Antifragile: Things that Gain from Disorder

by Nassim Nicholas Taleb

We are moving into a phase of modernity marked by the lobbyist, the very, very limited liability corporation, the MBA, sucker problems, secularization (or rather reinvention of new sacred values like flags to replace altars), the tax man, fear of the boss, spending the weekend in interesting places and the workweek in a putatively less interesting one, the separation of “work” and “leisure” (though the two would look identical

to someone from a wiser era), the retirement plan, argumentative intellectuals who would disagree with this definition of modernity, literal thinking, inductive inference, philosophy of science, the invention of social science, smooth surfaces, and egocentric architects. Violence is transferred from individuals to states. So is financial indiscipline. At the center of all this is the denial of antifragility.

An agency problem, for instance, is present with the stockbroker and medical doctor, whose ultimate interest is their own checking account, not your financial and medical health, respectively, and who give you advice that is geared to benefit themselves.

I also saw similar irony in trading: a fellow was so upset with his year-end bonus that he started making huge bets with his employer’s portfolio—and ended up making them considerable sums of money, more than if he had tried to do so on purpose.

This is the reason I put social science theories in the left column of the Triad, as something superfragile for real-world decisions and unusable for risk analyses.

The doctor who refrains from operating on a back (a very expensive surgery), instead giving it a chance to heal itself, will not be rewarded and judged as favorably as the doctor who makes the surgery look indispensable,

The true hero in the Black Swan world is someone who prevents a calamity and, naturally, because the calamity did not take place, does not get recognition—or a bonus—for it.

we saw that procrastination protects you from error as it gives nature

a chance to do its job, given the inconvenient fact that nature is less error-prone than scientists. Psychologists and economists who study “irrationality” do not realize that humans may have an instinct to procrastinate only when no life is in danger.

I once procrastinated and kept delaying a spinal cord operation as a response to a back injury—and was completely cured of the back problem after a hiking vacation in the Alps, followed by weight-lifting sessions.

If I defer writing a section, it must be eliminated. This is simple ethics:

Thanks to this, we are living more and more in virtual reality, separated from the real world,

To conclude, the best way to mitigate interventionism is to ration the supply of information, as naturalistically as possible. This is hard to accept in the age of the Internet. It has been very hard for me to explain that the more data you get, the less you know what’s going on, and the more iatrogenics you will cause. People are still under the illusion that “science” means more data.

no more than the Rio slums called favelas are currently ruled by the Brazilian central state.

Beyond some level it forces people into endless complications of their lives, creating worries about whether the housekeeper in one of the country houses is scamming them while doing a poor job and similar headaches that multiply with money.

There is another dimension to the need to focus on actions and avoid words: the health-eroding dependence on external recognition. People are cruel and unfair in the way they confer recognition, so it is best to stay out of that game.

A man is honorable in proportion to the personal risks he takes for his opinion—in other words, the amount of downside he is exposed to.

And numerical prediction leads people to take more risks.

Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.

Seneca fathomed that possessions make us worry about downside, thus acting as a punishment as we depend on them.

the worst” had advantages way beyond the therapeutic, as it made me take a certain class of risks for which the worst case is clear and unambiguous,

Roman Stoic would use to separate anger from rightful action and avoid committing harm he would regret later would be to wait at least a day before beating up a servant who committed a violation.

Georges Simenon, one of the most prolific writers of the twentieth century, only wrote sixty days a year, with three hundred days spent “doing nothing.” He published more than two hundred novels.

The rules are: no smoking, no sugar (particularly fructose), no motorcycles, no bicycles in town or more generally outside a traffic-free area such as the Sahara desert, no mixing with the Eastern European mafias, and no getting on a plane not flown by a professional pilot (unless there is a co-pilot). Outside of these I can take all manner of professional and personal risks, particularly those in which there is no risk of terminal injury.

His modus was that people don’t know what they want until you provide them with it.

Steve jobs

America’s asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no comparative shame in failing, starting again, and repeating failure.

Sour grapes—as in Aesop’s fable—is when someone convinces himself that the grapes he cannot reach are sour.

you need to know whether you do not like the pursuit of money and wealth because you genuinely do not like it, or because you are rationalizing your inability to be successful at it with the argument that wealth is not a good thing because it is bad for one’s digestive system or disturbing for one’s sleep or other such arguments.

In a way, uncertainty increases the worth of such privilege. Should you face a high degree of uncertainty about future outcomes, with possible huge decreases in real estate value, or huge possible increases in them, your option would become more valuable. The more uncertainty, the more valuable the option. Again, this is an embedded option, hidden as there is no cost to the privilege.

The number of persons who dislike the work don’t count—there is no such thing as the opposite of buying your book, or the equivalent of losing points in a soccer game, and this

Another business that does not care about the average but rather the dispersion around the average is the luxury goods industry—jewelry, watches, art, expensive apartments in fancy locations, expensive collector wines, gourmet farm-raised probiotic dog food, etc.

He was trying to say that males and females have equal intelligence, but the male population has more variations and dispersion (hence volatility), with more highly unintelligent men, and more highly intelligent ones.

If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells.

Let me summarize. In Chapter 10 we saw the foundational asymmetry as embedded in Seneca’s ideas: more upside than downside and vice versa. This chapter refined the point and presented a manifestation of such asymmetry in the form of an option, by which one can take the upside if one likes, but without the downside. An option is the weapon of antifragility.

From our discussion on rationality, we see that all we need is the ability to accept that what we have on our hands is better than what we had before—in other words, to recognize the existence of the option (or

In many pursuits, every trial, every failure provides additional information, each more valuable than the previous one—if you know what does not work, or where the wallet is not located. With every trial one gets closer to something, assuming an environment in which one knows exactly what one is looking for. We can, from the trial that fails to deliver, figure out progressively where to go.

history belongs to those who can write about it (whether winners or losers),

discovery. He remarks that a fellow named Joe Siegel, one of the most successful traders in a commodity called “green lumber,” actually thought that it was lumber painted green (rather than freshly cut lumber, called green because it had not been dried). And he made it his profession to trade the stuff!

The difference between humans and animals lies in the ability to collaborate, engage in business, let ideas, pardon the expression, copulate. Collaboration has explosive upside, what is mathematically called a superadditive function,

(i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so; (iv) Make sure you are barbelled, whatever that means in your business.

It is not well advertised that there is no evidence that abilities in chess lead to better reasoning off the chessboard—even those who play blind chess games with an entire cohort can’t remember things outside the board better than a regular person.

Their strength is extremely domain-specific and their domain doesn’t exist outside of ludic—extremely organized—constructs.

In fact their strength, as with over-specialized athletes, is the result of a deformity.

(Just like corporate executives are selected for their ability to put up with the boredom of meetings, many of these people were selected for their ability to concentrate on boring material.)

But I read voraciously, wholesale, initially in the humanities, later in mathematics and science, and now in history—outside a curriculum, away from the gym machine so to speak. I figured out that whatever I selected myself I could read with more depth and more breadth—there was a match to my curiosity.

Trial and error is freedom.

“much of what other people know isn’t worth knowing.”

For the fragile, the cumulative effect of small shocks is smaller than the single effect of an equivalent single large shock.

This leaves me with the principle that the fragile is what is hurt a lot more by extreme events than by a succession of intermediate ones.