The Black Swan: by Nassim Taleb

[Jonril]

A very short book review:

Fooled by randomness and The black swan

Author: Nassim Nicholas Taleb

Publisher: Random House

So I had the luxury of spending some time in a Borders store recently and picked up a book I have been itching to read for a while now, The Black Swan. To my lucky surprise the publishers has recently bundled the work with Nassim's early work Fooled my randomness. I love 2 for 1 bargains!

Fooled by randomness was an interesting read and I would say Nassim articulated his point of view well, using interesting (mostly fictional) characterisations of the typical work done on wall street using quantitative economics and general statistics. Nassim's insights into the fallacies, we are fed as truths, by so called experts has reinforced my skepticism, and my opinion, that everyone should be "minding their own business" when it comes to their financial holdings.

I am near the end of The Black Swan and have also thoroughly enjoyed the read. The Black Swan follows on and fleshes out Nassim's philosophy and history of human natures weakness for statistical fallacies (and other misconceptions). It also provides a good bibliography/reference for further reading which I always find handy.

His essays published on the web are interesting reading too, they can be accessed from the Wikipedia page.

Has anyone else read Nassim Taleb's work? Opinions on his views?

 

[cu@thetop]

Regrettably I don't read as much as I wouuld like. Last book I read was a non fiction over 6 months ago! The Devil We Know: Dealing with the New Iranian Superpower, by Robert Baer.

I will keep an eye out at the local library when next I am there for Mr Taleb's 1st book at least.

 

[Amadio]

The Black Swan is essential reading for any investor, property or stock market, especially young people. Some of it is challenging to read, but the overall message is that world history revolves around unexpected events.

After I read The Black Swan the concept of stock market charting flew out the window and still makes not one iota of sense. Also, I changed my buying/selling to be reactionary rather than trying to be on the right side of predictions.

Nassim Taleb is still on a pedestal for me. He and 2 other authors saved my financial bacon.

In winter of July 2007 I was on holidays and read 3 books in one week.
1. The Black Swan
2. Traders, Guns and Money -The Dazzling World of Derivatives by Satyajit Das
3. Robert Shiller's book Irrational Exuberance 2005 edition.

Traders, Guns is pretty exciting stuff and it was there that I read the most astonishing thing - about 14 TRILLION US$$ unaccounted for in derivatives (could be wrong on the figure but it sticks in my head).

Anyway, I finished reading on Friday night, and by Monday morning at 9.10 am had traded every US REIT (managed funds in RE) which had been doing over 30% a year for yonks, and every bit of American stock and exchanged it all for US Treasuries.

And then I sat and waited on the sidelines as everyone crashed and burned around me.

Satyajit Das has a very interesting email subscription service (free) that expresses his opinions on other authors and thinkers. Taleb has a website too but it is highly eccentric, just as he is.

Unfortunately I didn't read the right authors or economists when it came to the latest property boom (Grr Mr Keen) but at least I can still play around with the cash that sat out the crash.

 

[Jonril]

Traders, Guns is pretty exciting stuff and it was there that I read the most astonishing thing - about 14 TRILLION US$$ unaccounted for in derivatives (could be wrong on the figure but it sticks in my head).

Is it Warren Buffet that deemed Derivatives as WMD's (Weapons of Mass Destruction) in financial markets?

I also remember sitting through Banking and Finance 101 a decade ago and my tutor going on about the time bomb that is the derivatives market.

As I am writing this I have a touch of nostalgia and the lyrics to Que Sera Sera in my head, which I think aptly sum up Taleb's reasoning. Sing along if you like


When I was just a little girl
I asked my mother, what will I be
Will I be pretty, will I be rich
Here's what she said to me.

Que Sera, Sera,
Whatever will be, will be
The future's not ours, to see
Que Sera, Sera
What will be, will be.

When I was young, I fell in love
I asked my sweetheart what lies ahead
Will we have rainbows, day after day
Here's what my sweetheart said.

Que Sera, Sera,
Whatever will be, will be
The future's not ours, to see
Que Sera, Sera
What will be, will be.

Now I have children of my own
They ask their mother, what will I be
Will I be handsome, will I be rich
I tell them tenderly.

Que Sera, Sera,
Whatever will be, will be
The future's not ours, to see
Que Sera, Sera
What will be, will be.

 

[Amadio]

Is it Warren Buffet that deemed Derivatives as WMD's (Weapons of Mass Destruction) in financial markets?

Yes, but that didn't stop him using them. And then he tried to change the rules so that he didn't have to come up with so much collateral.