Book Review: The Black Swan by Nassim Nicholas Taleb

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Most predictions are flat out wrong, just listen to any “expert” on CNBC give a prediction of where the market is headed on a given day. Yet, we love predictions because they help us feel like we understand what’s going on around us much better than we actually do…the idea of randomness is uncomfortable. The reason our prophecies fall so short is our lack of understanding of the Black Swan and its impact on both history and the future. The Black Swan as Taleb describes it is:
1) an outlier 2) carries extreme impact 3) produces explanations only after the fact.

The bulk of Taleb’s book explains in great detail, clarity, and wit the error most humans make in failing to account for the Black Swan in their thinking. He explores various theories ranging from our eagerness to interpret the “causes” in history (confirmation bias, narrative fallacy, etc.) to our inabilities to predict the future (the expert problem, herding and the character of prediction errors).

Finally, Taleb doesn’t stop with mere theory; he gives the reader help in how to think in a Black Swan world. His advice, make black swans gray by being aggressive in gaining exposure to positive Black Swans and extremely conservative when under the threat of a negative Black Swan. You’re probably reading this right now going, I think I know what he is talking about, but you don’t, just read the book and be prepared to have your comfort zone shattered and your mind exercised.

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