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 enlarge | Author: Nassim Nicholas Taleb
Publisher: Random House
Category: Book
List Price: $27.00
Buy New: $15.64
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New (54) Used (24) Collectible (5) from $15.56
Rating:  379 reviews
Sales Rank: 76
Media: Hardcover
Edition: 1
Number Of Items: 1
Pages: 400
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
Availability: Usually ships in 1-2 business days
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| Customer Reviews:
 Against the Gaussians; For the Mandelbrotians December 23, 2008
3 out of 8 found this review helpful
N.M. Taleb fulminates against the adepts of the Gauss-distributions (calling them madmen) and applauds profusely the Mandelbrot-fractals supporters. Why? Because the tail-ends of the Gauss-distribution underestimate the occurrence of black swans (unattended phenomena, spikes, large deviations). Indeed, for N.M. Taleb, `our world is dominated by the extreme, the unknown and the very improbable. Our future will be increasingly less predictable because of the apparition of black swans.'
The author even rejects Heisenberg's uncertainty principle, because it is ... Gaussian.
But, as J. von Neumann said: `mathematical formulation necessarily represents only a theory of some phase (aspects) of reality, and not reality itself.' Even Mandelbrot fractals are models. More, its exponents are not easy to gauge.
There is also a huge difference between descriptive and predictive (based on the past) models. Moreover, as the author states himself: `you can project the behavior of a physical system in the future. But we hit a stumbling block when humans are involved, if you consider them living beings endowed with free will.'
However, as Schopenhauer said, our minds did not develop in the first place for thinking, but in order to have the best survival reaction (fight or flight) in case of danger.
I agree with the author that `we just don't know how much information there is in the past'; that `there is a huge gap between what we know and what we think we know' and that `people don't know what they don't know.'
Nevertheless, there are black swans for outsiders which are simply white ones for insiders. For the author, one example of a black swan is the 9-11 massacre. But some people made a killing in the stock market by buying massively put options on airline and brokerage stocks just before the attacks. An extremely strange and mind-boggling event.
There are other black-white swans (see Gene C. Marcial's `Secrets of the Street').
This thought provoking book is a very worth-while read, but it has to be handled with caution.
 Good Fats/Bad Fats; Good Fat-Tails/Bad Fat Tails December 22, 2008
1 out of 5 found this review helpful
Taleb challenges the Gaussian modeling premises underlying various financial/sociological phenomenon. Fat-tails are challenging thin-tails for order beyond the six sigma.
Taleb does hint at the macro-economic actions that cause Black Swans to occur and escalate; but he refrains from driving the point home:
"In the summer of 1982, large American banks lost..everything they ever made in the history of American banking--everything. They had been lending to South and Central American countries that all defaulted at the same time.."an event of an exceptional nature."..the bankers led everyone, especially themselves, into believing that they were "conservative". They are not conservative; just phenomenally skilled at self-deception...[This repeated again a decade later in early 1990s when..] the savings and loan industry required a taxpayer-funded bailout of more than half a trillion dollars. The Federal Reserve bank protected them at our expense; when "conservative" bankers make profits, they get the benefits; when they are hurt, we pay the costs."
In the world of finance, (contrary to Taleb) these periodic Black Swan events are not really random events; there is a macro-economic logic to this madness; i.e., astute Hedge Fund managers could game this until the tall-poppy syndrome catches up.
Timely feedback loops are essential. Thus without the Gift of Pain (see author Paul Brand) , the disease of leprosy devastates the human body. Similarly, without the gift of bankruptcy, flawed economic decisions escalate into a singular Black Swan event. Capitalism uses negative feedback loops in a timely fashion; in contrast, altruism is in open-loop denial until the obvious is in plain "King Without Clothes" sight. This lack of negative feedback is the fundamental reason why draconian regulations never go away, but instead get layered in like sedimentary rocks.
Black Swan events are not necessarily negative (witness J.K Rowling's phenomenal success); i.e., innovations could be deliberately seeded by grasping and tweaking the embedding fat-tail context. Just as there are good-fats versus bad-fats, likewise there are good fat-tails versus bad fat-tails.
All this is connected to E.O. Wilsons socio-biological re-framing of the Darwinian order--individual entities are evolving within the group context; like-wise, thin-tail phenomenon are unfolding within the fat-tail context. If one respects the individual freedoms, these are not necessarily antagonistic evolutions; unfortunately in the current stage of human evolution, they often end up so. There is a psychologically deep, mirror-neuron level (see author/discoverer Giacomo Rizzolatti) reason why this is so; why altruism often trumps capitalism; why we as a species cannot suffer/witness chronic pin-prick pains, but instead settle for one giant tsunami of overwhelming pain such as the Great Depression. And we may have to wait for a Wilsonian socio-biological evolution to temper our overactive mirror neurons and learn to accept the small-scale self-corrective bankruptcies before they escalate.
As an aside, Taleb is off-mark in his critique of Modern Portfolio Theory and the associated practice of Risk Management. When governments step in to rip the carpet armed with a collective mandate from populations hooked on overactive mirror-neurons, systemic risk rules; and portfolio diversification is of no value. But MPT was never designed for such a scenario; and neither does Taleb have long-term solutions for this. But as a timely industry gadfly, Taleb shows the limitations of modern finance subject to systemic assault. And in his search for the governing fundamentals, Taleb does bring the richness of Cognitive Sciences/Decision Sciences to the table; but missing from Taleb's table are the mirror neurons. All in all, an excellent book to read and read again.
Excellent concept, but book not as good as it could be December 22, 2008
0 out of 3 found this review helpful
First off: The Black Swan is not as good as Fooled by Randomness. The concept behind the book is excellent but the second half of the book is not written very well. I hope taleb produces a full revision of this book in which he corrects this huge missed opportunity.
 Am In the Beginning, and Hope to Understand More December 21, 2008
0 out of 3 found this review helpful
I am a new convert to these types of concepts. Intelligence and intellect after reading scores of badly written novels for me is a refreshing change -- daunting my previously hum-drum reading habits. So far, I find myself reading and then re-reading paragraphs - and then my head spins around, suddenly realizing that for so many years I didn't know much. I appreciate the genisus, I am pleased to see that after reading Freakanomics, I have found a new world of thinking. The Black Swan has some non-answers to my many questions, but perhaps that's a good thing!
Good promise, fail to deliver December 19, 2008
0 out of 2 found this review helpful
I have a lot of sympathy both to the topic and to the author personally.
There are certain aspects of modern economics and finance in both academia and among practitioners that would drive crazy any person having deep and diverse knowledge of the field.
Unfortunately all true concepts in this books are also trivial and what's suggested as a cure is either also trivial or not applicable.
There are also some things that are factually wrong, including for example wealth distribution, which is not really "scalable" as author claims and in fact is very well taken care of in most recent finance research.
Still, I would recommend reading this book simply for a well-written prose, leaving all diatribes addressed to "professionals" aside. It is not productive and the author simply is not up to the level of best research currently done in economics and finance as well as best and smart techniques used by practitioners.
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