The Black Swan Is Out To Bite You

The Impact Of The Highly Improbable by Nassim Taleb

LABELLE, FL. --  I don't normally do book reviews. But circumstances no longer allow me to ignore the latest by Professor Nassim Nicholas Taleb. Author of Fooled By Randomness, Taleb is going to anger many, while others may shake their heads in disbelief at his latest The Black Swan.

When is the last time your life changed unpredictably?  Taleb says probably fairly recently. And further more, unforeseen events have probably guided your life's adventure repeatedly. 

According to the author, most things happen randomly and he distinguishes two types. Type One: things that are routine, obvious, and can be predicted among fairly small samples; examples include average height, weight, average income for a professional, wage earner, or small business owner, gambling profits, car accidents, average IQ.

Type Two are those things less predictable and subject to the unseen, the accidental; wealth, income, becoming famous, damage by war or natural disaster, direction of financial markets, commodity prices, inflation rates, economic data.

Taleb says there are a few things in the world that are easy to predict from what you see, and can be extended to what you do not see. On the other hand there are many more things that are extremely hard to predict from past information. The latter are more likely to be found in our modern environment where most everything is now complex. And here lies the rub: those things that are not predictable, he calls "Black Swans" and they are the events that are likely to change history quickly and without warning.

Taleb contends that, because of the extreme difficulty in predicting "Black Swans,"  professional advisors "wearing suits," i.e. financial consultants, politicians, stock brokers, lawyers, etc. are just playing roles as "experts" but have in reality have never been able to predict the future with any accuracy at all.  He also jabs at newspapers, journalists and other current event or historical commentators, that he says aren't of any use in providing any real knowledge when attributing reasons for "why" some event happened. 

Taleb says when you observe normal random events you can get to know what's going on quickly, but for Black Swan events, it will "take a long time to know what's going on" if ever.  Because of the complexity of modern events, there is just no way to predict what will happen or to explain what happened after it happened.  Instead of relying on "expert" predictions, which are only chance guesses,  protect yourself from possible negative consequences from a "Black Swan" event that is unforseen.

The bottom line: Don't fool yourself or be fooled by others when they attempt predicting the future.  Realize that most things with even a modest complexity are not predictable. And read this book. Check online for many detailed summaries of Taleb's premise. The book is available at the Clewiston Public Library.