THE BLACK SWAN by Nassim Nicholas Taleb (2007)

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“Ever get the feeling you’ve been cheated?” – Johnny Rotten, The Sex Pistols


If you’ve been near a bookstore in the past year you’ve seen them: The Subtle Art of Not Giving a F*ck; Zero F*cks Given; F*ck Feelings; You Are a Badass; Get Your Sh*t Together. Large, bold, black font on bright orange or yellow backgrounds. They’re the punks of the book industry, all multi-coloured mohawks and big boots, making lots of noise. But, like punk (and with apologies to The Clash, of course), they’re all style and no substance. Cheated, indeed.


Nassim Nicholas Taleb (NNT, as he refers to himself) is a true punk. He calls himself a ‘sceptical-empiricist and a flaneur reader, someone committed to getting very deep into an idea’, but tells people at cocktail parties that he is a limo driver.


After growing up in Lebanon during its civil war, he began working in finance in the US during the heady days of the 1980s Economic nous, combined with luck (don’t discount it!), allowed NNT to make what he calls enough “f*ck-you money” to essentially be able to give up his day job.


‘I wanted to become a professional meditator, sit in cafes, lounge, sleep as long as I wanted, read voraciously, and not owe any explanation to anybody. I wanted to be left alone in order to build, small steps at a time, an entire system of thought based on my Black Swan idea.’


In other words, he doesn’t give a f*ck., And the result The Black Swan.


And what is the Black Swan? It’s the world-changing event that no one sees coming, the seismic events which seemingly come out of nowhere and have profound or lasting impacts. Think the September 11th terrorist attacks. We don’t see them coming because we are blinded by our own psychology. It’s these flaws in thinking that The Black Swan sets out to expose.


NNT gives the example of a Thanksgiving turkey (the book is unapologetically targeted at an American audience): for a thousand days it is cared for and fed, and on the one thousand and first day the axe falls, a complete shock to the turkey (for a humanely brief period) and in contravention of its experience of the past thousand days. In fact, just as it was feeling at its most secure (in the cumulative knowledge of one thousand days of being fed) it was actually at its most endangered – one day from death.


So why not call such unexpected events a ‘Black Turkey’? Why a ‘Black Swan’? Up until the European discovery of Australia, it was thought that all swans were white, because all European swans were white, and no one had ever seen a black swan (which are native to Australia). NNT’s point is this: absence of evidence is not the same as evidence of absence. In other words, just because you’ve never seen a black swan (absence of evidence), it doesn’t mean that they don’t exist (evidence of absence).


Our predilection towards the absence of evidence model – our delusion that Black Swans do not exist - is at the crux of NNT’s message.


According to NNT, there are three attributes of a Black Swan event:

  1. Unpredictability
  2. Consequences
  3. Retrospective explainability


This last attribute is a key focus of the book. It’s not that we aren’t aware of Black Swan events, but that we try to rationalize them after the event. As humans, we’ve developed lots of clever ways of interpreting history, and subsequently using it as a means to try to predict future events. NNT presents a range of these principles, supported by examples. Some of these are (now) commonly appreciated, such as confirmation bias. Others are less well known: narrative fallacy; survivor bias; ludic fallacy, belief perseverance. But you will know them when they are explained to you, because we’ve all been guilty of them – and that’s the problem, the whole point of the book, really.


‘I know that history is going to be dominated by an improbable event, I just don’t know what that event will be.’


I’m not going to break down every section of the book; there’s a reason it’s almost 400 pages long. But I will briefly touch on how we interpret history. NNT equates our understanding of historical events as like seeing a movie: ‘You see what comes out, not the script that produces events, the generator of history.’. Alternatively, our interpretation of historical events is like the difference between a finished dish and the ingredients that go into making it.


‘…our minds are wonderful explanation machines, capable of making sense out of almost anything, capable of mounting explanations for all manner of phenomena, and generally incapable of accepting the idea of unpredictability.’


Election results are a perfect example: very few predicted Trump would win in 2016, yet the next day the media was full of the reasons why he’d won.


By their nature, Black Swan events sneak up on us. Yet we attempt to understand Black Swan events in general by analysing a specific Black Swan. This is the famous philosophical Problem of Induction: going from specific instances to general conclusions.


‘How can we know the future, given knowledge of the past; or, more generally, how can we figure out properties of the (infinite) unknown based on the (finite) known?’


We can’t (shouldn’t), because we don’t account for the possibility – or implication – of a Black Swan (because it falls outside our observations). Again, the book does not set out to predict the next Black Swan, but rather to explain the cultural, institutional and psychological faults by which we fail to see them coming.


‘In the distant past, humans could make inferences far more accurately and quickly…the sources of Black Swans today have multiplied beyond measurability…This instinct to make inferences rather quickly and to “tunnel’’ (i.e. focus on a small number of sources of uncertainty, or causes of known Black Swans) remains rather ingrained in us. This instinct, in a word, is our predicament.’



Adding to our misinterpretation of history (and our subsequent inability to detect Black Swans) is the narrative fallacy. I’ll mention this one specifically, because it seems to be out of control in contemporary society in the form of exhaustive conspiracy theories. We like stories – they summarize and simplify – at the cost of overinterpretation and a tendency to fit the facts to the narrative. ‘Information wants to be reduced’, because information is ‘costly’ to obtain, to store and to retrieve. The act of summarizing and simplifying reduces the inclusion of randomness, and hence our ability to appreciate random events.


NNT has a neat antidote: ‘…not theorizing is an act – that theorizing can correspond to the absence of willed activity, the “default” option’.

To automatically begin theorizing is to not think, but to submit to lazy behaviour. Resist the natural tendency to make inferences and ‘storify’ things; instead look for the “antilogic”.


‘Train yourself to spot the difference between the sensational and the empirical.’


The early chapters dealing with such ‘psychological’ matters are perhaps the least technical, before NNT begins diving into the mathematics of probability. Thankfully he provides a handy guide for those more technical chapters we may like to skip, and where to again take up the tale. Hence, The Black Swan can be read in two ways: as a psychological overview of how humans think (or don’t), or as loose guide for financial investing (NNT was an options trader, after all, and economics is often his frame of reference).



But the book is not all negativity or hyper-vigilance:


‘Accept that being human involves some amount of epistemic arrogance in running your affairs. Do not be ashamed of that. Do not try to always withhold judgement – opinions are the stuff of life. Do not try to avoid predicting – yes, after the diatribe about prediction I am not urging you to stop being a fool. Just be a fool in the right places…be fooled in small matters, not in the large. Do not listen to economic forecasters (they are mere entertainers), but do make your own predictions about the picnic.’


Also, relieving what can at times be a very dry subject, NNT’s acerbic wit is liberally dispersed throughout:


‘Assume that you round up a thousand people randomly selected from the population…You can even include Frenchmen (but please, not too many out of consideration for the other members in the group).’


‘Assume that you’re able to find a large, assorted population of rats (you can easily get them from the kitchens of fancy New York restaurants).’


‘One day, looking at the gray beard that makes me look ten years older than I am and thinking about the pleasure I derive from exhibiting it…’


He comes across as a guy you’d really like to hang out with - though it’s unlikely he’d want to hang out with you.


In this time of the Great Corona Shutdown (and NNT has commented that it is not a Black Swan event, because we saw it coming), I’ll leave you with his advice:


‘We grossly overestimate the effect of misfortune on our lives…More likely, you will adapt to anything, as you probably did after past misfortunes.’


Nassim Nicholas Taleb - "The Black Swan" - The Impact of the Highly Improbable



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