The Impact of the Highly Improbable
Black Swan: Non Fiction Written Blog Post
Centauri Liu 1/20/18
The Black Swan, The Impact of the Highly Improbable is a 2007 book by author and former options trader Nassim Nicholas Taleb. The book focuses on the extreme impact of rare and unpredictable outlier events and the human tendency to find simplistic explanations for these events, retrospectively. Taleb calls this the Black Swan theory. The book covers subjects relating to knowledge, aesthetics, as well as ways of life, and uses elements of fiction and anecdotes from the author’s life to elaborate his theories. A central theme in Taleb’s book is not to attempt to predict Black Swan events, but to build robustness to negative events and an ability to exploit positive events. Taleb contends that banks and trading firms are vulnerable to hazardous Black Swan events and are exposed to losses beyond those predicted by their defective financial models.
The book’s layout follows a simple logic, moving from literary subjects in the beginning to scientific and mathematical subjects in the later portions. Part One and the beginning of Part Two delve into psychology. Taleb addresses science and business in the latter half of Part Two and Part Three. Part Four contains advice on how to approach the world in the face of uncertainty and still enjoy life. chapter nine, Taleb outlines the multiple topics he previously has described and connects them as a single basic idea, that is illustrate the philosophical problem of induction. And taking things for granted. In chapter thirteen, the book discusses what can be done regarding epistemic arrogance. He recommends avoiding unnecessary dependence on large-scale harmful predictions, while being less cautious with smaller matters, such as going to a picnic. He makes a distinction between the American cultural perception of failure versus European and Asian stigma and embarrassment regarding failure: the latter is more tolerable for people taking small risks. He also describes the “barbell strategy” for investment he used as a trader, which consists in avoiding medium risk investments and putting 85–90% of money in the safest instruments available and the remaining 10–15% on extremely speculative bets.
The term black swan was a Latin expression: its oldest reference is in the poet Juvenal’s expression that “a good person is as rare as a black swan” It was a common expression in 16th century London, as a statement that describes impossibility, deriving from the old world presumption that all swans must be white, because all historical records of swans reported that they had white feathers. Thus, the black swan is an oft cited reference in philosophical discussions of the improbable. Aristotle’s “Prior Analytics” is the most likely original reference that makes use of example syllogisms involving the predicates “white”, “black”, and “swan.” More specifically, Aristotle uses the white swan as an example of necessary relations and the black swan as improbable. This example may be used to demonstrate either deductive or inductive reasoning; however, neither form of reasoning is infallible, since in inductive reasoning, the premises of an argument may support a conclusion, but do not ensure it, and similarly, in deductive reasoning, an argument is dependent on the truth of its premises. That is, a false premise may lead to a false result and inconclusive premises also will yield an inconclusive conclusion. The limits of the argument behind “all swans are white” is exposed it merely is based on the limits of experience. The point of this metaphor is that all known swans were white until the discovery of black swans in Australia. Hume’s attack against induction and causation is based primarily on the limits of everyday experience and so too, the limitations of scientific knowledge. In the first chapter, the Black Swan Theory is first discussed to the Taleb’s own coming of age.
Mathematics professor David Aldous argued that Taleb is sensible going on prescient in his discussion of financial markets and in some of his general philosophical thought, but tends toward irrelevance or ridiculous exaggeration otherwise. Gregg Easterbrook wrote a critical review of The Black Swan in the New York Times to which Taleb replied with a list of logical errors, blaming Easterbrook for not having read the book. Giles Foden, writing for The Guardian in 2007, described the book as insightful, but facetiously written, saying that Nassim’s “dumbed-down” style was a central problem, especially in comparison to Taleb’s Fooled by Randomness.
In conclusion to the book, despite covering real prior historic events of the the expression of black swan in our terms. But mostly gives us food for thought, to grasp and add on the idea of He uses an exact metaphor, the Black Swan idea to argue against the “unknown, the abstract, and imprecise uncertain like white ravens, pink elephants, or evaporating denizens of a remote planet orbiting. It shows us what can be labeled as abstract, which is quite literally anything that comes unexpected to our minds. Which is the impact of highly improbable. The book that an insight of author Maverick thinker Nassim Nicholas Taleb had an illustrious career on Wall Street before turning his focus to his black swan theory. Not all swans are white, and not all events, no matter what the experts think, are predictable. Taleb shows that black swans, like 9/11, despite through different context and reactions, cannot be foreseen and have an immeasurable impact on the world.