Review: Taleb’s Black Swan

The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: “On Robustness and Fragility” (Incerto)
Nassim Nicolas Taleb

The book every trader/i-banker/finance nerd had to read. The thesis of this is pretty much the same as Taleb’s earlier work – we discount the chances and effects of the random or unlikely event when we make decisions, and because we do not take it into account, there are opportunities to be had by counting on the unlikely or random.

Taleb elaborates a number of reasons why this is, including a survivors bias (you always remember the guy who bet and won, not the guy who bet and lost) and some of the silliness of quantify risk (yes, you can come up with a risk to reward ratio for the predictable risk, but it is much more difficult to create a ratio for the truly bizarre or game changing).

That’s pretty much the whole thing right there. You read a book like this because you enjoy Taleb as a writer, not because you need to read the whole thing to understand the thesis. Taleb writes in a kind of round about, anecdotal, I’m smarter than you style which is by turns fun and exasperating. In the years since this came out, Taleb has become more and more of a crank. I enjoyed his curmudgeonly ways for a while there, but now I’ve had enough.

Still, this one is recommended for the enthusiast.

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