Book Review: The Black Swan

Book Review: The Black Swan

This is a book everyone should read.  It’s long-winded in places, but the central point is something that we should all internalize; less and less of the world can be described by a bell curve.  For example, the richest person in the world doesn’t only make 5 standard deviations more than the median.  The outcomes of stocks, startups, authors, politicians, and much more can’t be predicted by the observation and probability models that we love to use (whether subconsciously or consciously).  We are so bad at recognizing this in large part because we create a model to retroactively explain what we could not predict.  Think about all the reasons that you know “know” why Mark Zuckerberg ended up the billionaire behind the social network that “won”.  We fool ourselves in to thinking that we have now “learned” why and that we could see it the next time.  We couldn’t, next time will be sufficiently different to be unpredictable… or there wouldn’t be billions to be made in it.

I think the most interesting impact of the book is how it effects your career.  Taleb’s model of outsized outcomes for some parts of the world is easy to apply to investing.  You can keep 80% of your investments safe while exposing 20% to things that have this extreme upside (as well as downside) and end up riding along successfully.  When it comes to your career though, you only have so much time to give.  You have a much more binary choice of safe (e.g. more linear) career or putting yourself in the running for a black swan (but more likely ending up in the huge stack of people who did the same thing and didn’t succeed).  I don’t think the book gives you an answer when the question is put that broadly, just a better way to analyze your options.