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The Black Swan Summary

Here’s The Black Swan summary. This book explains how rare and unpredictable events cause massive impact. Keep in mind the key phrase black swan as you read.

Overview

The Black Swan author Nassim Nicholas Taleb explains how black swan events shape the future. They are unlikely and unpredictable but they cause much more impact than the regular events.

It’s likely you didn’t see a real black swan in your entire life. Then it’s also likely you assume that all swans are white. Your conclusions are based on the past. But what if you saw a black swan for real? The “truth” becomes different then.

Tendency is to rationalize. That’s the benefit of hindsight at work. But it could be dangerous. Black swan events are rare. But they carry much impact. If we don’t use them or protect ourselves against those events, the benefit of hindsight might not help us much.

About the Author

Nassim Nicholas Taleb is a Lebanese-American essayist, statistician, and risk analyst. His writing focuses on uncertainty, probability, and randomness.

His advocacy focuses on building “black swan robust” society. This way the people and society can withstand the impact of unpredictable events.

Aside from The Black Swan: The Impact of the Highly Improbable, he also wrote Fooled by Randomness and Antifragile. All of his books became bestsellers.

Main takeaways: The Black Swan Summary

Let’s discuss the key takeaways from his book:

  1. People give explanations to unlikely events after the fact.
  2. We underestimate the significance of extreme events.
  3. Experience is not always a reliable predictor of events.

People give explanations to unlikely events after the fact

We have a strong tendency to rationalize. That’s our human nature. We make up reasons and explanations why few things happen. We prefer inventing stories than facing the ugly truth of randomness.

This is hindsight bias at work. It’s “I knew it all along.” But what did you actually do before it happened? You have the benefit of hindsight that’s why you can easily say what you want.

Here’s the thing. Black swan events are rare. Those explanations won’t help much in predicting the next rare event. We can say whatever we want but how does it help?

Maybe the event is just random. It won’t happen ever again. Maybe another related rare event will just happen instead. Maybe a set of unpredictable events are about to come. Where will our explanations and reasons be of use then?

We underestimate the significance of extreme events

Why? Because they’re unlikely in the first place. We don’t have all the resources to predict the randomness of an extreme event from happening. We just stick to the regular events.

Here’s the thing though. The regular events don’t make much impact. But the rare and unpredictable events do. They lead to massive consequences. They can completely change how we think and act.

Let’s go back to the black swan on the lake. You see one, two, three, and countless other white swans. They don’t change the way you think. It’s expected. You know that the next swan you see is surely white.

But what if you see a black swan instead? That will change your core beliefs about swans. Even just one black swan will throw away the belief that all swans are white. Just one event and it will change everything.

Experience is not always a reliable predictor of events

You saw thousands of swans from your decades of experience. Someone will ask you “Is it possible that a black swan exists?” Most likely you’ll answer no.

Then that person shows you his black swan. Your years of experience didn’t help you. You still made the wrong conclusion.

It happens in various fields. “Experts” make intelligent predictions. They have decades of specialized experience. They are using the past as a predictor of the future.

However, the past is not always a reliable factor. New things come up and the unexpected always happens. The conditions might be a lot different compared to that past.

The future is unpredictable. Conditions are always changing. The past might not help much. And the “experts” got their expertise because they extensively studied the past.

Aside from the lessons mentioned above, you will also learn the following from The Black Swan book:

  • Why you should not try to predict Black Swan events
  • Why you should just build robustness in the system
  • Why experts are blind to black swan events
  • Know that change comes in unpredictable spurts
  • What is Matthew effect

My personal takeaways

The book contains some lessons on how we think. I learned what hindsight bias and Matthew effect are. I also learned that big things happen unpredictably.

I also learned that we underestimate the likelihood of rare but massive events. We are blind to those black swan events. But when they do happen, we are fast to make up stories and reasons for them.

Since big events are unpredictable, the solution is to make a robust system. It’s a system that should withstand the negative effects of a rare event. It should also be a system that embraces the positive ones.

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