The Black Swan

The Black Swan, by Nassim Nicholas Taleb, has been on my nightstand for a little over a week now, and I'm nearly finished. The book makes many interesting points, but the most important is that we, as a species, royally suck at making predictions. We are good at looking back on things that happened and trying our best to tease out a narrative on why that happened. But we are really really bad at looking ahead and guessing.

He says that the highly improbable events that shape are lives are impossible to predict and can shift things dramatically. He of course mentions September 11, which is kind of an obvious example, but he has another point I like a lot as well. There was an interesting graph of the S&P 500 over the last 50 years that charted the actual history of the S&P 500 against the S&P 500 minus its top ten most active days. In 50 years, it turns out that the ten biggest single day jumps (either up or down) changes the graph by more than 40%. Taleb's point is that we act as if those 10 days are abnormalities but in truth, they make up a huge portion of that 50 year history.

His story of the turkey is pretty interesting too. If you're a turkey, let's just say you've had 1,000 days of feeding from your farmer. What possible evidence could you have that the 1,001th day (the day before Thanksgiving), he's going to chop your head off? Taleb is trying to argue that historical data and trends don't have anything to do with what's coming next because whatever's coming next is going to be different, guaranteed.

It's an interesting read. It's not a book like "The Tipping Point" or "Freakonomics" that everyone can pick up and probably enjoy. This one is just a little dense and math/philosophy heavy for that. But it's pretty well put together. I'll be finishing it up shortly, although I'm now in the section he says is for more of the technical reader (AKA, a reader who knows more math than I do) so I'll probably be done with it pretty quickly.