Thread by @amito_malik

notes the black swan thread
1 When Taleb was student he was advised to choose a scalable career path. If you’re a doctor, dentist, consultant or message proffessional, there is a limit to the amount of clients you can see in a day AND the amount of money you can make in one day

2 t isn’t scalable.The pay is more or less predictable and depends on your continuous effort. There will be differences in your income over time, but no single day of work will have a huge impact on your lifetime earnings.

3) The d/f between the successful and less successful isn’t to big, and at least somewhat predictable. These professions isn’t black swan driven and is performed in Mediocristan.

4 Another example of a mediocristan environment is the casino. In the casino no single bet is allowed to deviate too far from the mean. If one gambler could place a bet of lets say 1 billion, the casino owner would face an Extremistan environment.

5 Casinos owners off course, likes a stable business model, therefore they limit the bet sizes so one single bet can’t have too big an impact, positive or negative.

6 Extremistan
Nassim N. Taleb's Black SwanOther professions allows you to add zeros to your output and your income. “Idea” professions as trading and writing, allow you to think intensely instead of working hard. You do the same amount of work whether your output is 100 or 1 mn.

7 . K Rowling will not have to write a new book for each additional sale, but the baker will have to form a new bread for each additional costumer. These professions are performed in extremistan.

8 One payday can have potentially huge impact on your lifetime income and the d/f bw the successes and failures are extreme!Other examples of Extremistan environments are deaths from war, financial markets and venture capital investing.

9 History
Taleb states human mind suffers from three mistakes when it tries to make sense of history:
The 1st 1 is the illusion of understanding. Every1 thinks he knows what is going on, whereas in reality the world is to complicated and random to know what is really going on.

10 The retrospective distortion or how we can access everything easily and simple in the rearview mirror. We are very good at making sense of events after they happened.
The overvaluation of factual information and the danger of “platonifying” or putting info into categories.

11 Putting info into categories always oversimplifies reality.

12 Learn From The Poor Turkey
thanksgiving-turkey-illustrationTaleb tells the story of the turkey which is fed for 1000 days. The turkey off course, thinks things everything is alright and it will continue to be fed.

13 it mean how can it think otherwise when it has been fed consistently for 1000 days in a row now. On day 1001, the day before thanksgiving, everything changes.

This story illustrates why it’s dangerous to use history to predict the future.

14 it shows how black swan events are relative knowledge. butcher knew about Thanksgiving death of turkey all the time. Here lies 1 of the keys 2 not being a sucker: black swan events happens relative to UR expectations. Avoid negative black swan event by keeping an open mind.

15 The Round-trip Fallacy
People are very likely to confuse the “Statements as “almost all terrorists are muslims” are also likely confused with the statement “almost all muslims are terrorists”, with is obviously a very different and untrue statement.

Confirmation Bias
u n me have a natural tendency to search 4 information that confirms our current beliefs, and view of the world.we will always be able 2 find these past instances that support our view & theories.ex of this would be showing people sucess,not ur failures on resum

17 -ve Empiricism
A real life example of this is in cancer detection. Finding c cells confirms the existence of cancer in the body, whereas not finding any cancer cells would not allow you to say with certainty that the body is cfree.

-ve empiricism is a way 2 get closer 2 truth

18 The Narrative Fallacy
“We like stories, we like to summarize, and we like to simplify, i.e reduce dimension of matters.This is what causes the narrative fallacy. The narrative fallacy is the failure to look at things, events etc – without attaching a cause or explanation to it

19 The king died n the queen died Compare it to “The king died, and then the queen died of grief.” Information was added to the second statement but it is still easier to remember. As narrative is easier to remember n understand, it will be more popular and can be marketed better

20 We treat ideas as possessions”
Taleb mentions studies that suggests: additional knowledge of the minutiae of daily business can be useless, even actually toxic.” The moral of the study is that the more information you have available, the more hypothesis you are likely to form

20 and the worse off you will be. Once you form a theory you’re not likely to easily change your mind. Ideas are sticky. The confirmation bias mentioned earlier as well as the consistency bias is in play here. We should try to not get attached easily.

21
A common theme through the book, is that humans in general can’t predict anything. But we think we can.

Taleb urges us to be very skeptic about the confidence of professionals, because as with other humans, they don’t know when they don’t know.

21 They have a hard time defining the boundaries of their knowledge. You should always question the error rate of the authority or the experts procedure. Ie. question their confidence. And of course be skeptical of your own confidence in your methods as well.

22 What To Do If I Can’t Predict?
Practice trial n error. “You need to love to lose” –
INFOGRAPHIC: 5 TRICKS IN A WORLD OF BLACK SWANSTaleb urges us to be fools in the right places. Being human includes making automatic judgements and mistakes.

22 rank our beliefs in order of how much harm they may cause in our life. Be a fool in the trivial and small events of ur life. Don’t get fooled when it comes to important events, as for ex with handling ur retirement funds. u can benefit from unpredictability if u’re prepared.

Investment Strategy
Place around 85-90% in extremely safe assets & the remaining 10-15 % in extremely speculative ones. No need for medium risk assets as this “risk” is estimated by the so called experts. 10-15% exposure to speculative assets will pay off in case a +ive b swan

85-90% in ultra safe assets is meant not to be affected by -ve BSwan events. Be very aggressive when you can get exposure to a +ve Bswan & very conservative when u’re under threat from a -ve 1. Be aggressive when an error in a model can benefit u, & paranoid when error can hurt u

23 Make a distinction between positive and negative contingencies. Where is lack of human predictability extremely beneficial and where it is extremely hurtful? Hurtful: homeland security, military, insurance, banking and loans. Positive: publishing, venture capital.

24 Don’t look for the precise and the local. Don’t be narrow minded! Pasteur, the man behind the famous quote “Chance favors the prepared”, understood that you don’t look for anything in particular each morning, but you work hard to let contingency enter your working life.

25 Don’t try to predict any specific Black Swan as it will blind you 2 others. Invest in preparedness, not in prediction.
Cease any o/pnity or anything that looks like o/pnity. O/pnity r much more rare than u would think. Remember +ve Bswans needs a critical first step: Exposure

26 Beware of precise plans by governments. Government’s purpose is to survive and self perpetuate, not getting to the truth.

26 Be aggressive. It’s difficult to be a loser in a game you set up yourself. In Black Swan terms this means that you’re exposed to the improbable only if you let it control you. You always control what you do” – @nntaleb notes on black swan

converting 444 pages into 7000 words

Edits 7 . JK Rowling will not have to write a new book for each additional sale, but the baker will have to form a new bread for each additional costumer. These professions are performed in extremistan.

extracted signal from noise #theblackswan

Make number of hours of time that i put in this book make count .

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