96 of 108 people found the following review helpful:
enjoyable but sometimes irritating
This book is for most part engagingly written and full of entertaining stories and provocative ideas. It makes you reconsider things you take for granted in life and reevaluate your own perspective of the future. But at times I couldn't help feeling that the author was just too full of himself, too pleased with his own ideas and too disparaging towards other people's. Not...
325 of 360 people found the following review helpful:
right, interesting, but extremely irritating
Taleb has one good idea, a great idea even, and an infinite number of ways of talking about it. It is essentially the same idea as his last book, Fooled by Randomness: namely that life does not behave with regularity. Those who think it does, he says, will always be tripped up by the unexpected. Black Swan extends that idea, beyond the financial markets he concentrated...
Taleb has one good idea, a great idea even, and an infinite number of ways of talking about it. It is essentially the same idea as his last book, Fooled by Randomness: namely that life does not behave with regularity. Those who think it does, he says, will always be tripped up by the unexpected. Black Swan extends that idea, beyond the financial markets he concentrated on in Randomness, to just about all walks of life. He is a magpie for anecdote and stray pieces of supporting evidence wherever he can find them. He calls all this 'skeptical empiricism'.
The qualification is that his big idea is not original, though his numerous examples do help bring home its ubiquity. More problematically, he overstates its usefulness. For when it comes to calling your next move, the unpredictable and the unexpected are, by definition, not things we can anticipate. And though he is right that in the long run there will undoubtedly by high impact improbably events, it is also true, as Keynes said, that in the long run we are all dead: organising your life on the principle that something radical might come along doesn't solve the everyday problem of what to next.
In short, he exaggerates his own insight and the authority it gives him. That's a wicked irony, for the chief target of his ire is those with an exaggerated sense of insight and control over their lives.
Oh, and the tone... Taleb wants to be seen as a radical iconoclast. Every sentence drips righteousness and often irritation. He is the strutting, impatient sage, the rest of us blinkered morons. Apparently he doesn't like his editors trying to change this. A word of advice to the author: if you want your advice heeded, don't shout and sneer at your audience. For this reason, an interesting thesis, but in the end a wearisome read.
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Never before have I felt the urge to advise amazon buyers not to buy a book. But there's a first time for everything. Sadly, this book is an intellectual and stylistic mess.
In contrast to Mr Taleb's previous book (Fooled by Randomness) Fooled by Randomness: The Hidden Role of Chance in Life and in the Marketswhich I rate as a five star buy this book has nothing new and isn't even funny.
The basic argument is apparent from the title: just because you've never seen it before doesn't mean you won't see it tomorrow. Swans were assumed to be always white, until the discovery of black swans in Australia.
There are lessons to be drawn from this critique of what philosophers call the problem of induction, but not enough to fill a book. Instead, the author lets off a scattershot at several bats in a belfry.
First in the firing line is Plato. (Perhaps it's neo-Platonists, but an argument constructed on terms such as "What I call Platonicity" makes it hard to tell. The level of debate has already descended to the sophistication of a coconut shy.)
Second is the normal distribution. True, a roll of the die shows you one to six with equal probability. But two dice? Now we're talking a bell curve. The author seems to think that noone has wrestled before with the problem of extreme odds-against results, but's that's the future for you: hard to predict. A 95% confidence level is just that: once about every twenty times you're going to get an unexpected result. Surprise? Often. It is argued that these unusual unwelcome results are discounted from conventional thinking, and that the catastrophic consequence makes the tail of the distribution disproportionately important. Very true, but not new. Mountaineers and medical researchers (to name but two) have been confronting this problem for a century.
Not quite argued (but implied) is that all statistics is balderdash. Well, it's a branch of mathematics that deals with uncertainty, so we can't be sure.
Stylistically the book is all over the place. Reminiscence of the author's time as a "quant" (a statistical analyst of financial markets) elbow aside pseudo philosophical discussion, only to give place to some boasting about conferences he's addressed on the strength of his previous book. In between we get some noveletish stuff about "Fat Tony", "Yevgenia" (author of a bestseller that sounds unreadable), and a "fictional" character called Tulip. (Who is surely a direct descendant of Lupin, Mr Pooter's son in diary of a Nobody.)
We just can't predict, is the sum of all this. Indeed not, but we can bet that this book will be out of print just as soon as financial bestsellers go from "whoever would have thought it?" to next year's conspiracy theories.
The author thanks his editor, a certain Will Murphy. Mr Murphy, you didn't do your job, did you?
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This book is for most part engagingly written and full of entertaining stories and provocative ideas. It makes you reconsider things you take for granted in life and reevaluate your own perspective of the future. But at times I couldn't help feeling that the author was just too full of himself, too pleased with his own ideas and too disparaging towards other people's. Not only does this create a negative feeling but it also works against the book's objectivity. How can a theory be impartial and objective when its author is so in love with himself and his own ideas? Nevertheless this book is a very rewarding read.
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There are many reviews here already, so I'll keep this short:
- Content: makes insightful points on limitations of our knowledge, human temptation to identify false trends and narratives, follow herd mentality, blindly follow 'experts', and so forth. He calls this 'skeptical empiricism'.
- Style: long-winded and rambling, skipping from personal stories from Lebanon, to parables intended to represent the author, to dull discussions on history of mathematics. I didn't mind it, but some readers hate it.
- Author: massively arrogant and up himself. Thinks he's had the best idea since sliced bread. He's got a good idea, but he's not the first or the only one, just the one with the biggest mouth.
- Other reads: there are better books out there on similar subjects. John Kay (of the FT) writes essays from a similar position, much more concisely and more to the point.
Hope that helps!
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This review covers both "The Black Swan" (TBS) and it's predecessor work "Fooled by Randomness" (FBR).
An old joke speaks of a book entitled "How to Be Taller" published in two volumes, one for each foot. IMO the only way that TBS and FBR will enlighten people is by allowing them to see farther if they stand on them.
If you are going to write books about randomness and rare events, then it helps to know what you are talking about. Unfortunately Taleb appears not to have taken so rudimentary a precaution. Random processes have inherent non-determinism. Non-linear processes do not but they do exhibit chaotic behaviour that is mistakenly regarded as random.
Taleb fails to make an essential distinction between chaotic and random systems. (See for example page 142 of TBS where he states, "... There is no effective difference between my guessing a variable that is not random but for which my information is partial or deficient ... and predicting a random one ...") This is true *only* if the guessing itself is random. Otherwise one may readily design experiments that can distinguish between non-linear and truly random systems. Needless to say, the inferences that he makes from his mistaken premise are flamboyantly unsound.
In his examples what Taleb calls random behaviour is often the behaviour of deterministic but non-linear systems. Such systems have the property that small changes in initial conditions may produce large differences in trajectories through the phase space. This is true even when the changes are less than the error inherent in measuring the relevant quantities. Such a system can take markedly *different trajectories from distinct initial states that are indistinguishable by measurement*. Hence there is often negligible correlation between measured initial states and observed trajectory - but such lack of correlation *does not* imply that the underlying process is random.
Statistical methods are fine for truly random processes but non-linear processes do not generally satisfy the conditions under which statistical methods can be validly applied. The quantitative financial analysts that Taleb describes as being "fooled by randomness" are in fact merely incompetent users of inappropriate mathematical modelling techniques.
On the evidence of his writing, and despite his oft-cited "voracious reading", I regard Taleb as mathematically illiterate. the criticism that he makes of others apply just as well, IMO, to himself.
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One star may seem harsh but TBS (as the author likes to call The Black Swan) shows how hype and pretension can trimuph over clear analytical argument. Anyone who has already read the less self-indulgent "Fooled by Randomness" will not find anything new here. Indeed despite its age and a similar lack of succinctness "fooled" is the far better book.
Taleb defines black swans as unforecastable events. So the media and the brokerage community's obsession with offering their own "black swan" forecasts suggests that Taleb hasn't really explained "his" key idea well. TBS is also often lauded as predicting the current financial crisis. Of course it doesn't. Indeed if had it would have made TBS somewhat pointless since afterall it emphasises how much in life is unpredictable.
Not only is Taleb's thesis poorly elucidated but, as Taleb admits, it is not even an original idea, having been discussed by philosophers and economists for centuries. Black swan risks are commonly known as Knightian uncertainty in economics or, to quote Rumsfeld, "unknown unknowns" by everyone else. His "gray swans" are analagous to Rudi Dornbusch's "peso risks". I'm not sure sure Taleb adds a lot of value by renaming these concepts and then telling you how brilliant he is over 300 odd pages.
Despite, or perhaps because, Keynes, Knight and Dornbusch were writing far more intelligently about these concepts before him, Taleb has a pathological hatred of economists. Indeed he suggests putting rats down their shirts if they try to talk to you.
However, Taleb does make an exception. In a footnote he argues that "the smartest book I've seen in economics is Gave et al. since it transcends the constructed categories in academic economic discourse". This book argued that there was no bubble in the US or UK housing market, that volatility and risk premia in financial markets would go on being low thanks to a more sophisticated financial system. It was clearly nonsense when I read it three years ago and now looks just laughable. But Taleb's praise for it in TBS shows a key insight into his mind. He so dislikes economic pundits who offer forecasts (lots of whom had been worrying about global imbalances) that he was prepared to latch on to an idea that suggested that they were all wrong.
Taleb makes extremely valid points about the limits to human knowledge. It is just a shame that he doesn't recognise that this also applies to him.
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This book is a black swan because against all the odds it got published. It has one idea swollen unappealingly to almost 400 pages. It is full of stereotypes, rich in "imaginative" anecdotes and insufferably pompous. If you want to read about chance and probability then try Ian Stewart; for Chance and Necessity read Jacques Monod (1972).
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As a statistician, the book and its premise struck me as an interesting read, but it is clear after a few chapters that the book itself is meandering nowhere. What is worse is that the evidence is always second hand philosophy and the book is peppered with uninteresting self promotion. If your idea of a good read is to re-read Bertrand Russell or to move towards a footnote where the author feels it important to tell you he doesnt wear a tie in meetings then, please, feel free to lap this up and all the sixth form anarchy that it attempts to promote.
As for the statistics, it is amateur stuff. The Black Swan itself is an improbable event on which the author places far too much emphasis. It soon becomes confused and contradictory. Originally boldly stating that bell curve analysis is all Information (or is it Intellectual?) fraud, in later chapters the author then splits outcomes up into factions, some of which are affected by the black swan and some that are not. It then becomes apparent that the author has taken five chapters to split outcomes into normal and non-normal. Ground breaking stuff, that has, errm, been around for centuries. Essentially this book ends up elaborating on the phrase 'Picking pennies in front of a steam roller' which is so familiar to all that, well, there is a phrase for it. This book is an irrelevance to statisticians. I cannot comment on the philosophy side, but, as far as I can see, there isnt a viewpoint that hasnt been borrowed from someone more famous. In short, this book is a huge disappointment.
It should also be noted that this book is unduly aggressive and self opinionated. I assume that this is to add gravitas to the subject. On this point it fails miserably. Instead it makes the author appear narcissistic, unbalanced, and, yes, a bit stupid. Its likely that many people who start this book will lack the desire to finish it. And that, sad to say, isnt a bad thing.
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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.
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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.
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