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Black Swan - the outside of bell curve and scale-able data

The Black Swan: The Impact of the Highly Improbable - Nassim Nicholas Taleb

I have been duped. This writer is a jerk and I don't think I could trust what he said anymore. (updated on 5 Jan 2016) 

 

I bought this in 2009, that's 4 years ago, and it has been sitting on the shelf, waiting for me read it.

Well, I finally did. It is a good book. Another thinking person book, like "Thinking fast and slow".

How silence witnesses don't make history, and narration of history is a mistake most of the time, when we wanted to put a "because" to what happened, when the factor was much more complicated, that a "I don't know" would be more honest.

He is sharp, and because he worked in the financial market, he got rich fast and could live with a lot of free time with relatively little hours of work. He could also take a year off every three years just because he could afford to do so.

The writer did tell about the trick of getting rich. He tried to get readers to get work with good return instead of work with limited payoff.

He talked about how not to be a turkey, meaning, a turkey would not able to predict that it would be killed by the one thousand days of daily feeding table and chart. The unpredictable is outside of the daily pattern of being fed everyday.

Most people are turkeys, being exposed to the blowup and risk being bled out of their assets. The rich get richer, the poor get rob to feed the rich.

He mentioned a lot of thinkers who already aware of the limitation of data collected, and how patterns might not be enough to predict the future.

This is so rich in texture, yet you couldn't help but feel that you are being lectured at, by a man who think he is smart and rich and could tell you a thing or two that you don't know.

When he lack the style of a humble scientist, he made up of the ego of a smart guy who like to be a philosopher, while looking down on economists, historians and sociologists who put too much narrative in their work.


Prologue - like a summary of his ideas.

Part one - Umberto Eco's antilibrary

Chapter 1- Introduce the idea that what we don't know what we don't know. Much harder to think about when we are looking at a lot of data and fooled ourselves that our data is enough to show us what we need to know.

Chapter 2 - Black Swan sample Yevgenia's book.

Chapter 3 - Scalable - what the data is telling you. With a lot of data, the exception seems meaningless, things are affected by these accidents.

Chapter 4 - How not be a sucker.

We are all suckers sometimes, and fooled by the human mentality of following trend.

Chapter 5 - Induction thinking not work. Logical fault that lead to wrong conclusion.

 

Chapter 6 - *important* Narrative fallacy. We as human like to tell stories. That's how we remember things. Yet, a lot of historical events do not have cause and effect relations. So, when we looked back in historical event, don't jump into conclusion to explain why it happened. There is no because, or there are too many factors to explain it correctly.

Chapter 7 - Sensational over reality. What the news reported feed into the human nature of gear toward the sensational instead of what's important. Read the news in ways to look for what's important, instead of what's sensational.

Chapter 8 - Life depends a lot on luck. Luck explains how a lot of cause.


Chapter 9 - Ludic fallacy - Uncertainty of the nerd - wrapping up Part one.


Part Two - We just can't predict


Chapter 10 - Scandal of prediction. We really cannot predict the future. We are either the fooled by the past.


Chapter 11 - How not to look for bird poop. In 1965 two radio astronomists found the noise in the background of the recording that lead to the discovery of the Big Bang Theory, was looking for bird poop when they heard that "noise".


Chapter 12 - the melting ice cube. An analogy that we could not really work backward from observation.


Chapter 13 - Appelles the painter aka advice is cheap. Things we already know, advice should not be taken when you know the other person is just fitting you advice to confirm to the norm. And you are not the norm if you choose to be outside the norm.


Chapter 14 - From Mediocristan to exteremistan to black. The world is not what it seems. To ignore the extreme is to be fooled by the norm.


Chapter 15 - Bell Curve and not how to use it. Remember bell curve is used for mediocristan only, and when the math is right, it might not represent the whole of reality. So reality is more important than fitting into beautiful mathematical models.


Chapter 16 - Randomness is just that, random. It could be observed after the fact but could not be predicted.


Chapter 17 - Bell Curve in the wrong place.


Chapter 18 - Locke's madman.


Conclusion.

He rant against the economists for over teaching bell curve.

When rant against religion, he think one should not trust security analysts who do a lot of bell curve in the wrong place.

He should do both. Rant against religions and the security analysts who use Bell curve.

The problem is, academics might not care enough about their stock option. They should, but sometimes, their heads are somewhere else. They should befriended the writer and let him manage their stock option. Problem solved.

I like the conclusion. He acknowledged that we are the Black Swan from the universe. So, take the risk that might give you good return. Be conservative and don't risk when it could hurt you. That's the best and common sense advice. The problem is to know which one is the big risk that might yield return, and which one is not.