statistics based on the Gaussian distribution are no exception. In my view, Taleb's book will provide statistics professors some engaging examples to use when they are giving examples that violate the assumptions of Gaussian-based statistics. The danger with this book is that one has to be highly trained in statistics to sift through the trash to find the message that is worth reading.
Be warned, however, that the other interesting parts of the book are also littered with biases. For example, he throws in a lot of insults at French and Russian people--I have no idea why because they did not contribute anything but a sense of bigotry. Taleb's writing is so negative and biased one has reason to question his character--which is not hard to do given the well-known shortcomings of
In conclusion, besides reading the issue in The American Statistician mentioned above, I think that anyone that might be interested in the content of "The Black Swan" would be interested in the following two books that are infinitely more accurate, informative and useful. These two books are also much less likely to offend you or get under your skin.

"The Drunkard's Walk. How Randomness Rules our Lives" By Leonard Mlodinow.
"The Lady Tasting Tea. How Statistics Revolutionized Science in the Twentieth Century" by David Salsburg.

There are many good things about this book. Firstly, it is a very enjoyable read. The examples and stories may hurt the organization of the ideas somewhat but they make the book hard to put down. Secondly, Taleb makes some very reasonable criticisms of the use of the normal curve for variables that are clearly not normally distributed such as book sales or market prices. He exaggerates the problems with statistics quite a bit, however. I hope that non-scientific readers do not take these to heart and cease trusting anyone who uses traditional data analysis methods- in most scientific endeavors these are appropriate and superior to alternatives. Later in the book he does admit that there are legitimate uses of this approach- he gives the example of empirical psychology specifically(it was refreshing to hear his praise of this science).

His idea about using a fractal distribution for data with 'fat tails' is an interesting alternative, though I'm not sure how reliable such a technique really is. This may be part of the point- the normal curve and traditional statistics simply don't work in these cases, but we don't really know how these variables are distributed, so using a fractal tail is an alternative but imperfect tool. The major problem that I see with this tool is that you have to estimate what the power exponent of the tail will be- and making a mistake will have huge consequences for the model. Taleb himself admits that you could give ten different analysts the same data and they could all come up with a different value for the power exponent! This seems like a major Achilles Heel to using a fractal approach to these situations. I wish instead Taleb had simply emphasized that these variables don't behave in a way that lends themselves to exact modeling, especially because of the higher possibility of 'Black Swans' or what could simply be called very extreme cases.

My gripes with the book mostly come down to Taleb's arrogance and exaggerations. Taleb can be pretty full of himself, which gets old fast. As I mentioned above, I wish he hadn't exaggerated the problems with statistics- in the first part of the book he acts like nothing interesting calls for the use of statistics and calls the normal distribution an intellectual fraud. The normal distribution is not a fraud- it is an excellent description of many phenomena, despite the fact that there are situations to which it should not be applied. Taleb is also extremely critical of certain disciplines and professions, especially economics. He does make legitimate criticisms of economic ideas and models, but he does so in an insulting and tactless manner.

Despite Taleb's arrogance and exaggerations, this book has many interesting ideas and several great discussions of the philosophy of knowledge and science that make it worth reading. Just make sure to exercise a healthy dose of skepticism when you do so (as Taleb himself advocates).

The author is verbose and altogether too fond of the personal pronoun. The book is filled with valueless literary allusion and "clever" neology.

I thought I ordered beef stew but got 99% potatoes and too much salt.

Q: if he has something to say, why doesn't he just say it?
A: because it would be a one-pager.
(NOTE: that the one page would be true and factual doesn't make the entire book a worthwhile read.)

This is an overly complex, opaque and rambling exposition of some interesting ideas which, unfortunately, the author doesn't explicate with precision or take very far. The notion that we can't predict the future and that, certainly, the evidence of the past is not exhaustively or even substantially predictive of what is to come is, of course, hardly new though it's true that many of us often seem to forget this. Taleb does a decent job of highlighting this mistake in our thinking and of showing how, given the unlimited randomness of the universe (whether in fact or in principle it amounts to the same thing in our experience), we can and usually do make a ton of missteps in our lives, our careers, etc. Taleb has apparently been a trader and currently manages money and makes a point of noting that he uses his realization that the world is full of "black swans" (impossible to predict phenomena that can have a massive impact on us) to guide his money management and other endeavors. His basic view is to keep most money safely invested in low risk, relatively low return securities while putting a small amount out there in high risk but high potential return investments, any one of which, should a "black swan" hit, will cover and surpass the losses from all the rest. An interesting strategy to say the least. But along the way Taleb treats us to a great deal of personal posturing about how clever he is and how foolish most of the rest of the world tends to be and that grates after awhile. Too often, too, Taleb seems to be indulging in boasting and name dropping for their own sakes.

He does treat us to a bit of Popper and other heavy hitting thinkers. Karl Popper, of course, is the Austrian expatriate philosopher of science who formulated his falsifability principle which expresses the notion that no amount of positive observations is ever going to conclusively prove a general statement about all instances of those observations (seeing a million white swans can never prove that there are no black swans as long as we haven't seen all the swans in the universe). Taleb takes this a little further and relates the black swan question to statistical methodology, arguing that the Gaussian Bell Curve (that presumes most observations of a phenomenon will cluster together so that the outliers will be so small as to be insignificant) provides a flawed mechanism for gauging risk in certain arenas of life. He offers a distinction between arenas dealing with limited ranges of possibilities vs. those where the ranges are unmeasurable and, in principle, astronomical. In the latter kind of arena, he notes, a statistical outlier is not going to be insignificant but, rather, overwhelming. Negative black swans can, he explains, destroy all the positive returns one has earned while the positive kind will overwhelm the negative returns. On his view, most in the investment field wrongly rely on Gaussian analyses for gauging and managing risk when that field, in fact, has virtually unlimited (or unmeasurable) ranges of difference in its phenomena. Thus a negative black swan in such a field can put one out of business, at the least.

Having concluded from his own experiences, some of which are quite interesting, that life is more generally like the unlimited arena than the limited one, he takes the position that we must go through life looking out for the black swans while knowing they can never be predicted. In essence we must stop thinking in a traditional Bell Curve mindset. He counsels prudence and a defensive posture both in investing and in life. Good advice, but not especially profound or enlightening. On balance the book is interesting though Taleb tends to have trouble getting to the point and often beats round and round the same bush. One gets the sense he's padding a bit, in the absence of any overarching theory or approach to offer beyond the urge to caution. His most important points are hammered home repetitively while he spends too much time knocking the "competition".

When I began the book I had rather high hopes because his epistemological approach promised to be interesting. But by the end, I was deeply disappointed. When he finally brings the book to a close on the rather odd note of thanking the reader for having read it, I was left scratching my head. Expecting some subtle yet highly practical philosophical thought, I got common sense in the guise of an attack on the standard statistical model instead, and plenty of anecdotes about Taleb's personal life and the many important people he has hobnobbed with over the years and how smart the smart ones think he is. I'm sure he's a smart guy but I'd have preferred if he took up more of the book developing his thesis and less of it touting himself.

SWM

I'm somewhat suspicious that this book is an elaborate practical joke being played by Taleb. He's obviously a very intelligent man, an excellent and entertaining writer, and has an odd-ball sense of humor that is really appealing. So when I find after having read about 1/3 of the book that I haven't gone more than a few pages in a row without having found something that is factually incorrect or logically absurd I have to think to myself that it's all a joke. For example, even the title of the book is absurd as it relates to the alleged main premises of the book, and even then the main premises of the book are absurd and not born out by the facts. Black Swans are different species than the Swans found in Australia. In fact when they were discovered the concept of species didn't really exist as it does today. There really wasn't any reason why they shouldn't have named the new bird say, Honker, since if they really thought all Swans were white then a black bird would have to be something different. He claims that "Black Swan" events are unpredictable, carry a massive impact, and that after the fact humans construct explanations to make them appear less random. He also claims that these Black Swan events are the prime determinants of human history. In his words `History does not crawl, it jumps'. Then he bolsters his claim by trotting out a bunch of examples, none of which meet all 3 criteria. 9/11 not only was predictable but was predicted, probably will not have what I would consider a massive impact over the long run, and has certainly been explained conclusively as far as I'm concerned, and I don't know what randomness has to do with the explanation. How the hell could anybody call Google a "Black Swan"? It was just the best of a bunch of search engines. In fact it is a better example of the "Lucky Survivor" he likes to talk about elsewhere in the book than some of his other examples. The first 1/3 of the book is full of this nonsense. The one example that really kind of pissed me off is his criticism of the book "The Millionaire Next Door". That book was really intended to be "descriptive" as much as "explanatory" or as an "advice book", and what they found was that the typical person in the U.S. who had amassed assets in excess of 1 million dollars(1996 dollars) did it by spending considerably less than they earned throughout their careers and investing the difference prudently. If they did invest in something "risky" they only invested a small portion of their net worth in it and they made sure it was something that would pay off big if it panned out. In fact they invested their money in a modified version of Taleb's own 85-15 formulation!!! Their having amassed all those assets was not luck, as Taleb "claims". I just can't believe that Taleb made so many obvious absurd claims like this by accident. It must be a joke.

The book is largely a rant against use of the Gaussian distribution. But Taleb doesn't tell just what is being plotted against what in the cases where, he says, the Gaussian is no good.
He also says that Mandelbrot's work with fractals is applicable to economics and finance, but doesn't say just how.
He comes across as egotistical and defensive about his ego. He drops an awful lot of names along the way.

If you for whatever reason enjoy hearing the same story retold ad nauseum for a couple hundred pages, then perhaps this book is for you. If you like ad hominem arguments, unfair characterizations, and proof by assertion - then this will be your prize possession.

The interest in this book is inexplicable to me. The public perhaps has a craving for discovering 'enlightening' perspectives - though, to like or recommend this book is an aggrandizing assault on the intellect. Seriously.

"I've never thought about things like this before." First of all, if you've never thought like this before, then I should give you a high five for being sane. The title "...the impact of the highly improbable" says enough. Discounting that which we've previously encountered, what are we left with? It's intellectual nihilism and futile. We don't often consider the improbable if by nothing else than sheer definition of the word 'improbable' or 'unexpected'. Simple as pie. For mathematical/scientific systems that try and account for this variable... well, they've existed for almost a century in application. Why write about it as if the idea was an immaculate conception from your own mind, and chastise the educated who "should get a rat stuffed down their shirt" along the way? Why expound on the theory, when people can just read a financial brochure of any investment company?

"Not everyone expected Google to be as huge as it is. Now, it's ubiquitous. You could have made money by just taking a bet on chance." Why say any more beyond this? Secondly, there are many models which I can't help to imagine included the likely success of Google. I don't recall anyone calling the CEO or company insane for its reckless business venture. Were all the stockholders 'Followers of the Swan'? He's so arrogant. Third, to analyze why we didn't expect a black swan is a paradoxical exercise, contradictory to the whole point of the book. Waste. Of. Time.

Do not buy this book. The commercial success of this book is revolting.

I'd like to add: the author's pillaging of previous scientists' and philosophers' ideas, bastardizing them, then marketing the amalgamation of s*** is stupefying and unethical. Furthermore, his 'exalted by association' claims are just an ego stroke - thus my anger. "Be yours the pay, be theirs the praise - we will not rob them of their due... nor vex the ghosts of other days by naming them along with you." His ideas are not new, nor complete, or even relevant. The impudence and impertinence with which this author (he who shall not be named) spews his arrogant dribble is on par with that of narcissism. Furthermore, I would classify this book as a coup d'état of rationale, seeking to replace it with ignorance and feigned enlightenment. I place it on the same shelf as television news. I am disgusted by its very appearance, as it is the perfect manifestation of paltry, fustian commercialism (I'm gonna write me a book and make me some money!). The book is launched from a cliff of popularity, wealth, and the pedestal of the press - people are so entranced by its flight they don't notice it crashing to the ground in complete failure. I'm just thankful there are so many critics of this particular publication.

Sheer dribble.

Spectacular tour de force on the nature of the real world of probability. Highly intellectual fare, peppered with too many examples and gratuitous references, and ending with (spoiler alert) a grand over-simplification of advice: "don't sweat the small stuff". My feeling is that he could have cut the content by half and have done a better job. Mr. Taleb is obviously a very intelligent man, and I sense that he enjoys displaying that fact. However, it was a useful read. I'm glad I borrowed my copy to read. I would have regretted buying it. The Black Swan: The Impact of the Highly Improbable

The emperor has no clothes on!

I believe this book could have been easily condensed to 15-20 pages.

The style of writing reminds me of Geroge Soros - confusing, didactic, and pompous.

It was like eating scramble eggs but with the egg shells included.

This is the book I drag around everywhere, you can only read a few pages at a time because you need to think while digesting. the author is very knowledgable - sometimes too knowledgable, but that's a good thing, because he has a lot to say, a different point of view, a chip on his shoulder, intelligence to burn, a worldview bought to american shores, and he is conflicted about the class system - shrugging his shoulders at the suits, but flinging out big names here and there. No matter, it is worth the price of the book, because he stimulates thought. A sure sign of a good teacher, as well as tossing out more than a few investment strategies and his well-concieved notions about our financial system.
Love Taleb and hate him. I look forward to whatever he is working on now, and will go back & buy the Random book that everyone keeps referring to.

Taleb was unbearable in "Fooled by Randomness." Fooled was, however, worth the read. "Swan" is targeted to a general audience; in this attempt Taleb has lost his potentcy. But to greater effect, Taleb now seems deluded. For example, he tells a story of his past when as a tween he frightens the government of his home nation into granting him immunity from political offenses. Sad naive existence

I got interested in this book in part because the topic interested me and in part because I have seen far too many random people including boston cab drivers and random passerby reading this book. I am uncertain why this book ever caught on, as it is written without any style and with long rambling bits as well as poorly executed stylistic techniques. It seems to me at least, that the success of this book is in and of itself a very negative black swan.

First, I want to take intellectual umbrage with some of the events Mr. Taleb describes as unpredictable. The book got of to a bad start by immediately sighting 9-11 as an unpredictable event. Unfortunately, this is clearly not the factual case as there were many precedents in the realm of plane high jackings and much evidence including the bin laden determined to strike the U.S memo of August 2001 to suggest an imminent attack. The problems with our intelligence communities were quite many including information sharing flaws and execution errors especially in collaboration, but the threats we faced were never completely unpredictable. Of course, Taleb is correct when he says that conventional thinking was at fault for many of our intelligence mistakes, however, the problem at least in regard to national security ( a field Taleb claims to respect later in the book) is that we mostly deal with limited resources to respond to near infinite quantities of threats. Moreover, the conventional and probable ( the assassination of JFK in Dallas) has just as much impact as the highly improbable. This is not exactly the black swan situation Taleb speaks of and it seems that at least when it comes to policy direction, his theory is lacking.

Stylistically, this book is filled with poor choices such as the french baiting so in vogue when this book came out which now is just utterly irritating, the use of hypothetical or imaginary cases rather than interesting real world example, the continuous referral back to past chapters through the use of their numbers, as if Taleb expects his tome to be judiciously memorized, a curious portion in which Taleb practically gushes about specific philosophers or mathematicians such as mandelbrot ( very awkward) and the continuous assertions of the author that he is different and unique from everyone around. The content of this book gets lost in a muddled layer of arrogance and repetition. The point of this book could much more easily be told with concrete examples and less narcissism and redundancy.

The obvious premises of this book could have been related in 50 pages or less. I agree with those who commented that the author is self-engrossed. I've never wanted to skim-read a book more than this one.

Nicholas Taleb has seemingly spent his entire life chasing what he refers to as the black swan. A series of highly improbable events that have continuously shaped the course of human history. He presents his description of this phenomenon in what might be termed an autobiographical manifesto of sorts, the exhaustive and seemingly endlessly referenced book, "The Black Swan -- The Impact of the Highly Improbable". It's not that Taleb isn't onto something, or hasn't written a thought provoking book, he has. But Taleb has not given us a black swan. He has given us a Red Herring. He has taken a small piece of stinky fish and dragged it in the dirt perpendicular to the path we are on. There is a small benefit, if we leave our path momentarily to gain a new perspective, new insights will emerge, but that is all our feeble brains can comprehend, and nothing more. But to believe there are no thinker's among us who do not understand the need to search for the extraordinary and to try to link them to potential causes, that although we might not understand completely, are contributory and can indeed be rectified, is not to be an observer of the human race at all. Ultimately he is wrong about the Black Swan but he is right about the requirement for us to think outside the box. But this has been said before. Taleb just reminds us.

Taleb is an almost unbearalbe mix of arrogant and lazy. His ideas could be boiled down to about 10 pages, but he insists on rambling anecdotes to make his point. For someone claiming to rise above the rest of humanity with his visionary approach to history, his use of anecdotes as evidence is comical. Less comical but more serious is his wholesale invention of fictional anecdotes to support his theories. I want a refund.

How does one describe this book??? It is a tour de force of philosophy, mathematics, psychology, finance, statistics and NNT, himself. First, I absolutely love how Taleb thinks out loud. I feel like I know him now--especially after reading the book twice--the second time very, very slowly with pencil in hand. He is a very, very deep thinker and the fact that he chooses to let us be a part of his thoughts is a real gift--as he does not need to publish books.

Taleb's scope is both broad and detailed and he brings to life the great thinkers of past centuries. Poincare, Mandelbrot, Plato, Sextus Empiricus, Algazel... The Black Swan is a history of philosophy to the nth degree--centered around unpredictibility and the unknown. Taleb has an amazing brain, and amazing emotions that shows a passion for his topic unsurpassed by others. From a coctail party in Europe with intellectuals to fractals and statistics... His conclusions make total sense. I really like this gentleman.

One can't solve a problen unless you percieve the problem correctly. Taleb's numerous chapters on how we, how our brains and egos are programmed to misperception and are utterly invaluable. I feel I can much better assign -- or especially not assign causality to events. Another life lesson that I think about almost every day, never run for a train. And needless to say, I was compelled to tossed out all of my economics--which felt so good to do.

For all those reviewers who gave this book a negative review, I can only conclude that they read this book very fast and that they were looking to find a get rich quick solution -- which this book is not about.

And for those who have not read this because they think it's just another popular culture book on decision science--you could not be more wrong.

This book was a profound, unique experience, from the first word to the very last word. When I finished, I just wanted to start reading it over again.

It was a Black Swan that told me about this book. I will never be the same.

--Sara

The book can be summarized in three points:
1. people behave irrationally
2. many probability distributions are not normal
3. you may think you know it (most of this stuff is normally covered in intermediate microeconomics and statistics and in many popular science books), but you are stupid anyway, especially if you are an economist, French, MBA student, a Nobel prize winner, or a member of any other group that the author hates.

The book is a decent compilation of behavioral economics and probability research with some philosophy thrown in. There are no original ideas - however, the author does his best to associate himself with people who actually have such ideas through extensive name-dropping. At least a hundred pages are devoted to elaborate insults of all the people who may have won a Nobel prize, but are too stupid to understand the author's brilliance. Taleb's previous book, Fooled by Randomness, has essentialy the same content, but a little fewer diatribes - may be a better investment.

Yes, there's a lot that readers of very streamlined books targeted at very specific audiences will find to ruffle their feathers here. So if you read books just to add "facts" to your brain (i.e., you don't really ever think, you just remember), you probably might be annoyed by the delivery of this book.

But the ideas here are original and incredibly useful. It may take thinking readers a while to understand what Taleb is talking about and to begin their own researches into exploitation of black swans. But readers that actually think rather than remember will grasp the importance and practicality of these ideas at once, because they probably already understand that there's a gulf between skills and payoffs and have been positioning themselves to take advantage of life's small black swans all along.

When I buy a non-fiction book, I expect just that. The author though uses fictional characters and circumstances to prove his points, which makes me wonder the validity of his content. Additionally, many sections seemed to get derailed from the chapter they were in, and all the name dropping became pretentious to say the least. And, after all that, the author still doesn't provide any practical approach to dealing with the ideas of Black Swans. I put the book down after about 100, tiring pages and went on to something else. I was disappointed to say the least.

Taleb offers interesting ideas but couches them in disjoint prose. This is more a collection of barely related essays instead of a cohesive whole. It's like he had too much to cover and not enough time to tie it together properly.

There were also numerous editing errors that should have been caught.

A black swan is a surprising or virtually unpredictable event; that can have a massive impact. Nassim Taleb's observation is that after the fact, we concoct an narrative to explain it. Dangerous behavior at best. Google and 9/11 are black swans according to Taleb. After explaining the narrative is dangerous the author proceeds to deliver 308 pages of it! That is the way this book goes, it is hard reading, words you are not familiar with, jabs at the French followed by text in French, games within games. Yet, there are tons of pearls, as Taleb says, the test of an author is whether you reread his work and I will have to reread this to comprehend more.

A big chunk of the book is describing two subsets of our world are explained: Mediocristan and Extremistan. Mediocristan is the world of the regular Joe, at least most of the time. Earnings are related to the amount of work you do, things are predicable or at least mostly so. You can explain most events with a Gaussian distribution, a bell curve. Extremistan is the world of rock stars, book authors, G- where unfairness reigns, Joanne K. Rowling made several orders of magnitude more money on royalties than I did, the unexpected happens, Black Monday and Tuesday, the stock crash October 28, 29 1987 caused the US Stock market to decline over 22%. If you can describe Extremistan then you do it with power laws and fractal geometry not bell curves.

He challenges our notions about success; some companies and some CEOs that we think of as role models probably just got lucky. This was very helpful for me, I just finished reading Seduced by Success which has a similar message. He draws on his experience as a trader, a quant, in the financial markets and tells the reader in essence, these guys are just guessing. His financial advice is to put about 85% of your investment into something very safe and stodgy like T-Bills and then use the remaining 15% on high risk, high payoff and adjust the percentages based on your risk appetite.

There is a fictional component to this non-fiction book, at one point he is telling the story of a lady author and her paramours and it seemed impossible, it was, she was fiction. Another word picture was a true man of the world (Fat Tony) who had his own social engineering approach to the famous coin flipping problem. The Fat Tony's of the world do not allow even distribution to happen.

People are either going to like this book or hate it, I have a thick skin, I choose to like it, he made me work pretty hard to get through the book, but the mind is a muscle and I for one thank Taleb. I predict statisticians, academics and Frenchmen are going to despise this work.

I think Mr. Barett's review is the most thorough and balanced I have read.
I enjoyed the book -- struggled to find a lesson to use at the end of it-- enjoyed the research and intellect involved.

Taleb's book and "How to Measure Anything: Finding the Value of Intangibles in Business" by Hubbard are the two best book's I've read this year. Both deal with the issues of irrationality in decision making. Hubbard offers more pragmatic advice in how to assess such problems while Taleb focuses more on examples of how improbable events impact decisions (not necessarilly how to deal with it rationally).

I found the Black Swan to be a very clever book. The author clearly lays out what he intends to accomplish by writing the book, and then does so.
Curious? I hope you pick it up and have a fine mental meal.

Most predictions are flat out wrong, just listen to any "expert" on CNBC give a prediction of where the market is headed on a given day. Yet, we love predictions because they help us feel like we understand what's going on around us much better than we actually do...the idea of randomness is uncomfortable. The reason our prophecies fall so short is our lack of understanding of the Black Swan and its impact on both history and the future. The Black Swan as Taleb describes it is:
1) an outlier 2) carries extreme impact 3) produces explanations only after the fact.

The bulk of Taleb's book explains in great detail, clarity, and wit the error most humans make in failing to account for the Black Swan in their thinking. He explores various theories ranging from our eagerness to interpret the "causes" in history (confirmation bias, narrative fallacy, etc.) to our inabilities to predict the future (the expert problem, herding and the character of prediction errors).

Finally, Taleb doesn't stop with mere theory; he gives the reader help in how to think in a Black Swan world. His advice, make black swans gray by being aggressive in gaining exposure to positive Black Swans and extremely conservative when under the threat of a negative Black Swan. You're probably reading this right now going, I think I know what he is talking about, but you don't, just read the book and be prepared to have your comfort zone shattered and your mind exercised.

The author is expanding upon his earlier work and as such is well worth the reading. The idea behind the title and the book is that the most important events in financial markets, as in life itself, are unexpected and not presaged by earlier experience. The examples are illuminating and the insight worthy of the time spent.
He spends some time bashing the improper application of Gaussian models (normal distribution statistics) to many financial market analyses and predictions. Taleb properly recognizes his debt to Mandlebrot's books and papers. This corollary to the eponymous black swan and other anecdotes is worth the reading time as well.
I was disappointed that Taleb didn't explain how he makes this insight work to improve his outcomes, either personally or financially. So it is sort of half a book. 'Here are my observations,' but the application is left to the readers' imaginations and understanding. It reminded me of another great book, Jane Jacobs "Wealth of Nations" book which was also excellent, but ended where volume two should have begun.

As much as I enjoyed this book, I could have stopped after digesting the summary contained on the inside leaf of its jacket.

Don't take my lead the wrong way. I ordered The Black Swan the evening I received an e-mail announcement of its soon-to-be publication. It may have taken me a little longer to read it than my fellow reviewers, but I was not going to miss it.

Taleb's first book, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets articulated fleeting thoughts harbored by me for years.

1. Random events are unpredictable.
2. They arrive with a massive impact.
3. Immediately afterwards a rational explanation can be concocted.

Who could have active in the markets as long as I without experiencing an evening trip home perusing real estate ads for a castle in the South of France only to wake the next morning and experience a meat cleaver appearing from the middle of nowhere and removing half of your face.

My mistake, I now recognize, was in expecting Euclidean precision in a book about randomness. It will never happen. Sure, I scrutinized the end notes, pondered the bibliography selectively adding books and journal articles for my Umberto Eco Memorial Library.

I loved the book. I am sure Taleb benefited greatly from articulating and expressing the thoughts contained in it. If you seek a narrative on randomness, save your time and money. Like his previous book, reading this will change the way you perceive events. You will find yourself with a new appreciation for life's outliers.

The author's first book "Fooled by Randomness" was one of those rare, paradigm-changing books. I expected "The Black Swan" to have a similiar impact by further developing and explaining the author's ideas. I was disappointed. The first half of the book seems to dither around without a clear focus. It motivated the idea of "black swans"; however, it grows tiresome, and I was ready for the author to get-on with it. The second half of the book contained the most important ideas. The author spends a lot of time railing against use of the normal distribution, and an alternative modelling technique is presented.

I loved this book for the impact it has on my thinking. As with Taleb's previous book "Fooled by Randomness", I learned to look at the "bigger" picture not logically, not rationally, but honestly

I really enjoyed reading this book. It is full of deep thoughts and there are many intellectual diamonds to be unearthed. On top of that it is highly entertaining - Taleb has a great style!

Despite my title for this review, I enjoyed the book. In the land of Katrina, the Dustbowl, LTCM, and BP oil spills, the impact of rare events is extraordinary. But like nearly everything I have read from people educated in business schools, the writing is breathlessly over-the-top, as though he were saying something profoundly and desperately new. The content is not new; what is new is the author's style, which includes a large dose of funny sarcasm and irreverence toward conventional wisdom. A corollary of the author's sarcasm is, however, that you are a pedant, philistine, or ignoramus if you do not believe as he does; that his own intelligence is a highly improbable event; or that disasters won't happen by chance. In this respect, he is an Algernon of earnest economists and intellectuals--witty, intelligent, effete, humorous, and harmless.

Therefore, this book is enjoyable reading, but only if you can feel a healthy skepticism about its profundity.

If you thought that events such as natural disasters, terrorist attacks, and stock market crashes could be analyzed by traditional Gaussian methodologies, this book will turn you on your ear. The universe, Taleb declares, is Mandelbrotian, not Gaussian, as we will see later.
It is hard to pigeon-hole Taleb. If I said that he is a scholar, a statistician, a philosopher, an essayist, and a Jordanian-born New Yorker, that would come pretty close.
Taleb spends many pages explaining why conventional logic is just wrong. The title of the book is an example. The title comes from the fact that in philosophy there once was an axiom that declared that "all swans are white." This statement was meant to be an example of a universal truth, that is, until the discovery of Australia and the black swans that live there. The logic is that truth is not determined by what has been observed; it cannot ignore what has not been observed. Taleb refers to the latter part of this statement as "silent evidence."
Taleb discusses both positive Black Swans and negative Black Swans (he always capitalizes Black Swans). Positive Black Swans are opportunities that present themselves unexpectedly, such as investment opportunities. Other examples of positive Black Swans cited by Taleb are the discovery of penicillin and Viagra. Taleb has disdain for financial planners (and a lot of other people) who claim credit for successful financial planning. Planning, he claims, assumes that you know the outcome, which you do not. Financial success, he claims, is just luck or at least just taking advantage of opportunities that unexpectedly arise.
However, he spends most of the book discussing negative Black Swans, such as natural disasters, terrorist attacks, and stock market crashes, and how they are treated analytically. In risk analysis, these are sometimes referred to as the unknown unknowns. He has disdain once again, for the practitioners of Gaussian probability theory when applied to these types of Black Swans. He also has disdain for Nobel laureates, especially those in economics who apply Gaussian methods. The universe, he declares, is Mandelbrotian, after the mathematician Benoît Mandelbrot, who invented the Mandelbrot set and fractals. Mandelbrot asserts, and is supported by Taleb, that natural phenomena behave more like fractals than like Gaussian variables. Fractals increase (or decrease) in size according a scale factor. What does this mean to you and me? It means that "outlying events" (as Taleb calls them) occur more frequently and with greater intensity than Gaussian analysis would indicate. Taleb claims that the stock market fall of 1987 would only occur once over a period greater than the age of the universe if we trusted Gaussian analysis.
So how do we handle Black Swans? Taleb does not have a prescriptive nor comprehensive answer to this question except to warn against ignoring them and to strive to mitigate them. The worst thing is to be blind to them, as we are wont to do. For mitigation methods, Taleb mentions both physical and functional redundancy, terms familiar to researchers and practitioners in resilience and resilience architecting. He provides a list of "ten principles for a Black-Swan-robust society." One of these is the maxim, "Compensate complexity with simplicity," another way of phrasing the well-known Ockham's Razor, also emphasized in resilience analysis.
Apart from the analytical insights provided in this book, Taleb is also an excellent story-teller. He fills the book with entertaining anecdotes that illustrate his points.
Whether you are looking for an absorbing intellectual read or useful background material for the study of natural and human-made disasters and the resilience of systems to them, The Black Swan is an essential addition to your bookshelf.
The reviewer is the author of Architecting Resilient Systems, John Wiley and Sons, Hoboken, NJ (2010)

This book had a point to make, and it made it in the first 50 pages. After that it was a never ending stream of "tid-bits" that made you feel as though the book would never end. The message was a good one. The presentation method was not so good.

The book is actually about two black swans: the concept (unpredictable, highly-improbable high-impact event) and the author (Nassim Nicholas Taleb). The first can be explained in 10 pages. The second takes the rest of the book. If you're curious about the author, the book is a good reference (an artist's autobiography, one can say). If you're curious about the concept, virtually any book on the subject should be better than this one.

The main lesson I learned from the Black Swan is that the author thinks very highly of himself. While criticizing narrative as a preferred way of communicating information due to its bias and lack of accountability for what it doesn't include, the book is one long narrative from a self-absorbed view of the author. We get to learn of his favorite French literature (by the way, the English translation is bad), his aristocratic upbringing (he read a lot, because the summer cottage was *so* boring), and that he was a stock market genius before he got tired of that. Learning through self-narrative shouldn't be imposed upon us by people we can't begin to identify with. The book is choppy, often with one paragraph having little or nothing to do with what came before or afterward, as if inserted because it had to go somewhere. The author uses enough parentheses for ten books. Attempts at humor fail. The book's message is, in my opinion, somewhat trivial. Basically, quite a mediocre work.

I had really high hopes that this book would present the idea of the black swan with clarity and guidance of how to incorporate it into life and work. I was disappointed. Reading it made me feel like I was bombarded with a bunch of little ramblings that had no relation to the subject at hand. Maybe a sentence or two would finally appear to jolt my brain into seeing why the rambling was presented in the first place.

The "technical" chapters really had nothing technical in them that helped. I am a mathematician and was looking for someone who speaks my language to teach me something new and different, but I just got more prose and one little descriptive formula. I believe the whole book could have been condensed into a ten page pamphlet and conveyed the same information. I really hope that this topic is taken up by someone again because it is very important since this book just didn't meet my expectations.

This book consists of so much repetition and Name Dropping that it quickly
becones boring.

I can't remember being so annoyed by a book before.

Kaleb's central premise -- that our understanding of the world expands in jolts precipitated by rare, unexpected, and consequential events he calls "Black Swans" -- is well worth the effort, but his contrary style, which ranges from whimsical to smug to caustic, makes reading this book an effort indeed. Similar to a Socratic sapping, but without any trace of humility.

However, if you can manage to ignore the author's voice and focus on the message, this is a very good book.

I bought this book after seeing Taleb on CNBC and being very impressed with what he had to say then. I was very disappointed in the book....probably one of the more poorly crafted books I have read in a long while. He claims in the introduction that the effort to write his book was effortless and that 'the book just wrote itself'.........and it shows. It was a chaotic read and at first I thought that that was his PLAN to keep us in chaos given the theme of his book and that somehow then it would resolve itself in a fun ending of some kind. Didn't happen. The author could have made his point well in about 20 pages (and don't get me wrong, there were EXCELLENT points in this book) but instead it just droned on . Frustrating as well would be he would introduce a subheading within a chapter as if he was going to address that topic, and then never did. If you want a much more enjoyable way to cover this same kind of material....and done so much more informatively.....I'd recommend the 1978 BBC video series of James Burke "Connections". It's amazing how much Burke covered in 1978 that still is relevant today and stated far much better than Taleb.

The most predictable thing about events in this world is that they are far less predictable than we think. That is the thesis of this book. Most people reading this review will have heard that Nassim Nicholas Taleb is one of very few people who predicted the recent financial meltdown and made money betting on it. Only a small portion of the book is specifically about financial matters. Nevertheless, an understanding of the concepts here is essential for anyone hoping to understand the recent financial carnage. And yes, making a remarkably accurate prediction is an ironic way to gain credibility for a message about the futility of prediction.

For centuries all swans were believed to be white and every known observation of a swan had served to confirm this belief. Then a single observation of a black swan destroyed that theory. This principle is known to philosophers as Hume's problem of induction or Popper's falsification principle. It is known to investors as the fine print in the prospectus that says, "Past results are no guarantee of future performance." Taleb would prefer that this warning was taken out of the fine print and printed bold on the cover of the prospectus.

This book seeks to answer the question: How do we make decisions when faced with opacity of information on which to base those decisions? Taleb concludes we simply convince ourselves to be more certain than we have any objective right to be. The reasons for this have deep roots in evolutionary psychology. We prefer information that conforms to our biases. We prefer anecdotes over scientific statistical analysis. When we attempt scientific statistical analysis, we chose tractable models and mistake the model for the far less tractable reality. We respond to even the most unpredictable events by quickly convincing ourselves (with the benefit of hindsight) that they could have been predicted and we won't fail to do that next time.

Taleb convincingly shows that Bell Curve statistical analysis is vastly overused in situations where it is not just useless but dangerous. Usually this is done by confident, overpaid "experts." Using this model where it is not appropriate dramatically under predicts the likelihood of rare events. Even worse, it dramatically under predicts the impact of these events. A trader can lose a life's savings in an afternoon using the same methods that brought him a lofty income for many years.

In place of the Bell Curve, Taleb advocates the mathematics of Mandelbrot for studying most social and economic phenomena. This will yield far fewer firm predictions but a much better appreciation of risk. Attempting to find some examples of where the Bell Curve may work, he cites mortality and crime rates. This may be a rare case of him being too generous with his foes. History is replete with pandemics and societal breakdowns that blew up longstanding mortality and crime patterns.

Taleb aspires to be viewed as a big league philosopher. His biggest fear seems to be that he will be viewed as just a successful (or worse - lucky) trader. He is the type of polymath that you almost never see anymore in this age of hyper-specialization. While few of the elements he uses originate with him, there is some important and creative synthesis here. He effectively draws on philosophy, psychology, history, the mathematics of Mandelbrot, and his experience as a trader, in support of his thesis. Despite a showy vocabulary, he never hides behind jargon. He has a genuine talent for making technical ideas accessible to a general audience.

The book is marred by Taleb's incessant name dropping. He is very intent on establishing that his sensibilities in all things scholarly and cultural are unrivaled. Perhaps this is true. Even so, many readers will find it tiresome being reminded of it on every page. He admits to sharing the same psychological instincts that make us all bad risk managers. It's just that, his tone would indicate that, in himself, these are charming eccentricities while in others they are contemptible weaknesses. Like his hero Popper, Taleb preaches epistemic humility even as he is short tempered with all who challenge him. These flaws did not detract much from my enjoyment of the book but for others they will. How can you tell which group you are in?

One of the many relevant psychological principles Taleb cites is confirmation bias. I was inclined towards his ideas before I ever picked up the book. I had already concluded that most of what passes for economic prediction is useless - or worse. And that watching CNBC can only make you dumber.

If you are inclined to believe that events are inherently predictable and that corporate risk managers make their companies safer, then you probably won't like this book. On the other hand - if you believe we have often been sold a bill of goods by "experts" in the prediction business - then you are likely to find this a useful and satisfying read.

I agree with the review by Gaetan Lion below.

I would like to add that to support a few of his views, he resorts to a fictitious story of a writer who publishes on the internet and attains karma. This use of fiction has undermined (in my opinion) the author's position. I could not help feeling cheated on that.

Read only Chapters 15 to 17. No need to read any more.

An over written book.

This dense book challenges assumptions and long held beliefs. As such, it will delight some and infuriate others. That it questions human arrogance while simultaneously eliciting an arrogance of its own will doubtless cause much brow-furrowing. In the end, it does have something substantial to say, though the basic message is beyond simple. But sometimes the simple requires the most explication, especially when attempting to overturn inertial intellectual habits. To accomplish this, the book mashes finance, philosophy, statistics, literature, cultural studies, economics, psychology, forecasting, and social science into one meandering but nonetheless mostly cohesive volume. The unifying theme of this mutt is the "Black Swan" or highly unpredictable events with enormous impact (that Black Swans actually existed shocked English explorers). Such events seem to come out of nowhere, like the 1987 stock market crash, the Harry Potter rage, Beatlemania, World War I, etc. But, as the book argues, after the fact we claim we saw them coming (called "retrospective distortion") and we create a subsequent narrative to "explain" these phenomena. The book takes umbrage with how confident humans seem in the face of the unpredictable. We think we can predict and explain. The book counters that we're really far worse at these than we think, and this ignorance gets us into trouble. The recent economic crash serves as one more example, and those events have vindicated the author, Nassim Taleb, to some. That the book came out in 2007 and that one of its footnotes claims that Fannie Mae "seems to be sitting on a barrel of dynamite" (pg. 225) probably doesn't hurt. Taleb's reputation has since soared and "The Black Swan," still in hardcover, has surpassed some 30 printings.

The book's three parts (and one tiny, almost nonexistent, part) cover different aspects of the Black Swan problem. Part One introduces this problem through the metaphor of the "antilibrary" or the books not yet read. After all, we know what's in the books we've read. It's those unread volumes that may hold astonishing surprises. Black Swans may lurk within. Whooo! Randomness also plagues the world, but we sometimes try to explain this away via confirmation bias (fitting events to our presuppositions) and narrative fallacies (positing causation where none may exist). These human foibles give us an illusion of control and a seeming antidote to skepticism. Taleb counters that we ignore the "silent evidence," or situations where something didn't work (i.e., how a person lost a million dollars using the same advice/tools of someone who earned the same amount). The antilibrary contains, or can contain, silent evidence. Lastly, Taleb separates probability and randomness in the world from that in game theory (he dubs this "the Ludic fallacy"). The world isn't a game and he argues that we shouldn't treat it as such. We live in what he calls "Extremistan" (a world rife with Black Swan possibilities), not in "Mediocrastan" (where smooth bell curves reign). What's important is to know the difference.

Part Two deals with "The scandal of prediction." Taleb argues that most major innovations were not predicted (he cites the computer, the internet, and the laser) and some were mere accidents (e.g., the chapter entitled "How to Look for Bird Poop" tells the story of the Cosmic Microwave Background Radiation's discovery). Though he presents plenty of evidence of how terrible we are at prediction, Taleb doesn't advocate a fraidy-cat mentality. He says "be a fool in the right places." Part Three drills into some of the technical details of randomness, probability, and the Bell Curve. Taleb has no qualms about showing his disdain for much of what passes as economics and finance today. In the end, he prefers Mandelbrot to Gauss. A final chapter scolds philosophy for shirking its duty as critical thinking's gatekeeper. He also has unkind words for those who evoke the "uncertainty principle." Part Four, as Taleb promises early on, is very short. These some 6 pages sum up what Taleb finds more worrying (e.g., he worries more about diabetes than terrorism). A final epistle reminds us that we're all Black Swans and that we should appreciate just how lucky we are. So things end on a relatively positive note.

Many have taken offense at the ideas and opinions Taleb expresses in "The Black Swan." He does more or less give certain domains, such as economics and finance, the finger. Sometimes he can barely contain his rage. Add to that his penchant for a messy real world approach and the book can come off like a rambling diatribe. It's not clean and tidy, nor is it meant to resemble a beautiful uniform systematic approach. It's messy, and this reflects Taleb's view of the world. For him to present a linear, smooth as glacé argument would directly contradict his refutation of attempts at such systems. He doesn't think the world is neat and readily adumbratable and he's fiercely suspicious of work that claims otherwise. So expect digressions, meanderings, non-hermetic arguments, and sometimes the phrase, which many humans fear more than nakedness, "I don't know." Readers who don't agree with Taleb's method, or lack of, will nonetheless find challenging and intriguing ideas to contend with. Who knows, they may even encounter a Black Swan of their own, within one of those many yet unread books. But don't leave "The Black Swan" in the antilibrary.

I expected something different and I found the essay style hard to digest. I think readers might get a better deal if they read "Extraordinary Illusions and Madness of the Crowds", Irrational Exuberance" or "When Genius Failed".

It's too bad Taleb's ego is louder than his thesis. While he puts forth many interesting and insightful concepts and thoughts, the price one must pay to find them amongst the egocentric drivel that fills most of the pages makes this read hardly worth the effort. I can't help but think that the basic arguments from such a pretentious elitist could only be hot air. It's hard to take him seriously.

The author has also written "Fooled by Randomness". Both books deal with the same matter; how low risk/chance events can have a major impact more often that realised. The book earns five stars because it forces the reader to think about a very important issue.

Which of the author's books should you buy?
1. What a big font, very easy read? Then go for "Fooled by Randomness"
2. Want a small font, more intellectual read? The go for this book.
There is absolutely no need to read both. Just pick the one the fits your temperament.

Any critique? The book is focusing on just one matter and the author is pushing it a bit too one-sided. However, it doesn't matter if the book isn't balanced. The book gets you thinking. You should expose yourself to the ideas. Stylistically the book is not very good. However, this is not poetry so I would not put much emphasis on this point either.

Who should buy? All social scientists, all people investing in the stock market, and all people involved in planning about the future.

Do not use your valuable time reading through this entire book. Taleb provides some solid theories with good support. However, this book could have been condensed into about 50 pages and he could have conveyed his entire message. Much of the book is stream of consciousness and it is difficult to see how what he is currently discussing ties to what he just discussed, and where the discussion will go next. Additionally, many of his theories, while applicable in the constrained set of circumstances he presents, are not widely applicable.
Presentation of the Black Swan was a useful backdrop for other discussion in the book, but the Black Swan was really not what the majority of the book was about. Instead, it branched off into other theories, not directly supporting the Black Swan theory, and in many cases, unrelated to other parts of the book.
While Taleb (clearly qualified in this area of empiricist discussion), at times, wrote in engaging prose, too many times he engaged in name-dropping and abstract theoretical presentation that distracted the reader (without an extensive knowledge of mathematical theorists). It was difficult to determine an appropriate audience for this book. Sometimes it seemed anecdotal, targeting the lay mathematician, while at other times it dove so deep as to only interest a Ph.D. in related topics.
Overall, it was a struggle to get through this book and while there was some scattered, solid discussion, I was able to take very little away that will be applicable. Not an enjoyable or informative read.

I labored over a 2 or 3 star rating but ended up at a 2 since I decided to punish hubris in the wake of the Wall Street scandals.

The book is an interesting read but you have to keep an open mind and get past the author's incredible arogance and condescention. He basically tells you that you and everyone you know are stupid because you do not think the way he thinks you should think. Some chapters have some merit and when he is not so busy telling you how dumb you are, he can make his point effectively.

One problem I had was the idea that many of his "Black Swan" events were actually unexpected. Events like 9/11 were actually predicted, not least of all from Ramszi Yousef, the man who performed the Feb 26, 1993 attack who said they would come back to finish the job. The 9/11 Commission report listed basically 10 things that pointed to the attack which if performed would have prevented it. Five were in the Clinton Administration and five in the Bush Administration (although to be fair, the Clinton Administration had a lot more time to actually learn the threat and do something about it since the first attack happened on their watch as well).

I have heard others say that the author's previous book was more helpful without the biting sarcasm and self promotion.

If you want to read this book, check it out of the library. The basic premise of the book tires out quickly. The writing held a narcissistic flavor in my opinion.

This is the book that I've personally recommended to more people than any other.

Taleb's main point--that the world is far more random and unpredictable than almost anyone grasps--is well worth making. This, as he shows, is especially clear and crucial in human-dominated activities such as economics, politics and the social sciences.

I was particularly struck by a graph that appears three-quarters of the way through the book that shows that the ten largest one-day changes in the U.S. stock market account for half of the returns. This is a mind-blowing demonstration that anyone, including the Nobel-prize-winning economists Taleb reviles--who estimates risk under the assumption that the stock market follows the Gaussian bell-shaped curve is on extremely shaky ground.

Taleb's more general position, that in most human activities, "black swans"--events like 9/11 that are intrinsically unpredictable--make the most difference, is also an invaluable eye-opener.

After many pages of argument, I'm even willing to agree that whether we like it or not, we do live in chaotic, risky and unpredictable "Extemistan" rather than relatively tranquil "Mediocristan."

Unfortunately, the more I came to appreciate what Taleb has to say, the less I liked how he says it. He comes across as an angry, aggressive, in-your-face intellectual snob. I was tired of his tirades and gratuitous insults by page 7. They continue through to the last line of the book, where he, a "person of commerce" takes a last swipe at other persons of commerce.

Still, if you can get past his abrasive style, you can benefit, and maybe even profit from his frequently brilliant insights.

To me Taleb's underlying thesis is blatantly obvious. Random and chaotic events occur and greatly impact our everyday lives -- I think most of us can understand this. However by definition these events are "unmodelable". Probabilistically speaking these events are extremely unlikely yet provide huge impact upon our final outcome.
What Taleb fails to provide is a framework for dealing with these "Black Swan" events. I don't think any book can really claim to be ground breaking by simply outlining that life is random (a generally understood fact) and giving several examples. Sure I learned about a couple of such events that have occurred in history, which is somewhat interesting but certainly not something that makes me rethink my current decision making framework. The fact is randomness exists in life. Models are our best attempt at taming this randomness. I fail to see what alternative Taleb provides - Shall we just throw out all the models simply because they are poor? Poor is still better than nothing, and everyone understands this.

For instance suppose I wish to make a decision : should I buy a cup of coffee or not?
This is a yes or no question. The naive model says evaluate the expected utility of the coffee versus the cost. Taleb would say this is a crappy model because it fails to take into account the fact that you could meet the CEO of a company in line and then hit it off and start a new venture which could change your life. You could be held up at gun point because the store is robbed and shot.

Thats all fine and dandy but when I'm making the decision there is a huge universe of such life changing outcomes all equally probable in my mind. Thus when making the decision I have to use my best facilities to evaluate returns and opportunity cost which is in the end is the simplistic model.

So in the end he fails to provide any new model for evaluating risk... It's obvious that we can't predict the future. He is correct -- markets could collapse if a nuke hit america... or some other "Black Swan" occurrence happened. But the fact is we can't really practically use any of these events to model risk because there is an infinite universe of such "Black Swan" events each with near zero probability -- thus they don't provide any information gain.

One example I found to be lacking was when he talked about the banking crisis (where South American countries all simultaneously defaulted on their loans) ... and implied that this meant that "bankers were not conservative". His basic vice is that many strategies produce very little volatility yet still contain chaotic possibility of an extremely large loss. Unfortunately he never offered a practical alternative to what conservative should be defined as. Humans have limited tools to evaluate risk, I think everyone realizes that our models aren't perfect (yet in the book Taleb seems to think that no one has had this insight). This pattern occurs throughout the book -- Taleb chastising people for wrongly evaluating future occurrences without offering any practical alternative.

I would not buy this book if you are an academic -- it is good for someone looking for a casual read but doesn't provide any significant ideas on how to better evaluate risk

The research based information on the psychology of marketing, buying and selling that are described in the first two chapters are little known, facinating and extremely useful for those at many levels. Detailed discussions of "decoys" in marketing products, the relative comparisons involved in almost all buying decisions and the incredible effects of "free" merchandise such as Amazon's free shipping are given in an interesting and engaging way. After that the impact and interest of the information declines with each chapter and by chapter 7 it is hard to tell what the focus of the book (audio) is. A guess would be that after chapter three it just goes on to whatever the author found interesting and researched.

Ha! My clever title has nothing to do with my review (or does it?). Anyway, I found this book quite challenging. As I've said in other reviews, I am quite the layman when it comes to statistics and probability. But I think I got the gist of Taleb's concepts: we rely on flawed notions to make decisions or to view the world: the ludic fallacy; the narrative fallacy; the confirmation bias, etc. Foolish men (I don't think there is even one instance of a woman being mentioned, as either one who gets Taleb's thinking or doesn't) in expensive suits push on us a Bell curve from the world of Mediocristan, giving a false sense of security (and depriving us of potential big wins) in a brave new world where Black Swans - those improbable incidents for which we are impecabbly unprepared - have hugely significant impacts on our lives.

Taleb's is a mind deeply immersed in many disciplines. For those of us who spent our time in college waiting for Thursday to start partying, the subjects can be a bit challenging: philosophy, economics, financial analysis. But if you want to stretch your mind, take the challenge. There are profound and significant insights and learnings. Can I describe them to you succinctly? No. It will probably take me a few re-reads to fully grasp it all. Nevertheless, it's worth the plunge. In any event, I will forever be skeptical about any information backed up by statistical analysis.

For all the interesting stories, Black Swans has essentially the same message as Taleb's earlier book "Fooled By Randomness"; market prices do not follow a bell curve, and instead have a lot more unexpected extreme events. That said, most investment-related books tend not to linger on this issue, so Taleb is providing a reminder of something critical in markets. His style does come across arrogant, and judging by the bibliography (as well as the main text), he does want to show the world he is widely read. The stories are fun, but at times they are tangential to his thesis. The problem with reading his book is that it leaves one thinking that all investment returns come from chance. I find Mandelbrot's ideas of "gray swans" more appealing in that respect as it hints at the possibility of some skill. Taleb says he is a fan of Mandelbrot, so it would have been nice for him to explore this idea more. The book may not be the most inspiring for those involved in markets (we're all rolling dice), but a much needed reminder of the role of chance.

This is Taleb's follow up to "Fooled by Randomness." I found the lessons of both books to be important and instructive for both investing and, more generally, for life. Just like a Black Jack player who overvalues results ("lucky" or "unlucky streaks") and not the quality of play, Taleb teaches the philosophy of focusing on making the right probability-adjusted decision. Moreover, he teaches to evaluate decisions (your own or those of others) based on the info at hand at the time of the decision. It is easy to judge a decision based solely on results, but that is misleading as it does not account for the potential events that could have occurred but did not.

I found Taleb's philosophy compelling. Also, his direct, no-holds-barred conversational style is easy to read. He does ramble in places as he hammers certain points home. This is not necessarily elegant prose. However, the points are important and overall this is entertaining and instructive reading.

A few years ago "Fooled by Randomness" did open my eyes and fascinate me. To my disappointment, this book added little to its precedessor, except more intelligent use of terms like "Black Swans" (shadowed by the many more jargons of his creation which I cant appreciate at all), and more "confronting" words against his targeted "psuedo intellectuals". Definitely insightful and thought provoking, but can be 1/4 shorter. Recommended, esp traders/investors who should always be aware of those theoretically over 6 sigma incidents (that happen once every 6 months in markets), but should be read after "Fooled by Randomness".

p.s. Below please find some of my favorite passages for your reference.

On a given day 60% of those born in one of the two hospitals are boys. Which hospital is it likely to be? .........the very basis of statistics is that large samples are more stable and should fluctuate less from the long term average - here, 50% for each of the sexes - than smaller samples. pg 53

Chess grand masters actually do focus on where a speculative move might be weak; rookies, by comparison, look for confirmatory instances instead of falsifying ones. pg 59

The problem with experts is that they do not know what they do not know. pg 147

Dont cross a river if it is four feet deep on average. pg 161

Popper's central argument is that in order to predict historical events you need to predict technological innovation, itself fundamentally unpredictable. pg 171

Make sure that you have plenty of small bets; avoid being blinded by the vividness of one single Black Swan. pg 205

If you hear a prominent economist using the word equilibrium, or normal distribution, do not argue with him; just ignore him, or try to put a rat down his shirt. pg 210

Remember that if either of these two central assumptions (the flips are independent of one another; no wild jump) is not met, your moves (or coin tosses) will not cumulatively lead to the bell curve. pg 251

Black Swan is a solid read. Admittedly, I do not find it as insightful as "Fooled by Randomness;" however, I would recommend it. The narrower breadth is likely the reason for my reduced pleasure.

Having said all of that, last week, Bear Stearns was sold to JP Morgan Chase for ~$250M (x-debt). At the root of the decline of Bear were a bunch of models / bankers that failed to consider fat tails or "Black Swans." Liquidity ceased w/in short term lending market (which were heavily used against long term assets), as banks feared the real value of other banks housing-related assets. Banks were fearful, given there were correlations within the securitization unlike anything ever experienced historically ("prime" and ALT A loans, behaving like subprime, etc). This event only further solidifies the book's teachings, especially while it's (Bear and the read) fresh on the mind.

In summary, if you've read Fooled by Randomness, read it, you'll enjoy. If not, buy Fooled by Randomness first and see where you stand with the author, his writing style, his personality and his paradigm. Note: The author's personality and experiences are indeed special. I look forward to his next read.

Benjamin Franklin summed up the point of this book a long time ago when he said, "in this world nothing can be said to be certain, except death and taxes." For a less compressed version of this phrase see the plays of William Shakespeare. Even just one or two would suffice. And there are many other novelists and playwrights that can offer the same insight: stuff happens.

Of course there our big outliers. Of course things can happen that are totally unpredictable. They happen every day -- big things and small. If you agree with that idea, then you can skip this book.

I used examples out of this book the very day I bought it.

My job is to advise on business continuity plans, or BCPs. These plans are to help a business survive when disaster strikes. This generally means having a secondary location with server backups, a contact list of all staff members, and a set of plans on how to deal with various scenarios. You wouldn't deal with a fire the same way you'd handle a flu epidemic though either one could destroy your business.

This can be a tough sell. Managers and salespeople are edging to get out and do their own work and even in this post 9/11 world they see BCPs as a chore. They don't see a need for them because any single disaster is perceived as so improbable that planning against them is a fruitless expense.

I got much help from Taleb's book. His examples and insights forcefully counter this attitude. Here are some examples I gave management during my presentations.

* The hero of September 10th. Had some regulator mandated bullet proof doors on all passenger planes by 10 September 2001, then the World Trade Center would probably be standing today, but would we have thanked the regulator? Of course not, we'd have cursed the increase in fuel consumption caused by these heavy doors.

* The problem of silent evidence. Cicero asked about a series of portraits and was told that these were grateful pilgrims who had been saved from a storm by praying to the gods. I see, answered Cicero, but where are the portraits of those who prayed and drowned anyway? Evidence of success is seldom mitigated by the often absent evidence of failure.

* Power distributions. In Taleb's world (he calls it Extremistan and contrasts it with Mediocristan) events and their impacts are distributed following a power law, or the 80-20 rule. But the 80-20 rule scales up. If 80% of the wealth is held by 20% of the people, then 80% of that 80% (i.e. 64%) is held by 20% of that 20% (i.e. 4%). We should think this way when planning for worst possible cases, that is we shouldn't plan for the worst case we know has happened, we should plan for at least one level up in the 80-20 rule.

Taleb's main hobby is to tease people about what they claim to know. He readily says "I don't know" and advises skepticism towards those who claim they do know. Does it take courage to go to your boss or to a team of managers you are advising and say this? No, it doesn't take courage, it takes tact. We might not know what to expect but we can foster a culture of skepticism and promote it as the best available. We should give up a dangerous sense of false security and simply accept we don't know so that we can absorb as best we can the impact of the next big disaster.

Vincent Poirier, Dublin

I happen to work with software project estimation. Taleb's latest book has a special message for estimators in general and I found it entertaining, intriguing, frightening, and useful at the same time! Chapter 10, appropriately titled "The Scandal of Prediction", reminds us that predicting anything remains a hopeless task for most of us. Yes, we may do quite well on the average, but now and then a Black Swan (an improbable event) will come out of the blue and get us. Starting with the Sydney Opera House construction project originally estimated at AU$ 7 million that ended up costing AU$ 104 million, Taleb reminds us that we should be very humble when prediction of any kind is involved. Some of his controversial ideas about prediction: someone who has less information may be a better estimator than someone who has more; experts have a very poor assessment of their ability to predict - they tend to believe they are much better than they really are; and more. Taleb provides explanations and references for most of his peculiar ideas. He may convince you, or not. But it is worth reading.

Taleb lists the excuses used by forecasters when caught (most of the time they are not - few people actually compare actuals to estimates. Do you?). Some say they were "playing a different game", meaning some "exogenous" event took place. So if you are, say, a social scientist you may put the blame for a poor prediction on economic factors, since they are outside your domain of expertise. If you are a software project estimator like me you may blame the budget overrun on the project leader who left the company without warning (how could you predict THAT?). Alas, that does not fix the problem.

Also, as Taleb points out, projections usually do not come with a "possible error rate" attached to their scenarios. Not knowing a projection's variability rate is like trying to cross a river four feet deep on average only to fall into a seven feet hole. The average depth is still four feet... but that does not change anything once you're in the hole, does it?

How would you solve that problem? Taleb tells estimators to get another job. He adds, "Anyone who causes harm by forecasting should be treated as either a fool or a liar", period. If you do not mind shaking your beliefs now and then, brace yourself and dive into this book. I did and loved it. Good luck.

The Black Swan is one of the best critical thinking books I have ever read. Taleb uses the analogy of a Black Swan to symbolize his thesis - that significant, but unexpected, events occur and determine history, but we are blindsided by these events because our minds are fixated on the status quo.

With the knowledge that the dinosaurs had, could they have ever imagined getting wiped out by an asteroid impact? Who would have guessed that the transistor, invented in the late 1920s, would cascade to the invention of computers, the Internet, and the way we share information. Such events are Black Swans.

The elusive thing about the Black Swan is that they are difficult, if not impossible, to accurately predict. However, Nassim Taleb does his best to examine the scenarios that brew Black Swans and uses an interesting array of terminology such as "Mediocristan" vs. "Extremistan" to describe where Black Swans are likely to occur.

The most interesting part of Taleb's thesis are his explanations for why we are so shocked when the Black Swan arrives. He does an excellent job analyzing the way we are trained to think; our minds are so wrapped up in the status quo and the information we have that we tend to forget about the unknown unknowns.

Taleb examines how our minds naturally fall victim to fallacies such as statistical biases and what he calls the "ludic fallacy" of mathematical modeling. These fallacies cause us to overlook the big picture and miss the devastating Black Swans lurking.

I was happy to finally see someone with the guts to attack the academic means of thinking with a structured, rational argument. He vigorously discredits the eggheads who try simplifying the real world such as the stock market into their mathematical models. (Remember, these are the same eggheads who put together Long Term Capital Management.) Among the flawed models he points out is the Modern Portfolio Theory, which is taught to MBAs around the world, but is almost never practical.

References to ancient philosophers and every day news events keep the book interesting and give it a worldly sense. Taleb's terrific tongue-in-cheek humor makes it entertaining as well. You won't regret delving into this intuitive and practical new chapter to critical thinking.

This, like a lot of nonfiction books on markets, is a Harvard Business Review article grown overlong.

But's it message (of being more humble of what our cognitive and analytical methods can do) is diminished by being delivered by someone who is profoundly lacking in humility. And the autobiographical fluff that packs the book is annoying as you wade through pages and pages of how Taleb is so clever to get to the 1-2 paragraphs of actual thought in each chapter.

Also, he doesn't take into account that the cognitive methods he disparages could have prevented so-called Black Swans from occuring.

You only notice the failure of your risk management/safety/loss prevention systems when they don't work, not when they do. Taleb doesn't acknowledge his own lacunae in this.

A bit more humility and a lot more editing would have made this a better book. But there are still good insights in it, so three stars.

I read this book from cover to cover and decided it was the most significant book I had ever read. However, although entertaining, it is not an easy read, so having completed it I immediately re-read it to improve my grasp of the subject. I believe that Taleb has struck a blow for common sense in deflating the phony experts and their reliance on elegant mathematical models, that are based on completely false assumptions about the real world.

This book is a compulsory read for anyone who wants to understand the world we live in.

Very interesting book. The author discusses a number of subjects that we are not trained or care to think about in our everyday life and which nevertheless impact our life much more often than we realize - such as the nature of our perceived knowledge about the random events, the trust we place in "experts", the imaginary casual links we see in random events, etc. He does it in vivid and insightful manner, and his style is both easy to read and thought-provoking.
I certainly found the book expanding my horizons and giving me a lot to think about, which is what I seek in a good book. I think it is worth every penny and every minute I spent on it.

Anybody who has to confront uncertainties and is advised by "ëxperts" ought to read this book. Especially the use of the normal distributiuon - used in practically all such programs - is show to be misleading.
Taleb's alternative - thr Power Law - has one big disadvantage. It;s parameters are difficult to estimate, but it seems to be a good fit for many actual situations.
A wonderful read.

This book will take you into the fascinating mind of its author. The author has devoted his life to the study of probabilities and uncertainty. A Blak Swan is the rare occurance of a highly improbable event that radically changes current circumstances. It is completely unexpected and is an event that was considered almost impossible before it happens. Examples are the 9/11/2001 attack, the stock market crash of 25% on Black Monday 1987, and the collapse of the Soviet Union. These occurances are impossible to predict from an academic view point with their theories and formulas.
He also discusses how gambling in a casino or playing a board game like monoply do not represent the real world. the rules and odds of these two games of chance do not represent how the real world works with randomness and personal dynamics involved. (Casinos lose more unexpected money from uncontrollable events like people falling and hurting themselves or the Sigreid and Roy tiger attack than they pay off to winners at the tables,these losses are planned with the odds in their favor compounded with the gamblers not knowing when to quit).
The book is hard to follow at times and a lot of the material was over my head and I had trouble understanding it, but the jewels of wisdom I did get out of it were well worth the effort. This book will open your eyes to a lot of facts of randomness that you have not previously considered.

The Economist in the August 16th 2007 edition said
"The people at Goldman Sachs lost a packet when something happened that their computers told them should occur only once every 100 millennia"
(Surviving the market. Leader).
This is the way people made measurements in Mediocristan. But social sciences (and Economy IS A SOCIAL science) belong to Extremistan.
NNT, with his provocative prose, forces us to rethink everything what we have given obvious.
To give to the random the importance that it has in our lives, implies a philosophical and literary approach to the topic, since it is the only route to destroy the "solidly" constructed fallacys of the platonic and academic thought.
An absolutely universal and advisable book.

Taleb is a genius. This book has totally changed my view of the markets, and should be required reading for all MBA finance students. Incredible. Incredible! You won't regret this purchase!

It's not as good as the 1st book, because now instead of focusing on financial markets, he tries to apply his views to everything, and while he may be a financial expert, he's not a very good philosopher. He says past events are not predictors of the future (his example was a turkey who was fed everyday assumed it would be fed even the day before Thanksgiving)--an over-simplified example which is telling of how simple he thinks most people are!

Some of his generalized arguments can be easily refuted. He took issue with how a journalist described some tough people as being "strengthened by the gulag" and drew an analogy using rats being subjected to radiation. Not a good example at all, as human behavior and character do develop as a result of a tough environment. He also thinks swimmers will develop the same type of body shapes no matter what kind of exercise they do because of the type of muscle they are born with. That's partly true but different types of exercises develop some sets of muscles more than others.

And then, in the last chapter, the book just degenerates into advice about "how to live your life"--quite a weak attempt at trying to show that his intellect and true skeptism protects him from the frailties of life.

But one thing he said which would be useful for me and for traders to be mindful of:
"When you develop your opinions on the basis on weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions", "confirmation bias", and "belief preference--the tendency not to reverse opinions you already have."

As a follow-on to Fooled by Randomness, the Black Swan is a excellent, thought provoking work that raises questions that should be considered. Nassim's style is interesting.

Definately worth reading!

Okay, I'm a member of a cult of anti-Talebites (NuclearPhynance), and therefore everyone is dying to know what I think .....NOT!

So here goes.

I liked it. I liked Taleb's The Black Swan in the same way I like Charles Dickens. Dickens you see, in each of his works, has a single theme, which he carefully develops in the opening chapters and then flogs to death long past when it is obvious. But to keep you engaged in the theme, he creates characters worth following until the novel's resolution.

***Begin Spoiler***

And so it is with Taleb. His theme is: the standard normal distribution is inappropriate, outcomes really do have weird fat tails of events, measure theory and approximation of real probability curves and spaces is hopelessly naïve and at the level of alchemy, and folks are dangerously lulled into a false sense of security because of arbitrary historical measures that are *sure* to break down.

And Popper is a god. (I'm sorry, a scientific theorist par excellence).

***End Spoiler***

The rest is anecdotes and amplifications and narrative and opinions and self-contradiction.

"Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)" - Walt Whitman, "Song of Myself"

None of what Taleb amplifies is unknown to anyone who works in quantitative finance. Pretty much everyone I know *knows* that models approximate reality and are not coincident with reality. Everyone knows the limits of probability estimation. Everyone knows a lot of what passes for science is nonsense on stilts.

The question then becomes: is it a good read? The answer for me is a resounding "yes." Like hearing a familiar tale told with a fresh and welcome voice, The Black Swan is fun to read and has many treasures in turns of phrase.

Folks fault Taleb for his arrogant tone, dismissive rhetoric, and contradictory examples, but I find that just facets of an amusing personality and raconteur. I know the difference between a Magician and a Mathematician, a storyteller and codewarrior.

As opposed to other reviewers, it was too familiar material to really stretch my mind, but a fun read anyway.

I was most disappointed that William Poundstone's "Labyrinths of Reason: Paradox, Puzzles, and the Frailty of Knowledge" and "The Recursive Universe" wasn't credited more heavily....it was clear to me throughout that this and Popper have been Taleb's most significant influences.

The title phrase of this book has gotten enough airtime that prospective readers may think they already know what is in the book and may not take the opportunity to read it. I think that would be a mistake. Events that are hard to anticipate, exhibit extreme variation, and have a high impact are a part of the subject matter, but the book has much more to offer than a discussion of these type events.

Taleb delves into the biases that make it difficult for each of us to assess the probability of events in social interactions. Of course, his classification of biases can't be canonical -- but he has clearly thought deeply about such biases and organized them into some nice categories that are useful for anybody desirous of examining their own thinking in a wide variety of contexts.

He begins by talking about two very different variables: those "boring" types of variables belonging to a class that are modeled by the standard statistical methods -- those belonging to 'Mediocristan.' He contrasts such boring variables to those variable involved in social interactions -- variables exhibiting such a wide range, that only one observation can make meaningless the standard parameters used in statistical analysis. These variables belong to 'Extremistan.' Toward the end of the book -- [the weakest past] -- he admits a classification in-between within a discussion of power-laws and fractals.

The main strength of the book is not the above classification, but the authors emphasis on particular fallacies in thinking that cause us to think we know more than we really do. The book would be pretty good, if just for the clear identification of the common mistakes we make -- when dealing with the information in the 'Extremistan' category -- but Taleb goes further gives us some good ideas for countering some of our natural tendencies and tendencies we've acquired through bad learning. That said, he remains very much the realist about us being able to discipline our thinking to be completely free of such biases.

Regarding the writing of the book -- the writing style is more than a little bit idiosyncratic. Taleb discusses more than once how much he hates to be edited. It shows. However, he is quite good at selecting the examples he picks to demonstrate the difficulties we have. His personal anecdotes and even fictionalized accounts which demonstrate these fallacies -- add clarity and overcome his less than disciplined style of writing.

The book isn't specifically about forecasting, trading, history, or a host of other subjects -- but he draws on these examples to get us to think about what we know and what we don't. [Anybody involved in the above areas as a part of their career would certainly gain from his perspective.] His larger solution -- negative empiricism -- i.e. being sure to understand what it is we don't know, may not be satisfactory to some. However, I think the perspective that Taleb offers is at once both liberating and humbling to anyone who has been involved in planning.

Haven't read a more interesting and more eye opening book than these two - Fooled by Randomness and The Black Swan. Reading them changes the way one works, thinks and trades. Please read NOW!

To be quite honest, my rating of the book was changing from five to three stars and back while I was reading it, but now I am back to five stars. And the reasons are:

It's so easy to get affected (insulted, offended, frustrated) by Taleb's style - arrogant, often rude, all this absolutely deliberate. It's not that easy to brush off these emotions and begin to really think about the ideas presented. Once you do it (I guess, some of the reviewers didn't get to this stage), you should be able to enjoy the book. I think that all this arrogance is not only a pose, but also like a publishing trick. The more controversial is the book, the more people talk about it , the higher are the sales (on the cynical side), the more people get acquainted with the Black Swan idea (on the positive side). I would say whatever it takes to get people to read this book is really good. So, no points are taken out for the style. Even though, on the other hand - I really can not predict (:-)!) how many readers would be more open to Taleb's ideas, if not for his presentation.

On the other hand - while it's easy to argue with Taleb on minor points (not 100% accurate examples, or replacing strict proof with stories in some places), I do agree with him on the major points.
First, social and economic events really do not follow the same laws as physical events - and it's dangerous and counterproductive to think otherwise. In the least dangerous scenario, your economic theory will not prove anything (Eric D. Beinhocker does more elegant job of explaining it in "Origin of Wealth"...). In the worst case, the security measures in the airlines will not be implemented due to the small probability of ....(OK, all of us know that explosives could be masqueraded as innocent liquids... do we know what the next generation explosive would look like?)
Second, we really don't know what we don't know, and all risk management tools that are not taking it into account, are flawed. Again, NNT is not one and only to talk about it; to name only one, Daniel Kahneman talked about it in his latest interview; many business leaders also recognize this fact and try to implement the new way to hedge the risks.
Third, NOWHERE in the book Taleb says "There is no point to plan for the future, since you can not predict Black Swan". Just the opposite - he recognizes human tendency to plan as a natural one; he simply encourages us to incorporate probability of Black Swan in our plans (not to worry about small risks, and worry only about the things that are worth it - I'll take it as my day-to-day advice)

Summarizing it, if you are ready to be annoyed by every second page, but able to put your emotions aside, you would be rewarded - you will get another point of view, new ideas to think about - and you will twist your brain for a couple of months, looking for arguments and contra-arguments.

If you are afraid to spend money on the book and be angry with it in the end, hedge your risks - borrow it in the library first; you'll either end up buying it anyway or never finish more than first 10 pages.

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.

290 pages of poorly written pompous, self-serving and score-settling gibberish, plus 10 pages of interesting, but not original thoughts.

Skimming through the most recent 3 pages of reviews on this book, it is pretty obvious that there is a love-hate relationship that readers have with this book.

Trying not to be too elitist, I think you need a certain level of intelligence and education to even understand the depths of what the writer is getting at.

Is the book 30 or 40% too long? Absolutely. Could it have benefited from a good editor? Without question. Can an intelligent reader who is willing to look beyond all of that gain some life-altering knowledge from slogging through it?

Undoubtedly.

It is pretty clear from this book that Nassim Taleb is beyond arrogant, and also pretty clear that you wouldn't enjoy his company very much. At the same time, you need someone with this sort of personality to go after the academic frauds who have monopolized the conversation about the economy for far too long. They have succeeded in drowning out most other voices because the language they speak, higher mathematics, is accessible only to the elect few. The worldview that they espouse is one in which all of human behavior can and should be "modeled" using this elite language, and then future behavior can be predicted based on the model. Any challenges to this neat little closed system from laypeople who cannot speak the language are met with derision. Taleb knows the language and says that modelers are doing far more harm than good by making it appear that their models can fit the data and be predictive, when in fact the data can only be made to fit through fudging, and their predictive tool, the bell curve, is inapplicable to this type of data. There are insights on every page in this book (in addition to gratuitous insults), but one in particular will stay with me. The statisticians always tell you that they can make predictions at a 95% confidence level for a large dataset if they sample enough data points. How do you know whether you have enough data points? It depends on the variability of the data. How do you know how variable the data is? Only if you have actually measured the data. How do you measure the data? You have to look at enough datapoints. You see how circular this is when phrased in plain English. Taleb brings plain English back to the conversation, and it is plain refreshing. A must read.

Many other reviewers here at Amazon and elsewhere have done an admirable summarizing the key topics addressed by Taleb in his book on the "Black Swan" -- his metaphor for events that fundamentally could not be predicted by the mechanisms that humans (including scholars) use to understand past events and frame their expectations for the future. Therefore, I won't spend additional time rehashing these topics. Overall, I feel that Taleb makes some compelling points about the problems of experiential induction, "winner take all" effects, and probability models centered around the Gaussian or normal distribution. He also provides some useful examples and thought experiments from everyday life that illustrate these problems effectively.

However, I feel that the main downfall of this book lies in Taleb's frequent but unfocused references to philosophical and literary figures and concepts that seem far too obscure to appeal to the average reader. The author's choice to constantly fling these references at his readers, as if he's desperately seeking to demonstrate his intellectual pedigree, detracts from the clarity and thematic unity of the book and can be both dull and downright confusing for readers, as in the case where Taleb invents the story of a fictional French-Russian philosophe-author as evidence of the "Black Swan" effect with nary an explanation for how such a story provides greater value than a comparable example taken from real life (or even no example at all). This meandering, half-philosophical half-practical style, combined with Taleb's sometimes-tiring and often unprofessional sarcasm and derision for those who have yet to see and apply the (admittedly valid) wisdom of his points about randomness, left me with scarcely enough patience to get through the entire book. I felt that he could have communicated his ideas in equal detail but with greater impact (and less self-aggrandizement) in a book half or two-thirds this length.

In short, Taleb's main ideas are interesting and worth considering, but don't expect this book to give you a pithy pitch about the influence of randomness on the world. The book is ultimately as much or more concerned with the philosophical implications of this randomness than it is with how you can protect yourself against randomness (or alternatively, leverage it to gain some benefit or advantage). While that might not be a negative thing for a book about philosophy, I found it distracting and disappointing for a book in a more mass-market nonfiction genre.

Most of the people that buy this book do so to seek information to gain a larger perspective (advantage)? in life. However, most (myself included) are "cab drivers" not CEOs. When Puckish guys like Taleb who are obviously well read are allowed the luxury of a platform on which to ramble they make what seems a no-lose case for their cause. But they're not talking to us cab drivers, they're speaking to CEOs. To what end other than a potential trickle-down effect do regular folk hope to gain by examining his pearls before the swine? Not much, I'm afraid. His Optima fund is nothing more than a contrarian insurance policy the moneyed few can utilize in case of disaster in the market. I'm not saying that's a bad thing but it is hardly original. I am but the lowliest of the lowly and I've been saying for the better part of a year that hyperinflation may be around the corner. Am I some kind of genius? Hardly. In fact, even if many of the average Joes in this country know that their entire way of life hangs in the equilibrial balance of decisions made by self-serving morons they simply do not have the resources to do anything about it. In essence most of the people that buy and read his books are screwed either way. Then there are pearls such as the case he makes regarding the common intelligence test question (I'm paraphrasing because I don't feel like looking it up): "If all Zagrots are Zimbles then are all Zimbles Zagrots?" Then he delicately makes it analogous to a racial situation by implying that even though all of Race A may be Criminals, all Criminals are not necessarily comprised of Race A, then cheekily concludes that even those who know better will cringe when on alone on an elevator with a member of Race A. Hmmm? It seems to me that if I am to avoid a potential Black Swan event it would behoove me to avoid the elevator, right? And that's where all his books fall flat. They spend a lot of time criticizing our human foibles but very little time explaining what to do about them. Perhaps I could make a case for reading his books if I felt that, in some way, they illuminated my mind in such a way that they enabled me to avoid the pitfalls in thinking that seem to plague us all. He credits some of his own ability for abstract thinking from reading tons of books and becoming an aesthete. A rather impractical solution for us Cab Drivers. So all a guy like myself can derive from his books is a lengthy endorsement for his Optima fund. Except it doesn't matter because in perfect Talebian style the fund is closed to outside investors. It figures.

The author clearly loves to hear himself talk because he's filled up this book with a great many unnecessary pages and stories that just feel misplaced. There are a couple of meaningful chapters, but very few (15-17). It's also annoying that throughout he ties everything to luck. Overall, a disappointing read.

I won't dignify this idiotic book with a thorough review. Read a total of 100 pages, and I'm exhausted. If you like hearing others pontificate on why they're smarter than you, this is a real treat. I can't add anything to what others who have rated this book likewise have already said.

I came to this book expecting a clever but flawed argument for intellectual laziness or superficial thinking, another popular argument for "gut" or "intuition" or "Zen." Or perhaps a slick Gladwell-esque treatment of randomness. Perhaps a popularization of postmodernism or neo-pragmatism applied to financial markets, or a "Thriving on Chaos" (Tom Peters) for the 21st century.

This book is none of those things. Instead I found myself immersed in a very intriguing and deep intellectual journey into the roots of applied statistics and empirical science that had me thinking and taking notes prolifically. As readable as it is, this is not (or should not be) a quick read. Taleb is an erudite scholar but he uses his scholarship in the service of ideas rather than to accumulate impressive footnotes. His lectures are conversational but convey great weight.

I do find his tone somewhat arrogant in spots, oddly so. The half dozen or so people he finds interesting are worthy dinner companions, the rest of the world of intellegent mortals are pretty much fools who he chooses to stereotype and parody. Anyway, that's the impression I get. Contempt for audience usually works against an author. Still, very few modern authors can combine technical knowledge, originality, and readability the way Taleb can, and this to me kept me reading even when I imagined I was one of the many targets of the author's contempt.

Enough on style and impression, the content of this book is what makes it merit five stars. The core idea here is that we are creatures who quickly and easily sort things into categories and tell stories to make sense of them. Narration comes unbidden to us, but not skillful abstract thinking. This much of course we have heard before from the heuristics and biases school and behavioral economics. Taleb's contribution is to point out a particularly broad implication of this principle, that our knowledge rapidly degrades when rare events are consequential. We explain them away and miss their importance. At the same time, we overestimate the impact of rare events for arbitrary reasons when they really have no consequence.

That would be of mostly academic interest except for one thing. The key to Taleb's overall argument is his claim that the impact of rare events is domain-specific. That means we can learn to distinguish domains where: (a) classical risk statistics apply ("Mediocristan") from (b) those where rare events and winner-take-all competitions dominate ("Extremistan"). In "Mediocristan" domains, classical decision theory in principle should help us (although Taleb seems to feel that these domains are few and far between among things we really care about).

In "Extremistan," Taleb advises, we should take steps to protect ourselves from rare adverse events and use diverse aggressive risk taking to exploit rare positive events. The idea here is that we are betting that something rare will eventually impact us in these domains, even though we can't know what specifically it will be. The point is that in domains where likelihood can't really be calculated, we should focus our efforts instead on the impact rather than guessing at the probability.

Taleb doesn't make this argument lightly, he explains the limits in our predictive ability in an understandable way yet he also takes heed of technical details in his arguments. "Extremistan" consists of all of the domains where scaling and nonlinear accumulations occur, or rapid deviations from small differences in initial conditions. In line with complexity theorists, Taleb finds these effects pretty much everywhere of interest to social scientists, economists, and people in general. He suggests that we might be able to use scalable non-linear maths to get a rough idea of what to expect in some domains, but that we need to remain careful of the illusion of mathematical predictive power.

Biological values like height and weight and average life expectancy are areas where the normal curve applies, and perhaps mean failure rate of parts in engineering. But when important things like money or fame or success can accumulate virtually without limit and often for arbitrary reasons like contagion, the assumptions of Gaussian distributions are just not relevant. At least that's how I understand Taleb's claim that the normal distribution is a great intellectal fraud: it is applied confidently to things where it has no place being applied.

With one strange but perhaps unavoidable exception, Taleb usually follows his own advice. He considers theories for storytelling purposes and explanation but doesn't take them seriously or depend on them for his argument. He does use storytelling quite a bit to make his point, even though his argument is largely about the unreliability of our stories. He seems to be saying that we automatically make sense of events through stories, so it takes a story to help us understand the argument against relying on storytelling.

I suppose there is a touch of the postmodernist skepticism of narratives in The Black Swan, but the possibility of having specific strategies for dealing differently with specific domains is in intriguing and welcome update to that tradition, bringing it perhaps more in line with the critical rationalism and conjectures and refutations of Karl Popper and the scientific skepticism of the classical pragmatists than with the modern cynics. Taleb is not rejecting theory entirely, but he certainly prefers direct experiment and aggressive risk taking (in strategic areas) to bland assumptions of predictable statistical likelihood and the reliability of knowledge.

For me this book ties together a lot of diverse ideas very nicely in an original and interesting way, and yet stays on target with its message. Very impressive effort and a very worthwhile read.

This book puts forward what might be considered by many to be a revolutionary set of challenges to conventional ways of thinking about several very important topics related to "highly improbable" events. The book was written before the current global economic meltdown, and published in April 2007, so its early readers may have found some of Taleb's messages hard to accept. Since then, of course, we have been through a vivid illustration of one of the things he wrote about. It is hard to summarize the several interrelated themes of the book -- you really have to read it, possibly twice, to get Taleb's message; but I'll try to summarize one of the most important: the mathematics of Gaussian distributions (also referred to as "normal" distributions or the "bell curve") are applied by experts in many fields where the characteristics of the events are absolutely not Gaussian, but are accurately described only by one of several types of power-law or "scalable" distributions. By assuming a Gaussian distribution (e.g., for the size of daily market movements), experts underestimate the probability of a sudden, large change by many many orders of magnitude. As a result, models used by financial institutions and fund managers are, at a fundamental level, complete nonsense. History shows that within any period of 10 years or so an event occurs that, if market movements were Gaussian, would be a "10 sigma" event (a probably of something like one in 1,000,000,000,000,000,000,000,000). The very fact that market movements over the last fifty years include several 10-sigma events (under erroneously-applied Gaussian models) is immediate proof, for those who want to see it, that the movements are far from being Gaussian. The inappropriate application of Gaussian models outside the very few situations in which they apply (e.g., modeling the height distribution of human beings) is a recipe for disaster (as we now know). Taleb looks at cases of other power-law distributions, such as book sales, website hits, the size of cities, and personal wealth, showing that this class of distributions is so prevalent that they should have been called "normal" distributions, and the Gaussian should have been called the abnormal distribution. Taleb writes in a very entertaining style and does not hide his personality, which you will either love or hate; but you should not let your feelings about whether or not you'd like to sit next to Taleb on a long airplane ride detract from the highly logical critiques he presents of accepted thinking about the probability of events that radically change financial markets, technology, societies, and the world in general.

This is a philosophical book that really makes one think really hard. In this book, the author argues that we place way too much emphasis on past events with the hope that we can predict what will happen in the future. I guess we will never get tired of trying to guess what will happen next. Wall Street operates on the assumption that it has a crystal ball. No one really has any idea of why the markets moved up or down in a single day, but we try to find reasons for it. He argues that most of the big events in the world are unpredictable and he calls them Black Swans. But these kinds of events are what really matters. No one could have predicted the September 11th attack and still it had huge importance to our lives.

This is an unbelievable book. Now that I read it, I am going to read Fooled by Randomness by the same author.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

It took me more than half a year to finish this book. It's just so disorganized to me. I left it on my desk idle for 5 1/2 months and finished it just this past weekend. It can be summarized in a few words: Don't waste your time trying to predict. Future is unpredictable. Live at the moment. This is it. Don't waste your time reading the whole thing.

Yet, I gave 5 stars to this book because it's so sarcastic. Simply this book hitting bookstores and on its way as an international bestseller is a black swan.

In my opinion, of all the characteristics that define economic activity, connection is the most important. Institutions considered "too big to fail" are in reality "too connected to fail." The web of interdependencies that girdles the globe, linking the boardrooms of Wall Street to the kitchen tables of Main Street, can be the economic system's greatest vulnerability - as Nassim Taleb argues in The Black Swan - or its greatest strength. Job No. 1 for leaders of the world's financial institutions and market-regulating bodies is to design the architecture of systemic connection to assure strength.

Laurent Pacalin
Chief Marketing Officer at FICO

I loved Nassim Nicholas Taleb's earlier book Fooled by Randomness, and I am really loving the Black Swan as well. It has much of the charm of Malcolm Gladwell's current NYT best seller, Outliers. -- But while Gladwell leaves us with merely the understanding that the success of various prominent individuals such as Bill Gates or Steve Jobs is due largely to the "luck" of being born in the right place and at the right time, he gives us no greater insight into how a better understanding of luck (in the form of randomness and improbability forces at work upon us) might better guide us in choosing national and international policies or even actively choosing our life paths taking into consideration the improbable events such as birth date and birth place work that for our success as well as those that against it.

In contrast, Taleb's The Black Swan sets its sights on providing us a theory and method to make such decisions in a way that better recognizes the role of randomness in our lives. Even more, it also shows us s that any theory which simplifies real world complexity enough for us to see patterns also inherently blinds us to the risks hidden in the messy real world complexity which we have now simplified out.

Gladwell tells us that random chance defines our opportunities and the threats we will face; Taleb tells us how to seize the random opportunities that might occur in our lifetimes, and how to prepare for the improbable but catastrophic events that surely will happen someday and often change our lives in unimaginable ways.

To fully appreciate the Black Swan, it is useful to see how it builds upon insights set out in Taleb's previous book, Fooled by Randomness.

Fooled by Randomness highlighted the failures of Wall Street market makers who mistook the correctness of their string of predictions as a sign of their own genius, rather than just random chance -- at least until the financial markets changed and suddenly their predictions were consistently wrong and their were suddenly hoisted on their on petards. In Fooled by Randomness, Taleb points out an old investment scam where an investment advisor sends out 2^12 (4096) free investment newsletters predicting that the market will be up next month, and sends out another 2^12 free newsletters to other people predicting that the market will be down next month. Let's say the market is down. Now the broker removes all the people he sent the (wrong) up prediction from his list. But he takes the four thousand plus people to whom he sent the (correct) down prediction newsletters into two parts and he send half another down prediction, and the other half an up prediction. A month later the market is up -- and over two thousand people have seen this investment advisor make the right pick twice. So now he divides that group that got the two right picks into two halves and sends 1024 people an up prediction and the other 1024 the down prediction. Every month he drops off the half of his mailing list that got the bad pick that month , but the remaining half has seen him make one right pick after another! At the end of a year he has one newsletter recipient who has seen him make 12 correct picks in a row. That investors know the probability of 12 correct picks in a row is very low1 / 2^12) so they conclude that it isn't chance a lone that makes him a great stock picker -- they conclude he is a genius, so the invest a bunch of money with him, and tell all their friends to as well.

While the sham newsletter is a well known scam, in Fooled by Randomness, Taleb points out it doesn't require such an actively deceptive strategy to make 12 correct guesses in a row. Given enough investment advisors independently guessing each month's market direction at random, say some number greater than 8096, one or two will surely make 12 lucky guesses in a row. And in fact, when we say they make their predictions randomly, we don't mean that they don't have a method -- maybe they read tea leaves, counted sun spots or compared the month's average temperature in Jackson Hole, Wyoming versus than the average for the month over the last 20 years. As long as these methods are independent, distributed widely, and uncorrelated with the actual factors that drive the market, there will still be a few lucky winners who will get it right. But now their results will be shown in Morningstar or Consumer Reports, and people will think that given their past track record was so good, so will their future be equally good! But because actually these were just random correlations, their futures aren't always so rosy.

The point of Fooled by Randomness is that these investment advisors not only fooled unsophisticated small investors into thinking that they were brilliant (rather than just lucky and later unlucky), but they fooled their superiors at the trading firms, the financial press, and themselves as well. So all of these people were unprepared when the wheel of chance turned again -- this time against them. This sets the stage for the Black Swan -- not merely should we realize that we are prisoners of a chaotic environment full of randomness, but we should also realize that we actors in this environment and can use our improved appreciation of uncertainty to better shape our destinies.

In The Black Swan, Taleb tackles how to take advantage of the deliberately take advantage of improbable, but not impossible events, not by being smarter about when they will happen, but simply by embracing randomness and the impossibility of making the right prediction in the next moment but also the certainty that ultimately the unlikely even will happen. He draws on a wide range of historical events that seemed unpredictable in advance -- from the world of war, to big finance, to individual career decisions to illustrate the breadth of application of this theory.

Taleb's appreciation of this theory and how to apply it goes much deeper than typical applications of this theory in business and economics.

For instance, we are all familiar with one major financial industry built on a probabilistic understanding of an event which is unlikely in the next moment, but which in the long run becomes increasingly certain: namely Life Insurance. When we buy life insurance we are essentially making a bet -- we are betting that we will die so much sooner than our remaining life expectancy that our estate will make a bigger return on paying our premium to the insurance company and collecting the value at our death, compared to what we could earn if we just put that same amount of money into some other investment (e.g. an S&P index fund) and watching it grow ourselves. Of course the Insurance company uses actuarial charts and its expectations of future investment returns to calculate a premium that will be sufficient to earn it a healthy profit over time. Yes, the Black Swan underlies this business, but the beauty of Taleb's analysis of the Black Swan is to see that this thought process can be applied to other things as well. Should you work at a "stable" middle of the road salary job for you life? Or should you take a high risk series of high risk / high reward jobs in the hope of hitting it big?

If you live in California, should you stockpile emergency supplies in San Francisco and LA to sell immediately to unprepared homeowners after the next big earthquake hits? How about stockpiling goods in Miami for unprepared Florida coast homeowners hit by the next hurricane?

Thinking about the Black Swan can give you some insight into some of these questions, but they can also give you some insight about the eventual failure of most any institution built to profit on them too. What are your estimates of frequency/probability and magnitude of the catastrophe or subsequent profit opportunity based on? Their frequencies and magnitudes in the past? If so, how much do they reflect all the uncertain ways that the past might be different from the future.

What if global climate change occurs, and the homes you were prepared to supply after a hurricane are now permanently abandoned and under water due to rising sea levels? Or what if a small asteroid hits the Pacific plate off the California coast: instantly releasing the pressure along the entire San Andreas fault -- but also creating a huge Tsunami that wipes out the large portions of San Francisco and Los Angeles. Did your model take these unlikely events into consideration? What other possible events are missing from our oversimplified models?

For all of the above reasons, I find The Black Swan a book of timeless value. But ironically it is also a book of very timely value.

As we watch the unfolding aftermath of a global credit crisis that even former Federal Reserve Chairman, Alan Greenspan, admits that he never thought possible, the Black Swan theory is a great guide: It was not the stupidity of regulators and central bankers, nor the greed of bankers, investors, and prospective homeowners that caused such a precipitous turn of events -- rather it was our reliance on models that simplify complex processes enough that we can understand them and predict them MOST of the time -- and our failure to distinguish MOST of the time from ALL of the time. In particular, investors and regulators failed to anticipate the risks of the Credit Default Swap market and subprime mortgage crisis can be tied to an unreasoning belief in the power of DIVERSIFICATION in the standard investment MODEL to eliminate major risks. Diversification works MOST of the time, because most of the time institutions and individuals default on loans for reasons that are largely individual, or that at worst affect only a local or regional economy or just one industrial sector of an economy. That is, these defaults are mostly independent of each other. So at any given time some subgroup is affected and default rates in that group might be higher than normal, but some other region or sector is growing and default rates there are lower -- therefore if you diversify widely enough, the standard investment risk models says you should be safe from large swings in the average value of your portfolio.

That is of course only true as long as the assumption or model is based upon -- that failures and loan defaults are INDEPENDENT of each other -- is still true.

And historically, independence of events has been a pretty good assumption to make. In 1900, if a shipper of grain in China lost a ship full of rice due to a severe storm at sea while it was on its way to Japan, his loss might affect the farmers that grew the grain in China, the merchants who were going to sell the rice in Japan, and perhaps even the fishermen who were going to buy and eat the rice in Japan. But that loss was almost assuredly independent of whether a shipload of leather sent by train from cattle ranches in Wyoming reached shoemakers in Boston.

But the world of finance and commerce today is very different. There are multinational corporations with revenues that exceed the Domestic National Product of more than 100 countries. There are multinational financial institutions which finance and insure these companies, and their are investors who seek to diversify their risk worldwide by investing outside their own native countries. There are financial institutions that have lent so much money to so many companies around the world that if they were to pull their loans in millions of jobs would be lost overnight, And they have also borrowed so much of this money from other financial institutions that if they were to become bankrupt overnight, then 100s of of lenders would no longer be solvent either.

With all this interconnected borrowing and lending, buying and selling, saving and investing among people all around the world -- all connected by fiber cable trading systems that literally work at the speed of light, we have become more INTERDEPENDENT, not INDEPENDENT. And because of that interdependence