Нассим Талеб - The Black Swan. The Impact of the Highly Improbable

Half the time I hate Black Swans, the other half I love them. I like the randomness that produces the texture of life, the positive accidents, the success of Apelles the painter, the potential gifts you do not have to pay for. Few understand the beauty in the story of Apelles; in fact, most people exercise their error avoidance by repressing the Apelles in them.

Half the time I am hyperconservative in the conduct of my own affairs; the other half I am hyperaggressive. This may not seem exceptional, except that my conservatism applies to what others call risk taking, and my aggressiveness to areas where others recommend caution.

I worry less about small failures, more about large, potentially terminal ones. I worry far more about the “promising” stock market, particularly the “safe” blue chip stocks, than I do about speculative ventures—the former present invisible risks, the latter offer no surprises since you know how volatile they are and can limit your downside by investing smaller amounts.

I worry less about advertised and sensational risks, more about the more vicious hidden ones. I worry less about terrorism than about diabetes, less about matters people usually worry about because they are obvious worries, and more about matters that lie outside our consciousness and common discourse (I also have to confess that I do not worry a lot—I try to worry about matters I can do something about). I worry less about embarrassment than about missing an opportunity.

In the end this is a trivial decision making rule: I am very aggressive when I can gain exposure to positive Black Swans—when a failure would be of small moment—and very conservative when I am under threat from a negative Black Swan. I am very aggressive when an error in a model can benefit me, and paranoid when the error can hurt. This may not be too interesting except that it is exactly what other people do not do. In finance, for instance, people use flimsy theories to manage their risks and put wild ideas under “rational” scrutiny.

Half the time I am intellectual, the other half I am a no-nonsense practitioner. I am no-nonsense and practical in academic matters, and intellectual when it comes to practice.

Half the time I am shallow, the other half I want to avoid shallowness. I am shallow when it comes to aesthetics; I avoid shallowness in the context of risks and returns. My aestheticism makes me put poetry before prose, Greeks before Romans, dignity before elegance, elegance before culture, culture before erudition, erudition before knowledge, knowledge before intellect, and intellect before truth. But only for matters that are Black Swan free. Our tendency is to be very rational, except when it comes to the Black Swan.

Half the people I know call me irreverent (you have read my comments about your local Platonified professors), half call me fawning (you have seen my slavish devotion to Huet, Bayle, Popper, Poincaré, Montaigne, Hayek, and others).

Half the time I hate Nietzsche, the other half I like his prose.

WHEN MISSING A TRAIN IS PAINLESS

I once received another piece of life-changing advice, which, unlike the advice I got from a friend in Chapter 3, I find applicable, wise, and empirically valid. My classmate in Paris, the novelist-to-be Jean-Olivier Tedesco, pronounced, as he prevented me from running to catch a subway, “I don’t run for trains.”

Snub your destiny. I have taught myself to resist running to keep on schedule. This may seem a very small piece of advice, but it registered. In refusing to run to catch trains, I have felt the true value of elegance and aesthetics in behavior, a sense of being in control of my time, my schedule, and my life. Missing a train is only painful if you run after it! Likewise, not matching the idea of success others expect from you is only painful if that’s what you are seeking.

You stand above the rat race and the pecking order, not outside of it, if you do so by choice.

Quitting a high-paying position, if it is your decision, will seem a better payoff than the utility of the money involved (this may seem crazy, but I’ve tried it and it works). This is the first step toward the stoic’s throwing a four-letter word at fate. You have far more control over your life if you decide on your criterion by yourself.

Mother Nature has given us some defense mechanisms: as in Aesop’s fable, one of these is our ability to consider that the grapes we cannot (or did not) reach are sour. But an aggressively stoic prior disdain and rejection of the grapes is even more rewarding. Be aggressive; be the one to resign, if you have the guts.

It is more difficult to be a loser in a game you set up yourself.

In Black Swan terms, this means that you are exposed to the improbable only if you let it control you. You always control what you do; so make this your end.

THE END

But all these ideas, all this philosophy of induction, all these problems with knowledge, all these wild opportunities and scary possible losses, everything palls in front of the following metaphysical consideration.

I am sometimes taken aback by how people can have a miserable day or get angry because they feel cheated by a bad meal, cold coffee, a social rebuff, or a rude reception. Recall my discussion in Chapter 8 on the difficulty in seeing the true odds of the events that run your own life. We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions.

Imagine a speck of dust next to a planet a billion times the size of the earth. The speck of dust represents the odds in favor of your being born; the huge planet would be the odds against it. So stop sweating the small stuff. Don’t be like the ingrate who got a castle as a present and worried about the mildew in the bathroom. Stop looking the gift horse in the mouth—remember that you are a Black Swan. And thank you for reading my book.

Epilogue

YEVGENIA’S WHITE SWANS

Yevgenia Krasnova went into the long hibernation that was necessary for producing a new book. She stayed in New York City, where she found it easiest to find tranquillity, alone with her text. It was easiest to concentrate after long periods during which she was surrounded by crowds, hoping to run into Nero so she could make a snide remark to him, perhaps humiliate him, possibly win him back. She canceled her e-mail account, switched to writing longhand, since she found it soothing, and hired a secretary to type her text. She spent eight years writing, erasing, correcting, venting her occasional anger at the secretary, interviewing new secretaries, and quietly rewriting. Her apartment was full of smoke, with papers strewn on every surface. Like all artists she remained dissatisfied with the state of completion of her work, yet she felt that she had gone far deeper than with her first book. She laughed at the public who extolled her earlier work, for she now found it shallow, hurriedly completed, and undistilled.

When the new book, which was aptly called The Loop , came out, Yevgenia was wise enough to avoid the press and ignore her reviews, and stayed insulated from the external world. As expected by her publisher, the reviews were laudatory. But, strangely, few were buying. People must be talking about the book without reading it, he thought. Her fans had been waiting for it and talking about it for years. The publisher, who now owned a very large collection of pink glasses and led a flamboyant lifestyle, was presently betting the farm on Yevgenia. He had no other hits and none in sight. He needed to score big to pay for his villa in Carpentras in Provence and his dues on the financial settlement with his estranged wife, as well as to buy a new convertible Jaguar (pink). He had been certain that he had a good shot with Yevgenia’s long-awaited book, and he could not figure out why almost everyone called it a masterpiece yet no one was buying it. A year and a half later, The Loop was effectively out of print. The publisher, now in severe financial distress, thought he knew the reason: the book was “too f***ing long!”—Yevgenia should have written a shorter one. After a long but soothing lachrymal episode, Yevgenia thought of the characters in the rainy novels of Georges Simenon and Graham Greene. They lived in a state of numbing and secure mediocrity. Second-rateness had charm, Yevgenia thought, and she had always preferred charm over beauty.