Black Swan - Initial Thoughts

After three attempts and about three years, I have finally finished the Black Swan. I can honestly say that this was the most challenging book I have ever picked up, and completing it became more of a mission than it was a pure pleasure. The published manifesto circulated to support the book is engaging, and the book starts off well enough before thrusting readers into the deep end.

As I sit back and reflect on the reasons for why it was such a challenge, I have come to the following:

· The vocabulary was too vast.
· To fully follow the book, you cannot put it down for any notable period of time.
· The topic threads at times don’t appear to connect.
· The concepts are a bit too challenging.

Allow me to elaborae further…..

Vocabulary

Nassim is clearly very smart, and unfortunately for me, his vocabulary is far more extensive than my own. As such, there were a great many words whose meanings I simply did not know. As such, my choice was to ignore them, or look them up. To give you a sense of what I am talking about, consider the following words that I jotted down for the purposes of looking them up later:

· Flaneur
· Sycophany
· Levantine
· Mercantile
· Hellenistic
· Byzantine
· Ethos
· Indelible
· Pyrrhic
· Iniquitous
· Bard
· Troubadour
· Epistomology
· Denizen
· Obscurantist
· Fideism
· Erudite
· Philistinism
· Verisimiltude
· Obsequiousness
· Hedonic
· Pontification
· Polyglot
· Wile
· Tomes
· Penurious
· Charlatan
· Aggrandized
· Fiat
· Unctuous
· Precocity
· Ad hominem
· Sui generis
· Quincunx
· Paucity
· Dialectic
· Unassailable
· Derisively
· In extremis
· Synod style

Concepts

Nassim introduces a whole host of concepts in the book, and continues to refer to them after their introduction. As such, it is important to get a handle on them. As a sampling of the concepts introduced, consider the following:

· Mediocristan versus Extremistan
· Great Intellectual Fraud – GIF
· Cheap Signalling
· Barbell strategy for investing
· Mandlebroatian versus Gaussian
· Preferential attachment
· Cumulative advantage
· Knightian risk
· Corroboration errors
· Negative empiricism
· Silent evidence
· Black Swan Triplet: Rarity, extreme impact, and retrospective predictability.
· Epistemic arrogance
· Nerd effect
· Anchoring
· Ludic fallacy
· Platonication

Additional Notes

·He loves Physics as he views it as a pure science – couldn’t agree more!
·Laughs at game theory and people that try to apply rigid math to economics as he argues that we really can’t apply most models to economic issues. Also believes that Alfred Nobel would be rolling in his grave if he knew the types of people that were getting Nobel Prizes these days.
·Suggests that fractals are a good way to go about predicting as they maintain their symmetry at different scales. He then ties this to the need to use Power Laws in our predictions, but suggests that knowing which specific power to use is a very difficult thing to know for sure.
·His sarcasm is costic as can be, but that makes reading amusing.
·He has an interesting history, and is clearly very bright.
·He thinks the bell curve is the Great Intellectual Fraud in that people try to apply a normal distribution to data that can’t fit that type of distribution.
·Mediocristan is a world where data doesn’t vary widely within a given data set. While the individual data points might vary from one another, no single data point can influence the average value of the data aggregate. For example, if you randomly collect 100 people and take an average of their weight, you will get a value X. If you were to replace any one person in the sample with the heaviest person in the world, the average of that sample would not change appreciably. Extremistan is a world where data can vary dramatically one point to the next. An example of an attribute from Extremistan is personal wealth. If you repeat the above example with personal wealth, substituting one person in the sample with Bill Gates would have a huge influence on the aggregate average.