Black Swan. Nassim Nicholas Taleb. Summary of the book

Nassim Nicholas Taleb The Black Swan Under the Sign of Unpredictability

Nassim Nicholas Taleb

Black Swan

Under the sign of unpredictability


As the literary critic Harold Bloom observed, Hamlet's trouble was not that, that he thought too much, and in that, that he thought too well and therefore lost the opportunity to indulge himself with illusions. The same can be said of the philosopher., writer and stock trader Nassim Nicholas Talebe. He is extremely skeptical of overconfident financial gurus., investment analysts, hedge fund presidents, Wall Street bankers, Nobel laureates in economics and other authorities, claiming to be able to predict the future. According to Taleb, the mistake of all these people is, that they do not take into account the "black swans" - by this term the author denotes extremely important, but extremely unlikely events, which is almost impossible to foresee. Bright, the individual style and literary talent of the author could not overshadow the entire unorthodox of his views. The result is exciting, controversial, a memorable book on the role of randomness and unpredictability in human life. Taleb has created a potent cure for gullibility, whose reception recommends readers even though, that someone might find it unbearably bitter.

From the summary of the book, you will learn:

  • Why do people underestimate the role of "black swans" - the fateful, but unpredictable events;
  • Why people persist in the same misconceptions when interpreting data;
  • How to learn to take into account the factor of chance and the emergence of "black swans".

Key Ideas

  • Black Swans are extremely important, but extremely unlikely events, which can only be explained after, how did they happen.
  • It was the "black swans" that determined the development of technology, science, economy and culture.
  • The closer ties are in the modern world, the more important is the role of "black swans".
  • The human mind is dominated by numerous ignorant concepts, illusions and prejudices.
  • One of the most pernicious stereotypes is the misuse of such statistical tools., as a normal distribution curve, ignoring the appearance of "black swans".
  • Such statistical tools are much better suited for modeling many important phenomena., as a power distribution.
  • Expert advice is often meaningless and useless.
  • Most of the predictions are nothing more than pseudoscientific speculation..
  • Rebuild your thinking like this, to overcome bias and always remember the factor of chance, - difficult, but a feasible task.
  • A person can learn to insulate themselves from the effects of negative “black swans” and benefit from positive events of this kind..

about the author

Nassim Nicholas Taleb - former exchange trader, trading in derivatives, currently lecturer in uncertainty theory at the University of Massachusetts. Also teaches at the Courant Institute of Mathematical Sciences at New York University. The author of another Books - "Fooled by randomness".


When all the swans were white

To 1697 school teachers throughout Europe confidently told their students, that all swans are white. In those days, there was no reason to think otherwise., since all the swans, ever come to the attention of naturalists, really had snow-white plumage. But one day the Dutch navigator Willem de Flaming landed in Australia and found real black swans among the amazing representatives of the local fauna. Now, when they appeared to the eyes of Europeans, doubting their existence was just as foolish, as before is existence to admit.

"Modern world… develops thanks to unusual, exceptionally rare events ".

If you've never seen a black swan, This does not mean, that there are no black swans. Incredible events seem impossible only until then, while discussing them from a theoretical point of view. But when these events really happen, all sorts of "experts" like venerable political observers and financial analysts bite their elbows because, that failed to predict things, which seem as obvious today, how incredible yesterday seemed. Suffice it to recall the "sudden" start of both world wars, about terrorist acts 11 September 2001 of the year and the dot-com crash in the late 1990s. Examples of other events, revolutionized the world, - creation of an internal combustion engine, personal computer and the Internet, the release of cult literary works like the Harry Potter books. All these events, which no one knew in advance, in retrospect seem logical and inevitable. But why?

“We only perceive that, what happened, without thinking about it, what could have happened ".

The human mind has an amazing ability to simplify all that information., a colossal volume of which comes from all directions. Finally, our mind is a product of evolution, and no fundamentally new mechanism of cognition appeared during this evolution. Originally, the mind was a means of survival for primitive people, roaming the African savannas two hundred thousand years ago. Thinking was only required to help reach reproductive age.. In this way, simplification, generalization, prejudice and self-deception are not flaws in human cognition, and auxiliary factors, allowing a person to focus on solving a particular problem, without drowning in the endless stream of information. However, the ability to simplify comes at a cost.. Let's take, for example, stories and stories.

“People are phenomenally lucky creatures… We naturally have a love of risk, and to the stupid ".

The deceiving nature of storytelling

Stories and stories help people remember and understand the past. What a typical biographical sketch looks like, dedicated to some businessman? The story starts from now, when the hero got rich. Then the author takes us back, to the origins of the hero's life. Of course, he starts his business from scratch and passionately dreams of making money - this is his, so to speak, "Life motivation". One obstacle after another rises before the hero, and on his way, maybe, there is an antagonist rival. But our hero always takes the bold, forward-thinking decisions, despite the skeptics' warnings. Achieving success after success, in the end he makes capital, retires early, marries a fashion model and becomes a father of gifted children, who play blindly Chopin and enter prestigious universities. The hero's biography is discussed in business schools, and MBA students look at him with awe, when he lectures them, promoting his latest book. He is superman, he is the perfect role model.

“We love to hear stories about the past, because we like to generalize and simplify, ie. reduce the scale of phenomena ".

But let's look at this plot from a different point of view.. What if our hero ... just got lucky in life? His supposed merits had nothing to do with his success.. As a matter of fact, he pulled out a lucky lottery ticket. Although the surrounding, seeing this person's unexpected success, wrote a whole story about his unrivaled talents, in fact, he just happened to be in the right place at the right time. This is the nature of the "gambler's fallacy": people tend to underestimate the role of fluke in life, and in gambling they are her, vice versa, overestimate. Even the businessman hero himself falls prey to erroneous inference.. Considering your success, he makes far-reaching conclusions: “If I did it, anyone else will be able to do it!”. He could have said the same, just by buying a winning lottery ticket: “Yes, I'm just a genius - after all, I pulled out the number 3293927! I had no luck in the lottery for a long time, but in the end I got it!”.

“I have nothing against those, who uses plot simplifications in the story to grab the reader's attention… The point is different - these simplifications can be disastrous., if you use them in the wrong place, where necessary ".

Success is not due to a happy coincidence.. In some professions (for example, dentist) skills and abilities play a key role. However, in many other professions, the success factor is extremely important.. Consider the case of a successful businessman in the context of his social group.. Where are all those people now, who started the same, like he, and possessed the same personal qualities? They're rich too - or rummage through trash cans? Usually, it is practically impossible to establish such facts with certainty. Success in the arts is a great example of this.. Today everyone knows the writer Balzac, but quite likely, what equally talented writers were doing at the same time. However, their works are irretrievably lost., because these people were not destined to succeed. It was thanks to their "defeat" that Balzac gained a reputation as a one-of-a-kind great master, but tacit evidence of this has long been buried in the cemetery of history.

“Remarkable, that a couple of hundred years ago, people idealized their past in the same way, how we idealize ours today ”.

The property of consciousness to simplify reality often leads to false conclusions.. For example, when a person has an idea, he starts looking for facts, confirming it. This kind of bias is called epistemological blindness.: a person becomes overly confident in the correctness of his idea and discards the factor of chance. To make the idea seem consistent, people try not to notice facts or events that contradict it, trying to find (and finding) patterns, which actually does not exist. At the same time, the boundaries of perception are narrowed - this phenomenon is called "tunnel thinking". To overcome your bias, many resort to advice from all kinds of experts, but often the opinion of experts is no more valuable, than the result of tossing a coin or throwing darts at schedule stock quotes by specially trained chimpanzees.

"I know, that the further course of history will be determined by the onset of some extremely unlikely event; I just don't know, what will it be ".

"Country of usual" and "Country of exclusive"

so, human consciousness tends to smooth out the rough edges of reality. The significance of this fact depends on, where you are at the moment - in the "Country of ordinary" or "Country of exclusive". These two countries are metaphors, allowing to distinguish between two fundamentally different classes of phenomena. In the "Land of the usual" phenomena are concentrated, which can be described using traditional statistical concepts, such as normal probability distribution. The "Land of the Exceptional" contains single events and phenomena, far beyond the normal distribution.

“The true measure of our understanding of reality is not the interpretation of the past., and forecasts of the future ".

Let's illustrate this difference with examples of human height and number of tickets., sold by cinemas. In the first case, the sample may include giants two meters tall and dwarfs with a height below 70 centimeters, but among them there is still no one, whose height would reach, say, 500 meters or would not exceed three centimeters. The limiting values ​​here are limited by nature itself. Now let's turn to the number of tickets, sold by cinemas. The box office gross is so much higher than average sales., that modeling a sample using a bell-shaped curve in this case becomes deliberately incorrect, and the very concept of “average value” is meaningless. To analyze this kind of data, it is better to use other tools - for example, power distribution curve, developed by Wilfredo Pareto (the author of the famous "80/20 principle"). In this model, exceptional events are not treated as anomalies - on the contrary, they actually define the shape of the curve.

“I am outraged, that we continue to arrogantly make predictions based on the methods, not taking into account the possibility of unlikely events ".

Social processes defy normal distribution modeling, because they exhibit the "infectious effect" - the ability to self-reinforce. For example, your desire to see another cult movie conditioned, among other things, also so, what does everyone around you say about this film?. In situations like this, as they say, “Money sticks to money” - popular blockbuster becomes even more popular, until a huge number of viewers watch it. It's the same with wealth.. The richest people on the planet are not just richer than "ordinary" wealthy people - they are so much richer than them., that do not fit into the normal distribution curve in any way. If you suddenly find yourself in the same car with Bill Gates, then the average size of the state of the passengers of this car will exceed 25 billion dollars. But the distribution in this case will not be normal., since you have already entered the "Land of the Exceptional"!

“It’s not that important, how often do you find yourself right, and that, how big is the cumulative cost of your mistakes ”.

Fake prediction glitter

Living in the "Land of the Exceptional" would be easy, if we could accurately predict the time of occurrence of anomalies and their scale. But no one can do this. Screenwriter William Goldman once confessed, that no man is able to say in advance, will this or that Hollywood movie become a blockbuster. Likewise, no one could have predicted, what fate awaits a book about a wizard boy with a bizarre birthmark, written by a housewife. The situation is similar with stock quotes.. Anyone, who declares, which can predict the dynamics of stock prices for several years ahead, can be safely considered a charlatan. The situation with forecasts of technological development is no better. Nobody knows, what will be the next revolutionary invention. Forecast specialists, usually, systematically overlook those same "black swans", that move the story forward.

“Create situations, the favorable consequences of which significantly outweigh the unfavorable ones ”.

We owe this kind of mistakes to the "blind" and "guides". People are conventionally called "blind", who can only think in those categories, which were put into their head. If everyone, what you have is a hammer, then around you you will involuntarily see only nails. If you only use such concepts, as normal probability distribution and standard deviation, you will see bell-shaped curves everywhere, and you will discard any ambiguous data, writing them off as "artifacts". And the guides are the experts, people need advice. In some areas, experts may not be, since the phenomena, which such an expert should understand, absolutely unpredictable. This fact can often be mitigated - for example, convincing myself, that the world is much more rational, what it seems. This consolation works until then, until stock market crashes or terrorist attacks occur 11 September 2001 of the year (negative anomalies), or "Star Wars" does not appear on the movie screens and the Internet does not appear (positive anomalies).

“We misunderstand the nature of severe deviations from the norm”.

How to make friends with “black swans”

However, do not despair - “black swans” can be tamed, if certain "epistemological virtues" are observed.

“In the end, chance is just our ignorance.. Peace is opaque, and the outer side of the phenomena is deceiving ".

  • Get ready to meet the "black swan". Always remember, where you are - in the "Country of the ordinary" or "The country of the exceptional". If you observe the "infectious effect", then know, that you are in the "Land of the Exceptional".
  • You must be the master of your beliefs. Be prepared to reconsider your views, if you come across facts that refute them. Don't be afraid to say “I don’t know”, “I was wrong” or “This method did not work”.
  • Learn to feel subtly, where can you go wrong, and where - it is impossible. What are you trying to predict: what kind of cake will your daughter ask for for her birthday, or what will be the price of oil through 17 years after, how did you invest all your savings in oil futures? No one is immune from mistakes and stupidity, but if in some cases stupidity is harmless, then in others it can be deadly.
  • Remember, that in many cases nothing can be known for sure.Strive to transcend your thinking patterns. Instead of looking for the right option, it is better to exclude the knowingly wrong ones..
  • As the forecast horizon increases, the number of errors grows exponentially.. Be suspicious of too accurate predictions - a rough picture can be much more useful. It is often more important to focus on the consequences of predictions., not on their accuracy.
  • Strive for positive black swans. At the same time, protect yourself from the impact of negative events of this kind.. Look for asymmetrical situations, in which the beneficial effects significantly outweigh the adverse. Try to increase the likelihood of a happy accident (for example, live in a big city, have a wide circle of friends and acquaintances).
  • Analyze the unobvious. He came up with a theory, look for facts that refute it, do not collect evidence. If your theory or idea can be proven, it doesn’t mean yet, that she is correct.
  • Beware of gullibility. Be critical of stories about events from the past - these stories are often biased. Often they just play the role of psychological armor., helping to endure the "arrow strikes of a warring fortune". Learn to think for yourself. Avoid the "blind" and "guides".

“Every morning the world seems to me even more unpredictable and deceiving, what he was yesterday ".

No matter how incredible the emergence of the universe may seem, planet earth and your own life, these events have already happened, so enjoy your luck and remember, that you are also a "black swan".

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