The Black Swan: The Impact of the Highly Improbable | 
 enlarge | Author: Nassim Nicholas Taleb
Publisher: Random House
Category: Book
List Price: $26.95
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Rating:  342 reviews
Sales Rank: 102
Media: Hardcover
Edition: 1
Pages: 400
Number Of Items: 1
Shipping Weight (lbs): 1.5
Dimensions (in): 9.4 x 6.5 x 1.4
ISBN: 1400063515
Dewey Decimal Number: 003.54
EAN: 9781400063512
ASIN: 1400063515
Publication Date: April 17, 2007
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Amazon.com Review
Bestselling author Nassim Nicholas Taleb continues his exploration of randomness in his fascinating new book, The Black Swan, in which he examines the influence of highly improbable and unpredictable events that have massive impact. Engaging and enlightening, The Black Swan is a book that may change the way you think about the world, a book that Chris Anderson calls, "a delightful romp through history, economics, and the frailties of human nature." See Anderson's entire guest review below.
Guest Reviewer: Chris Anderson
 Chris Anderson is editor-in-chief of Wired magazine and the author of The Long Tail: Why the Future of Business Is Selling Less of More.
Four hundred years ago, Francis Bacon warned that our minds are wired to deceive us. "Beware the fallacies into which undisciplined thinkers most easily fall--they are the real distorting prisms of human nature." Chief among them: "Assuming more order than exists in chaotic nature." Now consider the typical stock market report: "Today investors bid shares down out of concern over Iranian oil production." Sigh. We're still doing it.
Our brains are wired for narrative, not statistical uncertainty. And so we tell ourselves simple stories to explain complex thing we don't--and, most importantly, can't--know. The truth is that we have no idea why stock markets go up or down on any given day, and whatever reason we give is sure to be grossly simplified, if not flat out wrong.
Nassim Nicholas Taleb first made this argument in Fooled by Randomness, an engaging look at the history and reasons for our predilection for self-deception when it comes to statistics. Now, in The Black Swan: the Impact of the Highly Improbable, he focuses on that most dismal of sciences, predicting the future. Forecasting is not just at the heart of Wall Street, but it s something each of us does every time we make an insurance payment or strap on a seat belt.
The problem, Nassim explains, is that we place too much weight on the odds that past events will repeat (diligently trying to follow the path of the "millionaire next door," when unrepeatable chance is a better explanation). Instead, the really important events are rare and unpredictable. He calls them Black Swans, which is a reference to a 17th century philosophical thought experiment. In Europe all anyone had ever seen were white swans; indeed, "all swans are white" had long been used as the standard example of a scientific truth. So what was the chance of seeing a black one? Impossible to calculate, or at least they were until 1697, when explorers found Cygnus atratus in Australia.
Nassim argues that most of the really big events in our world are rare and unpredictable, and thus trying to extract generalizable stories to explain them may be emotionally satisfying, but it's practically useless. September 11th is one such example, and stock market crashes are another. Or, as he puts it, "History does not crawl, it jumps." Our assumptions grow out of the bell-curve predictability of what he calls "Mediocristan," while our world is really shaped by the wild powerlaw swings of "Extremistan."
In full disclosure, I'm a long admirer of Taleb's work and a few of my comments on drafts found their way into the book. I, too, look at the world through the powerlaw lens, and I too find that it reveals how many of our assumptions are wrong. But Taleb takes this to a new level with a delightful romp through history, economics, and the frailties of human nature. --Chris Anderson
Product Description
A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives.
Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don’t know. We are, therefore, unable to truly estimate opportunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the “impossible.”
For years, Taleb has studied how we fool ourselves into thinking we know more than we actually do. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. Now, in this revelatory book, Taleb explains everything we know about what we don’t know. He offers surprisingly simple tricks for dealing with black swans and benefiting from them.
Elegant, startling, and universal in its applications The Black Swan will change the way you look at the world. Taleb is a vastly entertaining writer, with wit, irreverence, and unusual stories to tell. He has a polymathic command of subjects ranging from cognitive science to business to probability theory. The Black Swan is a landmark book–itself a black swan.
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| Customer Reviews: Read 337 more reviews...
 original and great insight October 10, 2008
Kathleen Mccahill (san jose)
This is the book I drag around everywhere, you can only read a few pages at a time because you need to think while digesting. the author is very knowledgable - sometimes too knowledgable, but that's a good thing, because he has a lot to say, a different point of view, a chip on his shoulder, intelligence to burn, a worldview bought to american shores, and he is conflicted about the class system - shrugging his shoulders at the suits, but flinging out big names here and there. No matter, it is worth the price of the book, because he stimulates thought. A sure sign of a good teacher, as well as tossing out more than a few investment strategies and his well-concieved notions about our financial system.
Love Taleb and hate him. I look forward to whatever he is working on now, and will go back & buy the Random book that everyone keeps referring to.
 The emperor has no clothes October 10, 2008
Dr. Michael J. Breen
0 out of 1 found this review helpful
The Black Swan: The Impact of the Highly Improbable A highly disappointing text from an erudite and capable author. The book is fallacious, mislaeding and mischievious. The abuse of simple statistical distributions alone warrants not taking it seriously. It is oversold by the blurb and does not do what it says on the cover. Extremely disappointing.
 more unbearable than before, and now deluded October 9, 2008
0 out of 1 found this review helpful
Taleb was unbearable in "Fooled by Randomness." Fooled was, however, worth the read. "Swan" is targeted to a general audience; in this attempt Taleb has lost his potentcy. But to greater effect, Taleb now seems deluded. For example, he tells a story of his past when as a tween he frightens the government of his home nation into granting him immunity from political offenses. Sad naive existence
Good read, but fooled by randomness is better October 6, 2008
D. J Najarian (Buffalo, NY)
0 out of 2 found this review helpful
Black swans are rare, unpredicatable events that pack a big punch. As Teleb explains, they are not accounted for by modern financial theories. Black Swans are particularly relevant to today's market calamity...and they will likely arise many times in the remainder of our lifetimes...to our benefit...if we are prepared. The lesson is to prepare for these events...and to exploit them.
 A must-read for a quant, but... October 1, 2008
N. Tuzov (West Lafayette, IN USA)
8 out of 8 found this review helpful
... but Dr. Taleb goes too far by claiming that the quantitative analysts, including statisticians, are (or even were) mesmerized by the Gaussian curve or any other quantitative concept, for that matter. Even the undergrads here at Purdue are taught to understand that the mean and standard deviation are not always descriptive of the distribution and that a single outlier can have a great impact on the fit of simple linear regression. As for PhD-level people, there are enough of us able to handle data with care and who are well aware that Pareto & Barabasi is not a cool label of Italian fashion. By the way, how come that Extreme Value Theory (at least 60 years old) is never mentioned in the book dedicated to the extreme?
I don't believe that such people as Markowitz, Scholes, or Samuelson thought even for a second that their job was to create models that would alleviate the hardship of the long-suffering investment banking community. That was never a requirement for academic promotion or the Nobel Prize, which was their ultimate goal, whether they admit it or not. Therefore, any "quant" who took those models at face value deserved all he got.
Most importantly, I believe such misguided model-worshippers have always been few in the industry, especially after 1998. MBA graduates, too, have enough sense to know what is what even after being through a Modern Portfolio Theory course. Courses like that, according to Dr. Taleb, have to be wiped out along with the academic disciples of Markowitz and Samuelson. But will that "ethnical cleansing" do any good?
Perhaps the sad truth is that in the industry both MBAs and PhDs quickly realized that claiming they can quantify any financial product generates a fat stream of immediate bonuses, although at the expense of possible (but surely very distant :) blowup. If that is the case, all those people consciously use bogus models as a front. Hence, contrary to what Dr. Taleb thinks, Nobel Prize winners and their followers in the academia are hardly to blame. So, why don't we leave the distinguished professors alone and turn to those who set the malign short-term incentives in financial institutions.
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