The Black Swan Book Summary

Book Summary

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Brief Summary

Our lives and society are filled with randomness. The most extreme form of randomness is the black swan.

Black swans are unpredictable. Because of their extreme nature, you don’t see them coming until they’re already there. Black swans are consequential. They have a widespread impact or a curve-breaking magnitude. Black swans are explainable. But this is only in retrospect once you have the benefit of hindsight.

Some randomness is not that impactful and you don’t really have to worry. You can control and predict to a certain degree in these areas free of black swans. This is the world of Mediocristan.

If you’re in Extremistan, you have to be willing to challenge your beliefs and look for evidence contrary to your theories. There are opportunities for success like J.K. Rowling and Bill Gates, but there is also the potential for mass devastation through war, terrorism, and pandemics.

It is hard to grapple with the unknown, especially because it can change everything so quickly. But you have to accept this truth to be as prepared as possible while also appreciating what you have.

About the Author

Nassim Nicholas Taleb is a statistician and an academic. Born in Lebanon, he first attended a French school in Beirut before getting degrees from the University of Paris. He then got his MBA from the University of Pennsylvania’s Wharton School before returning to the University of Paris for his Ph.D. in Management Science.

Taleb’s career started in the finance world. He worked as a hedge fund manager, options trader, risk analyst, and derivatives trader. Taleb also created an investment strategy to protect against black swans. His statistics and investment knowledge has set him up to be independently wealthy.

Stepping away from an active investment role, Taleb moved into academia. Working at major institutions around the world, including NYU, Oxford, and London Business School.

Taleb has been controversial in his writings and public positions. He has called for the cancelation of the Nobel Prize in Economics and applauded the collapse of Lehman Brothers.

Black Swan is the second book of Taleb’s group of philosophical works addressing uncertainty. This group is collectively known as Incerto. He has also has several other works in the field of statistics.

Topics

Psychology Philosophy

The Black Swan Book Summary Preview

Key Insights

The events that shift the course of history for an economy, a country, or the whole planet are known as “black swans.” They cannot be predicted, although you can explain them in retrospect.

Humans don’t generally do well with chaos, randomness, and unpredictability, but the things that make the biggest impact are not the ones we see coming. Our brains try to make sense of the information and trick us into seeing patterns and causality where they don’t exist.

Black swans aren’t necessarily bad, but the things that rock the world (think 9/11, World War II, pandemics) cannot be predicted. It may be hard to accept that you can’t see the big, terrible things coming.

You have to learn to live with the unknown unless you want to delude yourself. Look for good black swans and appreciate the beauty of the randomness around us.

Not all swans are white, even if that’s the only kind you know.

So, why are these unpredictable events called black swans? For a long time, Europeans were taught that swans are white birds. It makes sense because this is all they knew. If you only see birds with white plumage, it would be reasonable to conclude that that’s what they all look like.

Then, in 1697, the European view of swans changed. Willem de Vlamingh, a Dutch explorer, landed in Australia. Many of the animals there were unlike the ones seen in Europe. Kangaroos, koalas, and duck-billed platypuses are unique to the Land Down Under. Then, there was a bird that looked just like a swan. Except, it had dark feathers.

These black swans were never imagined by Europeans. It seemed improbable that a creature identical to those around them but with different colored feathers. Of course, once you know they exist, it is easy to explain why the black swans are there.

You don’t have to see a black swan for it to exist.

The metaphorical black swan is unpredictable, consequential, and explainable only in retrospect.

Like its avian counterpart, a black swan event can exist even if you don’t see it coming. In fact, that is one of the hallmarks of a black swan. They are unpredictable. They are not likely or probable events, and they may not even seem like real possibilities. But they happen.

And when they happen, they’re a big deal. Consequences are also a key component of black swans. When there’s a black swan, it is impactful. Think about the terrorist attacks on September 11th. The tragedy of that day was hugely impactful on its own, but there were also large changes to the world after ranging from international conflict, the way we travel, and more.

Finally, black swans can be explained after the fact, but that’s with the benefit of hindsight. Take a stock market crash. Yes, they happen from time to time. However, they do not come on a predictable schedule. After one happens, you could analyze the circumstances leading up to the crash to explain it. But, until the crash happens, you can’t predict that it’s coming.