The Black Swan: The Impact of the Highly Improbable
A Brief Summary
“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.” – The Black Swan
About the Author
Nassim Nicholas Taleb is
a Lebanese-American figure. He is most known for his Black Swan Theory, Applied Epistemology and
Antifragility. Nicholas is a well-known scholar, essay writer, author, risk
analyst and professor. Nicholas Taleb is the author of many books, including The Black Swan: The Impact of
the Highly Improbable. The Sunday Times, a British newspaper, described
The Black Swan as
“One of the twelve most influential books since World War II”
referred to Nassim Nicholas
Taleb as one of the top intellectuals and said, “Taleb has changed the way many people think about uncertainty,
particularly in the financial markets. His book, The Black Swan, is an original and audacious
analysis of the ways in which humans try to make sense of unexpected events.”
The Black Swan: The Impact of
the Highly Improbable
book, ‘The Black Swan: The Impact of the Highly Improbable’,
was published in 2007. The inspiration of the book was the sudden finding of
the black swan in
Australia. Up until then, it was believed that swans only exist in the color
white. This finding was a surprise to the world and hence, inspired the black swan theory. The
book elucidates how our knowledge about this world is limited to the
observations and experience of the human race. The book represents events that
happen suddenly, without anyone expecting of its occurrence. “I never saw that
coming!” Is the best example of you experiencing a Black Swan.
studied about these events and the way humans deal with them. He believes that
we have convinced ourselves of knowing more than we actually know.
The Three Principles of The Black Swan
Taleb has based
the entire book on three properties:
The occurrences of
unpredicted events. There are events that are considered to have a one in a
million chance of happening. The Black Swan is that one event that actually ends up happening. No
one prepares for this event as they consider it unlikely to happen.
The impacts of these events
on our world and its conditions. These impacts are society changing and can be
drastic or remarkable. The reason such events have such major effects is
because no one prepares for its happening. An earthquake is a likely example of
a Black Swan.
After its occurrence, our
attempts at explaining the happening and making it seem more predictable than
it was. Which means, data was available through which the incident could have
been predicted. Our rejection to Black Swans make us more vulnerable to them and their massive
Explanation of the Three
“Categorizing is necessary for humans, but
it becomes pathological when the category is seen as definitive, preventing
people from considering the fuzziness of boundaries”
In The Black Swan, Nicholas
represents the unforeseen and rare happenings in the history, science, finance,
and technology sectors. He talks about the major events which have impacts of
large magnitude on these industries. These events have destabilizing and
alarming consequences, altering the historical affairs. The term ‘Black Swan’ itself refers
to the unpredicted events and their ability to shake the world of human
affairs. Just like how the first sighting of the Black Swan was unpredicted, so are these
events eccentric. No one in the past can predict its probability.
However, the human mind conjurers up facts and interpretations to explain the
happening of the certain event. Nicholas Taleb believes that the number of Black Swans have been
increasing over the years. Predictable and ordinary events are becoming more
and more infrequent.
On page 267
of The Black Swan,
Taleb writes ‘In the absence of a
feedback process, you look at models and think they confirm reality’. This
presses on the fact that weather experts and economists give forecasts, which
mostly turn out inaccurate. Yet, people continue relying on these forecasts and
wanting more of it. Taleb detests the fact that studies nowadays rely a lot on
theoretical models of current and future affairs. He suggests preference of
data analysis and comparison over models and predictions.
that humans should focus more on generalities instead of trying to simplify and
categorize everything. The human mind must think about the impossible; think
out of the box. We must take into consideration we do not know, so we become
more open to new opportunities.
Examples of Black Swan Events that
Support Taleb’s Theory
European Sovereign Debt
Crisis of 2009:
Several European countries including
Portugal, Greece and Ireland faced the collapse of financial institutions and
high government debt. This could have brought down the entire world banking
system. The countries were then given bailout funds.
The Unexpected Success of
Google’s success was a big surprise
to analysts. This is because the company had achieved great success in the days
when the market was recessing. In 2016, Google’s revenue summed up to 89.5
Billion US Dollars.
Incident of 9/11: The
unexpected attacks of September 2011 shook the world. The attacks killed about
3,000 people, injured 6,000 and caused property damaged of about $10 Billion.
The incident had major impact on the US and world markets. The stock exchanges
remained closed for a week after the deadly attacks. In that year, U.S. stocks
lost $1.4 trillion in valuation for the week.
In 2008, Zimbabwe
experienced the worst case of hyperinflation. The peak inflation rate exceeded
79.6 Billion percent. No one could and did not predict this inflation rate,
which was high enough to easily destroy a country financially.
The rise of
Hitler, the global spread of internet, the market crash of 1987, etc. These are
all examples of the Black
Swan dynamics. The impact of these events were inversely proportional to
example for this is you yourself. Look back at your life and count the number
of events that occurred without you expecting them or predicting them. Think
about the number of technology upgrades, the important events of your life, the
betrayals and drastic changes around you. All of these things confirm the Black Swan theory.
The Turkey – The Most Commonly
Known Example of the Black
Taleb, in The Black Swan, uses a turkey
to represent his thoughts. The way humans feed turkeys all year long, making
the turkey believe that this is their task in life. To be fed by humans is what
they believe they were born for. However, a time comes when the turkeys are
sacrificed by those very humans for Christmas dinner.
The theory of black swan can be applied
in this scenario as well. The turkeys, being cared for by the humans, wouldn’t
be able to predict their sacrifice with the past they lived. Once the time for
the turkey is up and it’s in the slaughterhouse, it realizes why it was being
taken care of.
In other words,
Taleb tries to tell us that believing what’s constant will stay constant, is a
major mistake humans tend to make often. He believes that the human race can
improve the way they think in order to predict the unknown. With this, we will
be able to turn the Black
In his book,
Nicholas Taleb provides us with tricks and methods of benefiting from these
sudden events. He points out the importance of people realizing he possibility
of a Black Swan at
any point. This way, the person will plan accordingly and will be able to
minimize the impact of the Black
Swan. For managing risks, Taleb proposes the idea of creating anti-fragile
thinking system. A system that accepts variability and the unknown.
The best thing
about this book is that Taleb uses examples and anecdotes from the lives of
famous thinkers. He relates his theories and ideas to these examples to
illustrate his points. This method of his entertains the reader and makes
the book intriguing and amusing. The book isn’t too complicated as it is
neither scientific, nor academic. Hence, it is easy to read for the general
public with little knowledge in those fields. The book has been a major help to
people looking forward to starting up a business. Decision makers also benefit
a lot with Taleb’s theories and ideas. This is because The Black Swan prepares
people in dealing with Black
swan events by realizing the importance of the possibility of the
happenings of the unexpected events. Taleb is now focusing on creating a ‘Black Swan Robust
The Black Swan has the
ability of changing the way you look at the world today. The book’s author
shows true passion and devotion towards his own theories. The unusual stories
narrated by Nicholas Taleb in The Black Swan makes the book worth reading.