Review on Taleb's Black Swan  #Books

30 Aug 2020

I've heard about the concept of Black Swan a few times in business school, as well as from the amazing book on negotiations "Never split the difference". I had very high expectations. I finally got to it when the COVID-19 broke loose, a Black Swan type of pandemic: an event that no one anticipated. If someone would tell me a year ago that next year most countries will voluntarily haul their economies by stopping production, asking their people to stay at home, suspending air traffic among countries and continents for months - I would say the person is out of her mind. And yet, we found ourselves in such situation - a true black swan. Surely, I wanted to read the book that talks about precisely these kinds of events.

The truth is that the book is not worth the buzz. It is long and dull. It would be ok if it was long and dull because it has a massive intellectual substance to it. But this book doesn't. It could've been written in a much shorter way, without the author describing his childhood in Lebanon, bringing fictional characters like Yevgeniya Krasnova, praising himself as a God-send "erudite", "practitioner", "philosopher", "trader". There are a few valuable points that Nicolas makes. Most of them I knew before reading the book. For example, he explains some of the biases that exaggerate our perception or sense of understanding of events. The most valuable and new idea in the book personally for me was the notion of Mediocristan vs Extrimistan. Simply put, mediocristan is any domain, where the largest (or smallest) event is not too far from the average. For example, if you were to gather randomly selected 1000 people in a single place and measured their average weight, and later brought to the sample the heaviest person in the world and recalculated the average, the difference wouldn't be huge. The heaviest person in the world, although being significantly heavier than the average, still cannot exceed in weight by a few orders of magnitude, and thus, wouldn't skew the average too much. On the other hand, if you were to calculate the average wealth of the 1000 randomly selected, and then added the richest person in the world to the sample, the chances are that the average will be hugely affected by the last person. Moreover, the cumulative wealth of the 1000 people combined would be more of a