Reddit reviews The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto Book 2)
We found 9 Reddit comments about The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto Book 2). Here are the top ones, ranked by their Reddit score.
Alright, let's talk about Nassim Nicholas Taleb. If you're not familiar, he's the famously belligerent author of Fooled by Randomness, The Black Swan, and Antifragile, among other works. I don't think Taleb's views can be fully comprehended in a single day, so I strongly advise going out and reading all his books.
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Edit: What I really want to know here is: of those of you who are familiar with Taleb's technical approach to decision theory and how he applies this to the real world, is his decision theory 1) Basically correct, 2) Frequently correct but mis-applied sometimes, or 3) basically incorrect?
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On the one hand, I suspect that if he knew about the rationalist community, he would loudly despise it and everything it stands for. If he doesn't already know about it, that is: I remember seeing him badmouth someone who mentioned the word "rationalist" in Facebook comments. He has said in one of his books that Ray Kurzweil is the opposite of him in every way. He denounces the advice in the book "Nudge" by Thaler and Sunstein (which I admittedly have not read - is this a book that rationalists like?) as hopelessly naive. He considers himself Christian, is extremely anti-GMO, voted third-party in the election but doesn't seem to mind Trump all that much, and generally sends lots of signals that people in the rationalist community would instinctively find disturbing.
On the other hand...
Taleb the Arch-rationalist?
Despite the above summary, if you actually look closer, he looks more rationalist than most self-described rationalists. He considers erudition a virtue, and apparently used to read for 30 hours a week in college (he timed himself). I remember him saying off-hand (in The Black Swan, I think) that a slight change in his schedule allowed him to read an extra hundred books a year. When he decided that probability and statistics were good things to learn, he went out and read every math textbook he could find on the subject. Then he was a wall street trader for a couple of decades, and now runs a risk management institute based on his experiences.
He considers himself a defender of science, and calls people out for non-rigorous statistical thinking, such as thinking linearly in highly nonlinear problem spaces, or mis-applying analytical techniques meant for thin-tailed distributions on fat-tailed distributions. (Example of when thinking "linearly" doesn't apply: the minority rule). He loves the work of Daniel Kahneman, and acknowledges human cognitive biases. Examples of cognitive biases he fights are the "narrative fallacy" (thinking a pattern exists when there is only random noise) and the "ludic fallacy" (ignoring the messiness of the real world in favor of nice, neat, plausible-sounding, and wrong, theoretical knowledge).
He defends religion, tradition, and folk wisdom on the basis of statistical validity and asymmetric payoffs. An example of his type of reasoning: if old traditions had any strongly negative effects, these effects would almost certainly have been discovered by now, and the tradition would have been weeded out. Therefore, any old traditions that survive until today must have, at worst, small, bounded negative effects, but possibly very large positive effects. Thus, adhering to them is valid in a decision-theoretic sense, because they are not likely to hurt you on average but are more amenable to large positive black swans. Alternatively, in modern medical studies and in "naive scientistic thinking", erroneous conclusions are often not known to have bounded negative effects, and so adhering to them exposes you to large negative black swans. (I think this is what he means when he casually uses one of his favorite technical words, "ergodicity," as if its meaning were obvious).
Example: "My grandma says that if you go out in the cold, you'll catch a cold." Naive scientist: "Ridiculous! Colds are caused by viruses, not actual cold weather. Don't listen to that old wive's tale." Reality: It turns out that cold weather suppresses the immune system and makes you more likely to get sick. Lesson: just because you can't point to a chain of causation, doesn't mean you should dismiss the advice!
Another example: Scientists: "Fat is bad for you! Cut it out of your diet!" Naive fad-follower: "Ok!" Food companies: "Let's replace all the fat with sugar!" Scientists: "JK, sugar is far worse for you than fat." Fad-follower: "Well damn it, if I had just stuck with my traditional cultural diet that people have been eating for thousands of years, nothing all that bad would have happened." Lesson: you can probably ignore dietary advice unless it has stood the test of time for more than a century. More general lesson: applying a change uniformly across a complex system results in a single point of failure.
For the same sorts of reasons, Taleb defends religious traditions and is a practicing Christian, even though he seems to view the existence of God as an irrelevant question. He simply believes in belief as an opaque but valid strategy that has survived the test of time. Example 1. Example 2. Relevant quote from example 2:
> Some unrigorous journalists who make a living attacking religion typically discuss "rationality" without getting what rationality means in its the decision-theoretic sense (the only definition that can be consistent). I can show that it is rational to "believe" in the supernatural if it leads to an increase in payoff. Rationality is NOT belief, it only correlates to belief, sometimes very weakly (in the tails).
His anti-GMO stance makes a lot of people immediately discredit him, but far from just being pseudoscientific BS, he makes what is probably the strongest possible anti-GMO argument. He only argues against GMOs formed by advanced techniques like plasmid insertion, and not against lesser techniques like selective breeding (a lot of his detractors don't realize he makes this distinction). The argument is that these advanced techniques, combined with the mass replication and planting of such crops, amounts to applying an uncertain treatment uniformly across a population, and thus results in a catastrophic single point of failure. The fact that nothing bad has happened with GMOs in the past is not good statistical evidence, according to Taleb, that nothing bad will happen in the future. There being no good evidence against current GMOs is secondary to the "precautionary principle," that we should not do things in black swan territory that could result in global catastrophes if we are wrong (like making general AI!). I was always fine with GMOs, but this argument really gave me pause. I'm not sure what to think anymore - perhaps continue using GMOs, but make more of an effort to diversify the types of modifications made? The problem is that the GMO issue is like the identity politics of the scientific community - attempt to even entertain a possible objection and you are immediately shamed as an idiot by a facebook meme. I would like to see if anyone has a statistically rigorous reply to taleb's argument that accounts for black swans and model error.
Taleb also strongly advocates that people should put their "skin in the game." In rationalist-speak, he means that you should bet on your beliefs, and be willing to take a hit if you are wrong.
To summarize Taleb's life philosophy in a few bullet-points:
Most or all of these things are explicit rationalist virtues.
Summary
Despite having a lot of unpopular opinions, Nassim Taleb is not someone to be dismissed, due to his incredibly high standards for erudition, statistical expertise, and ethical behavior. What I would like is for the rationalist community to spend some serious time considering what Taleb has to say, and either integrating his techniques into their practices or giving a technical explanation of why they are wrong.
Also, I would love to see Eliezer Yudkowsky's take on all this. I'll link him here (/u/EliezerYudkowsky), but could someone who knows him maybe leave him a facebook message also? I happen to think that this conversation is extremely important if the rationalist community is to accurately represent and understand the world. Taleb has been mentioned occasionally on LessWrong, but I have never seen his philosophy systematically addressed.
Taleb's Youtube Channel
Taleb's Medium.com Blog
His essay on "Intellectuals-yet-idiots"
His personal site, now with a great summarizing graphic
There was an interesting take on this in The Black Swan, where the author gives you an alternative reality situation, where an FBI agent acts on the indications of a plot to fly jets into skyscrapers and successfully advocates for reinforced cockpit doors in all planes and increased screening of carry-on baggage. In this alternative reality, 9/11 did not happen. Is this guy a hero? No, he's the pain in the ass who wasted millions of airline money and inconvenienced millions of passengers by forcing them to get to the airport earlier. But the fact is that 9/11, like any terrorist attack was a Black Swan: a highly improbable event with three principal characteristics:
It is impossible for us to know exactly how effective our security forces have been at thwarting any attacks, because it is counter-productive for them to reveal sources and methods. Which makes it awfully convenient for the Government to drive through increased police powers.
What I don't understand is why ASIO needs immunity from killing in self-defence, or why we need further laws to lock people up for advocating terrorism, when existing laws seem to be adequate.
You can't prove God doesn't exist. Just studying how a cell reproduces makes you think, could there be something or someone behind all this. Where did all this begin and how did it start? We have no way of knowing. So then the question is do you declare God doesn't exist and is a figment. Or entertain the possibility that your knowledge and experience are truly limited and we are weak beings.
Pride in oneself and knowledge is a very dangerous thing.
edit: This is a good book to read on the impact of the highly improbable
I enjoy reading anything Charlie Munger has written (or said). If you don't know, he is Warren Buffett's business partner, and one of the things he promotes tirelessly is reading and understanding mental models from other domains. So in reading Munger, you tend to get some second-hand insights into different mental models.
Munger has also spent his life trying to understand human rationality and irrationality in order to make himself a more rational investor. He has some significant things to say about that that are very insightful.
Someone recently posted a 350 page compendium of Munger's writings and speeches. I'm sure you can find it easily by Googling.
You might also read stuff by Daniel Kahneman and Amos Tversky. They spent their careers essentially studying rational and irrational behaviors, and behavioral economics owes a huge debt to them. Michael Lewis just wrote a book about them and their collaboration called The Undoing Project. Having never read a less-than-fascinating book by Michael Lewis, I'll stick my neck out and say it's probably worth reading.
Finally, if you can stand his style and unmitigated pomposity, Nassim Nicholas Taleb has written a few interesting things. The two books I found most interesting (and rewarding) were Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets and The Black Swan: The Impact of the Highly Improbable.
For traders, Mandelbrot's The Misbehavior of Markets for a dose of humility.
Taleb's Black Swan talks about an investing strategy that seems relevant to crypto: keep mostly low-risk liquid assets and invest small amounts in things that can pay off big.
For developers, this is a weird one but my all-time favorite is Zen and the Art of Motorcycle Maintenance.
Get a basic background in logic and statistics and their respective fallacies. This will give you the knowledge and tools you need to think critically of 99% of what you find in news media and websites. A good introduction to logic is Harry Gensler's Introduction to Logic textbook. A good guide to statistical fallacies and how to spot them is [The Black Swan by Nassim Taleb] (http://www.amazon.com/Black-Swan-Impact-Highly-Improbable-ebook/dp/B00139XTG4/ref=sr_1_1?s=books&ie=UTF8&qid=1421288487&sr=1-1&keywords=the+black+swan+taleb).
>The good traders GameKyuubi was wrong about only one thing: There aren't any good traders.
If you haven't seen a good trader yet, does that mean they do not exist?
Nobody had ever seen a black swan. For thousands of years, that meant that they didn't exist. Until someone saw one, of course.
You are running into a fundamental problem of inductive logic, and it's preventing you from seeing trading rationally. If you want to read more on how this matters to traders, I'd suggest The black swan by Nassim Taleb
>There are lots of us who believe we are good traders. But we aren't. Of course, some of the loudest voices on Reddit regularly remind us about how well they time the market. Except when they don't time the market well.
Here is the first misconception about trading. The best traders have never timed the markets. They utilize arbitrage opportunities, which exist in countless forms across every asset class, and rarely have anything to do with market timing.
I highly recommend reading The Quants if you're interested in learning how successful traders operate, as well as their history. It's not only extremely informative, but highly entertaining
>A paper published last October by the Haas School of Business at UC Berkeley entitled "Do Day Traders Rationally Learn About Their Ability?" used nearly 15 years of stock market day trading data to conclude that all day traders are irrational, the vast majority of day traders lose money, and even when day traders are successful, they "irrationally attribute success disproportionately to their ability rather than luck."
Now this I agree with. The vast majority of traders are terrible at trading, and when they do win, it's because they are lucky, not because they are smart. One of the fundamental books on Wallstreet for understanding this is What I learned losing a million dollars
The entire story is about an extremely successful trader who lost everything on one bet, mainly because his entire life before that had been a string of extremely lucky coincidences, and he never realized it.
>Of course, their success was due to their unique trading ability and not the fact that the entire market rose like a rocket.
Keep in mind, the best traders are always benchmarked against an asset or index. This is called beta weighing. If you make less money trading then you would have from just holding the bench marked asset, you have effectively lost money from trading.
>Warren Buffett, the most successful investor of modern times, has often said that he only invests in what he knows. His preferred holding period: forever. With that model, his company, Berkshire Hathaway, has averaged a 19 percent annual return since 1965 which means it has risen more than 1 million percent.
There are a lot of reasons for Warren Buffet's success, but it's worth pointing out that it's a lot more complex than just picking a security and holding it forever. If you want to learn about value investing, and the fundemental analysis behind it, check out Security Analysis
It's written by Ben Graham, the guy who taught Warren Buffet everything he knows. Arguably the most important concept in the text is called [investing with a margin of safety](https://en.wikipedia.org/wiki/Margin_of_safety_(financial)
Bitcoin definitely has intrinsic value. The problem is, nobody knows what that intrinsic value is worth. Since there is no currently known method of valuing a decentralized network (although progress is being made) Warren Buffet wouldn't touch bitcoin with a 10 foot pole, and if you want to invest in value, the way he has, you shouldn't either.
>Trading is no solution for intelligent people. What we need are new ways to use cryptocurrency.
Ouch man, that's harsh. I'm interested in why you correlate hodling with intelligence. IMO, there are dumb people hodling, and dumb people trading. Most of the time, it's those who form an opinion based on a single source, or worse yet a single quote, who are dumb. It's those that think in absolutes, and without a healthy degree of skepticism.
According to Ben Graham, it's not the speculators or the investors that are dumb. It's the people that can't tell the difference between the two.
EDIT: Sorry, typed this up real quick at work. Spelling and grammar mistakes everywhere.
Robot as in no feeling? Hardly. My point was simply who won a speculative bet is irrelevant to the citizenry. Sorry about the cheap shot aimed at Chavez economic policy. If anything my comment was my own emotional reaction to politics based on slogan not substantive issues. IMO shorting the pound was far from substantive.
The impact of the economic shifts of both globalization and software devastates low skill workers. Just as farmers were radically displaced in "leave" areas a century ago, weavers (just an example I'm familiar with due to a past job) and other low skill jobs are disappearing now (or gone). Global productivity gains amplified by software creates similar social upheaval as the industrial revolution. Within democracies we must address these shifts. Arguing about policies to address these macro trends are critical to strengthen outcomes for citizens.
Whether or not those macro shifts were on voter’s minds or not; the impact is highest in the areas that voted to leave. This shift must be addressed in government policy. Security too but I don’t know anything about securing countries or blocks of countries.
Speculators on the pound are merely a side show. Gamblers who win or lose aren't super interesting. Does a retired person winning or losing a million quid at the Aspers-Stratford casino matter? Good copy maybe. Same with speculators on the referendum. Soros was supposedly long on the pound. Does that make him dumb or altruistic? Supposedly Crispin Odey was short. Is he evil, bad or smart? If they didn't speculate would it have changed the outcome for the london banker who would lose their job given a full Brexit? This is a side show. Money moved from Soros to Odey. Who cares.
As a side matter in the who cares department, all the folks who bet against the pound for other reasons now get credit for predicting Brexit:
Finally, from a govt. policy perspective, hedge funds shorting the pound should not be conflated with weaknesses in rated collateralized-dept-obligations (CDOs). That’s a different “hedge funds are evil” argument. I’m down with regulatory shifts across rating agencies and CDOs. Rated CDOs obviously didn’t manage risk as advertised. Well-designed regulatory regimes that help prevent misinformation improve market efficiency and benefit citizens IMHO.
Come now, I'm trying to engage you. Like this entire time.
ALL I SAID WAS HAVE SKILLS THAT CAN MAKE YOU STABLE AND HELP YOU HAVE A DAYJOB SO YOU CAN WORK ON YOUR DREAMS IN STABILITY.
Like I said that four times or something like that.
Over and over again.
Have skills people will pay for. Make sure you don't hate those skills but you don't have to have a passion for it. Work on your fun thing. It's unlikely to be the next Beatles because there's not enough brain space, but if it makes you happy, hobbies are great!
Somehow that came out
>NOBODY SHOULD EVER BE HAPPY. ALL ARE SLAVES!
Or something. I'm not sure how I could be more clear.
Anyone I know I haven't cited much here's an info dumb
http://www.amazon.com/The-Great-Stagnation-Low-Hanging-ebook/dp/B004H0M8QS Tyler Cowen is one of the World's best most sober economists. You should fall in love with him (even if he sounds autistic)
http://www.amazon.com/Race-Against-The-Machine-ebook/dp/B005WTR4ZI
Machines might be becoming substitutes instead of completments. This could cause problems even if we were socialists. We have no idea how to handle that
http://lesswrong.com/lw/4su/how_to_be_happy/ All the best happiness research in one post
http://www.amazon.com/Worthless-ebook/dp/B006N0THIM/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1334194677&sr=1-1 A good book about the economics of college degrees
http://www.amazon.com/The-Happiness-Hypothesis-Finding-ebook/dp/B003E749TE/ref=sr_1_sc_1?s=digital-text&ie=UTF8&qid=1334194701&sr=1-1-spell
Jonathan Haidt is sexy and cool and also a psychologist.
http://www.paulgraham.com/love.html How to do what you love only also be practical and not ruin your life.
http://www.paulgraham.com/wealth.html How to get fuck you money if you can identify a good start up and work that hard. (also finance
http://www.amazon.com/The-Black-Swan-Improbable-ebook/dp/B00139XTG4/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1334194849&sr=1-1 Why all the advantages of artists go to a few while most are forgotten because they have trouble finding a fanbase
http://www.amazon.com/The-Consolations-Philosophy-Alain-Botton/dp/0679779175/ref=sr_1_3?s=books&ie=UTF8&qid=1334194919&sr=1-3 How Ethical Philosophy can help with not having your favorite external circumstances.
Why modern therapy owes much of it's usefully to ideas generated by old greeks
http://www.amazon.com/Philosophy-Cognitive-Behavioural-Therapy-Psychotherapy-ebook/dp/B005TQU5KA/ref=sr_1_1?s=books&ie=UTF8&qid=1334194962&sr=1-1
So yea, I hope that made up for claims you find spurious.