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 enlarge | Author: Nassim Nicholas Taleb
Publisher: Penguin Books Ltd (UK)
Category: Book
Buy Collectible: $63.90
Collectible (1) from $63.90
Avg. Customer Rating:  318 reviews
Sales Rank: 1776847
Format: Import
Media: Hardcover
Pages: 400
Shipping Weight (lbs): 1.7
Dimensions (in): 9.3 x 6.2 x 1.4
ISBN: 0713999950
EAN: 9780713999952
ASIN: 0713999950
Publication Date: May 31, 2007
Availability: Usually ships in 1-2 business days
Shipping: Expedited shipping available
Shipping: International shipping available
Condition: THE NEW HARDBACK BOOK! THE UNABRIDGED 1ST EDITION. RANDOM HOUSE, 2007. HARDBACK BOOK, DUST JACKET AND PAGES ARE IN FINE CONDITION, CLEAN AND TIGHT. RAPID SHIPPING WITH FREE TRACKING, GREAT PACKAGING. PRIORITY AIR MAIL. WV-GR
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| Customer Reviews:
 What we don't know can hurt us July 30, 2008
2 out of 6 found this review helpful
In 1997 my cousin worked on Wall Street and suggested to her colleagues that the office keep a rubber raft in the storage room in case the World Trade Center gets attacked again. She had to leave soon after that. They thought she was crazy. In fact, she was dead right. She had predicted what this book calls a "Black Swan"...something that most people cannot or will not predict.
One reason why I never bought real estate is because I have always been concerned about the effect of a nuclear bomb or nuclear reactor accident on said purchase. Most people would laugh at me for saying that. I hope that I am never correct, but I fear that somewhere, some day, real estate in a given area will approach zero value because of such a "black swan" event.
This is one of the best books you can read that describes how knowing what you don't know is more important than knowing what you know. It is interesting to know that the US Military takes this book and this author very seriously. Rumsfeld apparently quoted him several times when he was in office.
The tail effect in a bell curve July 28, 2008
2 out of 3 found this review helpful
Very nice book, explains how the tail (outliers) in a bell curve is so imporant. Must read for financial engineers.
What happens to the Turkey on the 1001st day? July 24, 2008
3 out of 5 found this review helpful
I can't comment on the science behind this book. I will say that - at least from this layman's perspective - Taleb offers magnitudes of insight on the ideas of unpredictability and randomness, and does a bang-up job of upsetting the status quo.
The book is centered on the concept of a Black Swan - an event that lies outside the narrow periphery of our knowledge, has an extreme impact or causes a major upset (whether it be cultural, financial, political, et al.), and is characterized by a rampant slew of retrospectives - all the media, the so-called "experts", and the authorities suddenly have the details on why it happened.
For instance, we are told by historians of the outbreak of WW2: "tensions were mounting" throughout Europe, and that there were "escalating crises" abound, but according to bond prices (which offer a good understanding of history, says Taleb), there was no sign of this to speak of! "One would suppose that people living through the beginning of WW2 had an inkling that something momentous was taking place. Not at all."
The idea of retrospective distortion and over-interpretation fascinates me. How people attempt to fit messy empirical reality into neatly organized interpretations! The problem with our predictions, and our retrospectives, is that they are often framed from a naive perspective that we live in a place called Mediocristan, a place where randomness is mild, or Type 01, when we really live in a place called Extremistan - where reality is characterized by wild, unpredictable events that completely upset the averages of the bell curve.
...We come out the other side mistrusting the arrogance of almost all predictions! What does bird poop have to do with one of the most fundamental physical theories? Do we think that our wars are "under-control", or do we consider the unpredictability of conflict - that a small conflict might someday spiral unpredictably out of control and result in the decimation of the entire human race!?! How has the Nobel Prize been exploited to sell methods of market-interpretation that are completely unscientific, yet universally accepted and completely institutionalized? We are treated to an interesting investigation of this arrogance which dominates so many fields of study and indeed, we find that it is an arrogance deeply embedded in our minds!
Despite the seemingly bleak picture, The Black Swan is great fun to read and offers tips ("be as hyper-conservative and as hyper-aggressive as you can!") on how to cope and perhaps even thrive in this chaotic, simmering soup we call Civilization.
If you are like me, you will enjoy reading about things like the narrative fallacy, confirmation bias, the ludic fallacy, the problem of induction, et al. My only criticism of book is it's repetition, but honestly - I hardly noticed.
 Nebulous with the odd bright spot July 23, 2008
2 out of 5 found this review helpful
Any book that attempts to explain a nebulous concept such as this is hard to write but the presentation of this book is very cumbersome.
The only parts I liked was Chapters 1-3 which has some interesting observations about rare events and how most humans are hardwired to miss the rare event and Chapters 15-17 are quite good: I think most readers will relish the discussion on bell curves and standard deviations.
Chapters 5-15 are completely unreadable in which the author "discusses" the works and hypothesis of unknown french-philosophers with weak connections to the book's subject.
This book doesn't offer a clue on predicting rare events and offers a lot of hindsight advice. Most readers will find Taleb's suggestions totally inapplicable to their work. The biggest shortcoming of this book is its treatment (lack of) conditional probability and its dismissal of intelligent action as merely "random" events.
 The Abnormality of Normal Distributions July 20, 2008
2 out of 4 found this review helpful
Nassim Taleb's Black Swan makes for a fascinating read, despite (or perhaps because of) his heavily self-important style of writing. Taleb strikes at the core of the human tendency to prophesize, or more humbly, forecast all kinds of things. The reason why almost everyone gets it so wrong all the time, even while making predictions about seemingly mundane things (e.g., a project plan for building construction), is that they ignore the impact of "black swans", seemingly rare events. Taleb's contention is that while specific black swans are difficult to predict, the occurrence of some black swan or the other is very widespread in all walks of human life. In mathematical terms, Taleb contends that a lot of real life phenomena that are modeled using Normal or Gaussian distributions, are in fact governed by a Power Law distribution.
Taleb introduces the notions of Mediocristan and Extremistan, the former including all areas of measurement where the outlier event does not make much of a difference to the average (e.g., the average weight of any population sample will not be skewed by the fattest or the thinnest person), and the latter includes all areas where the outlier (or the black swan) typically dominates the sample (e.g., Bill Gates' wealth would dominate any sample of the wealth of1000s of people of which he was one). Taleb points out that Extremistan is more widespread and commonplace than we'd imagine, and that we commonly end up making the mistake of applying Mediocristan tendencies of averaging, linear extrapolation and Gaussian distributions to situations that belong to Extremistan.
Taleb argues that humans have a natural tendency to forecast, even though most previous forecasts have been proven wrong. In addition to ignoring the black swan, some of the reasons for incorrect forecasting include:
oConfusing cause and effect, or attaching unreasonable probabilities to events, due to "narrative fallacy": We have a tendency to believe statements of the form "U.S. Treasuries rise; Hussein Capture may not curb terrorism", which treats one event as a cause for the other. Similarly, people are likely to consider the scenario "A massive flood somewhere in America in which more than a thousand people die" as being less likely than the more narrative scenario "An earthquake in California, causing massive flooding, in which more than a thousand people die", even though the first scenario is more inclusive than the second.
oIgnoring "silent evidence" and drawing incorrect cause-effect relationships: Taleb quotes Cicero's story about Diagoras who, when shown the portraits of worshippers who prayed and then survived a shipwreck (the implicit suggestion being that the praying helped prevent their drowning), remarked "where are the portraits of those who prayed, and then drowned?". We often infer cause and effect relationships from incomplete data, because the only data we see has "the winner's bias". By ignoring silent evidence, we give an undue importance to the role of certain actions towards causing an outcome, instead of ascribing the outcome to luck or randomness.
oConfusing the uncertainty that averages out with the uncertainty in real life: We often confuse the unpredictable uncertainties we deal with (e.g., how long will the Iraq War last) to the more well-behaved uncertainties we find in the rolling of dice and casino games.
Even if we opened our eyes to these mistakes, Taleb argues that we can not predict most real life phenomena. Modeling real life events using the Gaussian distribution is incorrect, because the assumptions behind the Gaussian (that all changes happen in a series of small steps, and that the odds are balanced at each step) do not hold in real life.
So what's one to do in the face of these difficulties in forecasting? Taleb offers his prescriptions: First, do not try to predict a specific black swan, and instead just expect some black swan to happen; and second, take actions that expose yourself aggressively to black swans (i.e., expose yourself to wild upsides and downsides) but at the same time protect your downside using some form of insurance. For example if you are investor, invest 15% of your portfolio in wildly unpredictable assets, and invest the remaining in safe insured assets.
Overall, I found Taleb's book a great read for anyone who uses data in decision making. It exposes a lot of mistakes I have seen myself and people around me make. I would strongly recommend this book to anyone, and I feel that reading The Black Swan will help any reader improve their understanding (or at least expose our lack of understanding) of the workings of the world around us.
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