Incerto 4-Book Bundle: Fooled by Randomness, The Black Swan, The Bed of Procrustes, Antifragile

by Nassim Nicholas Taleb

Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.

Suckers try to win arguments, nonsuckers try to win.

“Behind you is the sea, before you, the enemy. You are vastly outnumbered. All you have is sword and courage.”

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Thus Almutanabbi remains, a thousand years later, the poet who died simply to avoid the dishonor of running away, and when we recite his verses we know they are genuine.

royalties, he would steer the conversation to theology (he supposedly said the twenty-first century will be religious or will not be).

Take this simple heuristic—does the scientific researcher whose ideas are applicable to the real world apply his ideas to his daily life? If so, take him seriously. Otherwise, ignore him.

cents in the stock price before the year-end bonus. In addition, my experience of company executives, as evidenced by their appetite for spending thousands of hours in dull meetings or reading bad memos, is that they cannot possibly be remarkably bright.

There is no product that I particularly like that I have discovered through advertising and marketing:

I said about marketing by soft drink companies that it is meant to maximally confuse the drinker. Anything one needs to market heavily is necessarily either an inferior product or an evil one.

As the saying goes, it is hardest to be a great man to one’s chambermaid. And marketing beyond conveying information is insecurity.

Nero: “Signore Ingeniere Tony, some of these tie-wearers are very rich, even richer than you.” Tony: “Nero, you sucker. Don’t be fooled by money. These are just numbers. Being self-owned is a state of mind.”

According to him, the merchant only thrives by the debauchery of youth, the farmer by the dearness of grain, the architect by the ruin of buildings, lawyers and officers of justice by the suits and contentions of men.

only he who is free with his time is free with his opinion, for our horizontal friend and advisor, only he who has courage is free with his opinion.

I have just presented the mechanism of ethical optionality by which people fit their beliefs to actions rather than fit their actions to their beliefs.

The Tragedy of Big Data. The more variables, the more correlations that can show significance in the hands of a “skilled” researcher. Falsity grows faster than information; it is nonlinear (convex) with respect to data.

It is not trivial: people who on their own would not do something because they find it silly now engage in the same thing but in groups.

We can separate people and the quality of their experiences based on exposure to disorder and appetite for it: Spartan hoplites contra bloggers, adventurers contra copy editors, Phoenician traders contra Latin grammarians, and pirates contra tango instructors.

Distributed randomness (as opposed to the concentrated type) is a necessity, not an option: everything big is short volatility. So is everything fast. Big and fast are abominations. Modern times don’t like volatility.

Remember that food would not have a taste if it weren’t for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty, and an ethical life isn’t so when stripped of personal risks.

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Hammurabi Risk Management: The idea that a builder has more knowledge than the inspector and can hide risks in the foundations where they can be most invisible; the remedy is to remove the incentive in favor of delayed risk.

Narrative Fallacy: Our need to fit a story, or pattern, to a series of connected or disconnected facts. The statistical application is data mining.

One single observation can invalidate a general statement derived from millennia of confirmatory sightings of millions of white swans. All you need is one single (and, I am told, quite ugly) black bird.

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact (unlike the bird). Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. I stop and summarize

The central idea of this book concerns our blindness with respect to randomness, particularly the large deviations: Why

Isn’t it strange to see an event happening precisely because it was not supposed to happen? What kind of defense do we have against that?

It may be odd that, in such a strategic game, what you know can be truly inconsequential.

The payoff of a human venture is, in general, inversely proportional to what it is expected to be.

What you know cannot really hurt you.

Indeed, in some domains—such as scientific discovery and venture capital investments—there is a disproportionate payoff from the unknown, since you typically have little to lose and plenty to gain from a rare event.

or to prop up his romantic life on earth. But there are even more mistreated heroes—the very sad category of those who we do

having done nothing useful. I wish I could go attend

Indeed the normal is often irrelevant.

GIF, Great Intellectual Fraud.

Platonicity is what makes us think that we understand more than we actually do.

Ideas come and go, stories stay.

successions of anecdotes selected to fit a story do not constitute evidence.

It is also naïve empiricism to provide, in support of some argument, series of eloquent confirmatory quotes by dead authorities. By searching, you can always find someone who made a well-sounding statement that confirms your point of view—and, on every topic, it is possible to find another dead thinker who said the exact opposite.

Read books are far less valuable than unread ones. The library should contain as much of what you do not know as your financial

Indeed, the more you know, the larger the rows of unread books. Let us call this collection of unread books an antilibrary.

It is one thing to be cosmetically defiant of authority by wearing unconventional clothes—what social scientists and economists call “cheap signaling”—and another to prove willingness to translate belief into action.

The next time a Martian visits earth, try to explain to him why those who favor allowing the elimination of a fetus in the mother’s womb also oppose capital punishment. Or try to explain to him why those who accept abortion are supposed to be favorable to high taxation but against a strong military. Why do those who prefer sexual freedom need to be against individual economic liberty?

Categorizing always produces reduction in true complexity.

Second, it allowed me to become formal and systematic in my thinking instead of wallowing in the anecdotal.

Epistemology, the philosophy of history, and statistics aim at understanding truths, investigating the mechanisms that generate them, and separating regularity from the coincidental in historical matters.

So I stayed in the quant and trading businesses (I’m still there), but organized myself to do minimal but intense (and entertaining) work, focus only on the most technical aspects, never attend business “meetings,” avoid the company of “achievers” and people in suits who don’t read books, and take a sabbatical year for every three on average to fill up gaps in my scientific and philosophical culture.

To slowly distill my single idea, I wanted to become a flâneur, a professional meditator, sit in cafés, lounge, unglued to desks and organization structures, sleep as long as I needed, read voraciously, and not owe any explanation to anybody. I wanted to be left alone in order to build, small steps at a time, an entire system of thought based on my Black Swan idea.

Yegvenia ended up posting the entire manuscript of her main book, A Story of Recursion, on the Web.

second-year Wharton student told me to get a profession that is “scalable,” that is, one in which you are not paid by the hour and thus subject to the limitations of the amount of your labor.

In these professions, no matter how highly paid, your income is subject to gravity. Your revenue depends on your continuous efforts more than on the quality of your decisions.

I separated the “idea” person, who sells an intellectual product in the form of a transaction or a piece of work, from the “labor” person, who sells you his work.