Nassim Nicholas Taleb
Nassim Taleb is a visionary and nontraditional thinker who wrote the popular book series The Black Swan, Fooled by Randomness, and Antifragile. These books are about randomness, complexity, and living in a world where unusual things happen all the time.
Taleb is a tremendously engaging author, with his wit, irreverence, and odd tales. He knows a lot about a lot of different things, from cognitive neuroscience to economics to probability theory and statistics. The book Black Swan is a classic by Nassim Nicholas Taleb.
Born in Lebanon, Nassim Nicholas Taleb began his professional career as a commodities trader on Wall Street. However, he openly disapproves of the models espoused by the financial industry.
Between 2001 and 2018, Taleb authored the Incerto, a five-volume philosophical treatise on uncertainty. He has been the prestigious Professor of Risk Engineering at the NYU Tandon School of Engineering since September 2008. He has taught at other universities as well. He has been co-editor-in-chief of the science journal Risk and Decision Analysis since September 2014. He is also listed as a technical and scientific advisor at Universa Investments. He has worked in mathematical finance, managed hedge funds, and traded derivatives.
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He holds an MBA from Wharton and a Ph.D. from the University of Paris, but he feels that academia provides views that are distant from the reality of the world and that diplomas are primarily for show. These paradoxes are the essence of distinctive thinking. Taleb’s childhood in Lebanon was messed up by the Lebanese Civil War. He is a self-taught scholar who says he studied 60 hours a week for several months.
Taleb worked in the finance industry, but in his spare time, he started putting out books of personal short stories and essays. This was despite the fact that his unusual approach to trading futures was successful. They were thoughts about how uncertain life is and how we live in a world we don’t fully understand. How to prevent falling prey to cons. How to capitalize on “long” instability (in finance parlance). Why it’s best to plan your vacations ahead of time, and why watching the news will dumb you down. Why is attempting to predict the future a waste of time when being prepared, ready, and equipped for anything is not?
Taleb’s primary objective has been to comprehend the applicability of what statisticians refer to as “fat tails” which are infrequent events near the extremes of a statistical distribution that frequently have the most severe repercussions and are the most unexpected. He coined the term “Black Swan” to refer to extraordinary events that have never occurred and therefore cannot be anticipated but require our attention. He can claim to be an expert in the concepts that matter most.
Such autonomous, free-range thought is subject to intense scrutiny, and Taleb’s approach involves a rigid ethical code to which he holds himself and others accountable. For example, we can’t take risks that won’t affect us individually if things go wrong. We are not entitled to make statements without empirical evidence. We cannot hide behind our degrees and qualifications. Knowledge cannot be turned into a competitive sport. We must assume whole ownership of our predictions. and so forth.
Now, Taleb has published five books (the three named above, plus a book of parables and a technical treatise on options trading). His highly public work — most of it in the form of academic papers — continues as he attempts to create a formal mathematical basis for “fat-tailed” probability and statistics, while simultaneously tackling subjects such as psychology, economics, game theory, and political science.
With his work, we strive to develop survival tactics for a world where unusual occurrences have the greatest impact, where “knowledge” cannot be assumed to be real, and also where only non-suckers can live.
The Bed of Procrustes by Nassim Nicholas Taleb encapsulates the core issue that we humans are facing constraints of knowledge and things we do not perceive, the invisible and the unknown, alleviate the conflict by squeezing the world and life into neat commoditized concepts. Taleb disagrees with platonic (i.e., theoretical) interpretations of reality insofar as they encourage people to have the incorrect mapping of reality, rather than having no map at all. He challenges the vast majority of economic and big social science theories, which, in his opinion, are afflicted by excessive reliance on Plato’s idea of forms. Based on these and other conceptions, he proposes what he refers to as a “black swan robust” community, i.e., a society that can endure unpredictable catastrophes.
He has also postulated that economic, biological, and other systems can flourish and prosper from volatility, including some forms of random errors and events; he calls this property antifragility. Additionally, he feels that colleges are better at public affairs and credit claiming than they are at building knowledge. He contends that technology and knowledge are typically derived by what he refers to as “stochastic tinkering” instead of top-down directed research, and he has proposed options – like experimenting – as a way to outclass directed research as a technique of scientific discovery; he calls this method convex tinkering.
He contends that predictive models are plagued by Platonism, as they gravitate forward into mathematical purity and do not account for key concepts, like the impossibility of obtaining all relevant information, the fact that small unknown differences in the data can have a large impact, and dysfunctional theories/models that are derived from empirical data and do not account for events that have not occurred, but might have. He writes about the ludic fallacy in The Black Swan as the black side of the moon is more difficult to perceive and necessitates more energy to illuminate. Similarly, shining light on the invisible requires computational and mental work.
Taleb has identified his greatest issue as being the mapping of his concepts of “robustification” and “antifragility,” i.e., how to live and behave in a world we do not understand fully and build resilience against black swan events. Taleb established the “fourth quadrant” concept inside the exposure domain. One of its application areas is in his description of the most effective (i.e., least fragile) strategy for risk management, which he likes to call the “barbell strategy,” which is premised on avoiding the middle in favor of a weighted sum of extremes across all domains, from economics to politics to one’s personal life.
According to Taleb, these are more resistant to estimating errors. For example, he says that investing in “medium-risk’ ventures is futile since the risk is difficult, if not impossible, to calculate. His favored method is to be both extremely careful and extremely aggressive. A trader might, for instance, invest 80 to 90 percent of their capital in extremely safe securities, like Treasury notes, and the remaining in highly risky and diverse speculative wagers. An alternate approach is to engage in high-risk wagers with a low downside.
- 2018: Wolfram Innovator Award for breakthroughs in decision-making and strategic planning using Mathematica under complex and less-than-ideal probability structures.
- 2016: Awarded an honorary doctoral degree from the American University of Beirut.
- 2015, 2014, 2013: Listed by the Gottlieb Duttweiler Institute among the 100 most significant intellectual leaders in the world.
- 2011: Listed on Bloomberg’s list of the 50 most prominent names in global finance.
- 2009: Inclusion in the Forbes magazine ranking of “Most Influential Management Gurus”
Fooled by Randomness: The Hidden Role of Chance in Life and the Markets
Fooled by Randomness is a book by Nassim Nicholas Taleb that is part of his well-known Incerto series. It is the word-of-mouth phenomenon that will transform your perspective on business and the whole wide world.
Nassim Nicholas Taleb, the seasoned trader, recognized risk expert, polymath scholar, eloquent storyteller, and New York Times best-selling writer of The Black Swan, has created a timeless classic that inverts our beliefs about luck and competence. This work of art is about luck, or more precisely, how we interpret and cope with luck in our personal and professional lives.
Best understood in the context of the most prominent arena in which luck is misunderstood for talent – the world of trade – Fooled by Randomness offers a riveting perspective into one of the least understood aspects of our life. The author addresses significant intellectual questions relating to the underestimation of the impact of luck on our lives using an engaging narrative style.
Some of the characters in the book have understood and realized, in their way, the importance of chance, probability, and luck: the baseball legend, Yogi Berra, the philosopher of knowledge and understanding, Karl Popper, the wisest man in the ancient world, Solon; the modern financier, George Soros, and the Greek explorer Odysseus.
However, the most iconic character, the fool who happens to be at the right spot at the right moment, stays anonymous; he exemplifies “survival of the least fit.”
The Black Swan: The Impact of the Highly Improbable
The Black Swan is a book in Nassim Nicholas Taleb’s seminal Incerto series, an exploration of incoherence, chance, probability, uncertainty, human error, decision-making, and risk in a world we cannot fathom. The series also includes Fooled by Randomness, Skin in the Game, Antifragile, and The Bed of Procrustes.
A black swan is an incredibly unlikely event with three basic characteristics: It is unpredictable; it has a significant impact; and after the event, we devise a narrative that makes it look less arbitrary and much more predictable than it was. The astounding success of Google and 9/11 were both black swans.
According to Nicholas Taleb, black swans underlay nearly every aspect of our existence, from the creation of faiths to our personal experiences. Why do we only recognize the presence of black swans after the fact? As per Taleb, part of the issue is that people are built to study particular details when they should be concentrating on generalities.
We constantly fail to contemplate what we do not know because we are preoccupied with what we do know. We, therefore, are unable to accurately predict opportunities, too susceptible to the urge to simplify, explain, and categorize, and too receptive to honoring those who can envision the “impossible.”
Taleb has spent years researching how we deceive ourselves into believing we know more of it than we do. Big events continue to amaze us and influence our environment, whereas we limit our thoughts to insignificant ones. In this enlightening book, Taleb discusses what we know about what we don’t know, and the second edition includes a new empirical and philosophic essay, “On Robustness and Fragility,” which provides tools for navigating and exploiting a Black Swan world. The Black Swan is elegant, shocking, and ubiquitous in its applications; it will alter the way you perceive the world.
The Bed of Procrustes: Philosophical and Practical Aphorisms
This compilation of aphorisms and reflections by the writer of the masterpiece The Black Swan communicates his principal concepts in ways you would not anticipate.
The Bed of Procrustes derives its name from Greek mythology: the tale of a man who forced his guests to fit his bed to precision by stretching or chopping off their limbs. It symbolizes Taleb’s perspective on the vainglorious side effects of modern civilization: reconfiguring humans to fulfill technology, blaming the truth and reality for not being appropriate for economic models, conjuring up illnesses to sell drugs, defining intellect as what could be measured in a classroom, and convincing individuals that employment is not slave labor.
These snarky and caustic aphorisms will shock you by revealing self-delusions you haven’t ever acknowledged but have been living with.
Taleb shatters human illusions with a rare blend of incisive humor and profound wisdom, comparing the classical qualities of elegance, courage, and erudition with the modern maladies of philistinism, nerdiness, and phoniness.
Antifragile: Things That Gain from Disorder
Nassim Nicholas Taleb, the blockbuster writer of The Black Swan and one of the world’s preeminent philosophers, has written a book about how some systems benefit from disorder.
In The Black Swan, Taleb highlighted a dilemma; in Antifragile, he provides a comprehensive solution: how to profit from chaos and turmoil while avoiding fragility and bad outcomes. What he refers to as “antifragile” is one step above robust, as it gains from hardship, instability, and pressures, much as human bones become bigger and more powerful when subjected to tension and stress.
Taleb turns unpredictability on its head, arguing that it is desirable, and proposes that objects be designed to be antifragile. Highly ambitious and transdisciplinary, Antifragile gives a roadmap for how to behave and flourish in a world we do not comprehend and cannot even attempt to comprehend. Whoever, without antifragility, will perish. Why is the city-state superior to the nation-state, why is debt unhealthy, and why is nearly everything contemporary doomed to fail? This book examines innovation, health, biology, medicine, life choices, foreign policy, politics, war, urban planning, personal finances, and economic systems. The recipes and voice of ancient knowledge from Roman, Phoenician, Medieval, and Greek sources may be heard throughout.
Skin in the Game: The Hidden Asymmetries in Daily Life
One of the most influential philosophers of our day epitomizes what it means to comprehend the world, thrive in a career, add value to a fair and just society, identify folly, and inspire others in his most challenging and pragmatic work to date. Nassim Nicholas Taleb demonstrates, using examples spanning from Antaeus the Giant to Donald Trump, Hammurabi to Seneca, that the willingness to assume one’s risks is a fundamental characteristic of saints, heroes, and thriving people in all sorts of backgrounds.
Taleb challenges long-held ideas concerning the values of individuals who lead military actions, make capital investments, and preach religion.
His insights include:
- For social justice, prioritize symmetry and risk distribution. You cannot benefit by transferring risk to others, as do banks and major organizations. You cannot get wealthy without taking responsibility for your risks and losses. This asymmetry can be corrected more effectively with skin in the game than with thousands of regulations and laws.
- Ethical guidelines are not universal. You belong to a greater group than yourself, yet it is still smaller than mankind as a whole.
- Minorities govern the world, not majorities. The world is not governed by consensus, but rather by obstinate minorities forcing their preferences and values on others.
- An intelligent person can nevertheless be an idiot. From low-carb diets to Iraq to Stalinism, “educated philistines” have been mistaken about everything.
- Avoid overly convoluted approaches (that someone was paid to find). A simple barbell is superior to pricey modern devices for building muscle.
- True religion requires dedication, not simply faith. The amount of risk you are willing to take for something reveals how much you trust it.
In What Order Or Sequence Should I Read The Books Of Nassim Nicholas Taleb?
It should be read in chronological sequence. The Incerto Series Order; The publishing order of this series of books is the recommended order of reading. However, there is no requirement to read them in a particular order; they can be read individually in any sequence and still be understood.
Book 1: Fooled by Randomness: The Hidden Role of Chance in Life and the Markets
Book 2: The Black Swan: On Robustness and Fragility, Deeper Philosophical and Empirical Reflections
Book 3: The Bed of Procrustes: an iron bed on which his victims were compelled
Book 4: Antifragile: Things that Gain from Disorder
Book 5: The Skin in the Game: taking risks achieving a goal
What Is The Theme Of The Incerto Series?
The term Incerto implies unsure, uncertain, or undetermined. Nassim Nicholas Taleb writes about the Investigation of luck, risk, blunders, probability, uncertainty, decision-making, and opacity. These are offered in a personal style with autobiographical pieces, anecdotes, and philosophical, scientific, and historical discussions. The author has devised new terms to study the world from a different perspective.
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