Kazira

Well, first of all, I must thank Rajeev Roy for pointing me to this book (The Black Swan – Impact of Highly Improbable by Nassim Nicholas Taleb (Author)). This is the second book (in a row) that I read which dealt with the concept of ‘rare events’ aka outliers aka ‘Black Swan’. Now, what are the odds of that?? (Catch my drift here). The first book was the one that I reviewed last month – Malcolm Gladwell’s ‘Outlier’ and then this one by Nassim Talib.

There is a distinct difference between the two books. While, ‘Outlier’ tries to explain how some of the folks (by being at the right place at the right time and being extremely hard working and lucky) and events turn into outliers – ‘The Black Swan’ tries to explain how chaotically random the world is – for some people to model it and make predictions based off of it. Further, this book explains various different phenomenons out there which are making this world more and more chaotic; whereby increasing the occurrence of these Black Swans. This book attributes the black swans to the natural human behavior and a natural part of the world that we have developed around us.

I’m not sure how to write a review for this book. It left me perplexed to say the least. Which is good! That’s the purpose of a book, right? Well, that why I consider this one of those books (that I’ve read in a long time) that I would like to read again.

The author is eloquent and funny. He introduces two types of classification in the current state of technological and other developments – EXTREMISTAN and MEDIOCRISTAN.

Extremeistan is all things and phenomenon that are scalable – meaning a small input could produce disproportionately large output. For example, a book sale – few authors can sell multi-million copies of their book while other authors struggle to sell a few. All authors work equally hard to write their books but only a few sell millions of copies – Why? That is the extremistan. In real world (which is becoming more and more extremistan) the Gaussian property and associated predictability just does not apply. No one can predict if a new author will be success.

Mediocristan is all other things or phenomenon that have intrinsic Gaussian distribution. For example, measure of height among humans.

The primary concept in the book can be summarized as follows – The world is highly unpredictable -> Modeling the world is impossible -> Humans are irrational -> any predictions by human (for a scalable system) is futile -> Most predictions today are based on normal/Gaussian distribution -> Gaussian curves are useless in the scalable and chaotic systems -> Black Swan.

Sprinkle this concept with bunch of technical terminology, authors scorn for the elites and wall street bankers, stories and lessons from old French philosophers, and anecdotes from recent technological advancements, financial and political debacles – and you got your book.

The author ends the book with a SELF HELP tip that is pretty insightful.

I can’t say that I disagreed with the author at too many places. He does make very convincing argument to back his theory. Being into a pseudo-managerial role, I have seen the project planning that involves a lot of humans fail over and over again.

A MUST READ for all those who are struggling to understand the current financial mess that we are in. This book may provide some insight into it that may be useful for us the next time around. Hopefully, we may even completely understand the term that Alan Greenspan tossed at the height of DOT COM phenomenon – ‘Irrational Exuberance’.