Tuesday, June 19, 2007

The Black Swan

Nassim Taleb is a probabilist & a hedge-fund manager. I started reading his book out of academic interest in financial markets, but a few pages into the book, I realised that The Black Swan is as pertinent to markets as to life in general.

In the old world, people believed that all swans are white. Then the Australian continent was discovered & people were shocked to find black swans. That is the point of this book.

The universe is unpredictable, and the improbable events are the ones that shape the world. Human mind is programmed to find patterns in events; based on what we believe is empirical evidence. Hence we concentrate on the center of the bell-curve, when in fact we should be looking at the extremes.

The idea is told quite fascinatingly by Taleb, through many stories & anecdotes. The book at no point gets into mathematics, but dwells in the concepts. He extends his Black Swan Theory into interesting alleys of thought: career advice, explanation of wars (or the lack of it), philosophy, why people who don't read newspapers are better off... I didn't quite agree with all the ideas but enjoyed reading them all the same. A very stimulating read.


Bharathwaj said...

Hi .. I just got this book.. http://en.wikipedia.org/wiki/Fooled_by_Randomness a few days bac.. Its from the same author.. I read a few pages.. and was quite worried that it would change me a bit too much.. Its unconventional.. U need to hang on to every word he says.. Check it out.. U might love it.. :)

Radha said...

I've heard a lot about 'Fooled by Randomness', will pick it up soon! :)
Thx for that recommendation!

666 said...

hmmm... 'the black swan' sounds interesting. will keep it on my radar which unfortunately never blips haha

i liked your analogy of the bell curve.

a good post actually.. u work in difc?

Radha said...

I cant take credit for the analogy, its the authors, not mine :)
But the book really is very stimulating. Switch on that radar of yours!! :))

Moi said...

the premise of the book sounds really fascinating, radha.

Radha said...

Well, its something you already know, yet something you never consider while making many decisions. So yes, its quite interesting.

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