So yeah, started reading a book called The black Swan by Nassim Nicholas Taleb. The premise (at least, as I understand it after only half the book) is this: it is events which are highly unpredictable, but which have a high impact when they occur which have the highest influence on items like the Stock Market, evolution or, indeed, our own lives.
So I thought about it for a little while, trying ignore the tendency to think of the past as just ‘The Past’, something which, once happened, was always going to happen. And I came up with this:
The event which had the highest influence on my life in pretty much every way was that, in fourth year, I got the chance to go a programming course once a week on Saturday morning. I had no way to predict this and, once it had been put in front of me, no way to predict what impact it would have on me. Though I learned very little about programming (other than it probably wasn’t for me), I met people I actually liked and developed a social life. So yeah, most important even in my life was a Black Swan.
So I’m wondering if others here care to think about it and share something like that.
Strictly speaking, we ALL have Black Swans. For example, the chance that I might be caught in a plane crash isn’t very high, since I almost never fly, but it isn’t 0, and if it DID happen my life would VERY likely change (probably by ending.)
Where such things should be applied is for thinking “out of the box”, to consider what to do in case something really bad happened and how to handle it. The past few years, for example, has shown us that the US government isn’t as ready to deal with the unexpected as they thought they were, with things like 9/11 or the Louisiana disaster. While there will always be errors, If I were in the government I would hire people for the specific purpose of coming up with “worst case scenarios” and prepare for them (even the most unlikely.) Presumably they already do, but they might want to hire people with more vision. Like writers.
(PS: Wasn’t there another book called The Black Swan? I can swear I heard about a novel or fairy tale called that, but can’t remember right now.)
You didn’t ask anything, and even if you did, what makes you think I was trying to answer it? Not everything I say is specifically for you. Get over it.
My point was that this isn’t some kind of strange phenomenon, and doesn’t even deserve its own term or any kind of shock. Black Swan is a fancy way of saying that things you don’t see coming are prone to fuck you up. It’s life, and there’s no reason to get into it just because it has a catchy term. This isn’t new knowledge that’s going to teach you anything about yourself or help you in any way in the future.
The biggest recent change in my life was meeting someone who was morbidly afraid of just that sitting on the plane to Iceland next to me. She convinced me to quit smoking entirely by accident.
Black swans are cited in a whole line of cognitive tests on decision making, and to a lesser degree logic in general. Not the phenomenon, just the animal. It also sounds like a good name for a somewhat foppish/glamorous anti-hero.
Nah, that has nothing to do with predictability, only the notion that small changes will have great effect over a long term; moving a ball on the crest of a hill one centimeter could change which way it rolls down the hill. It is also the ultimate lesson in why one should not be a sissy and round off numbers early.
Hades: Gee I wonder what would make me consider that maybe the first reply in the thread I make might be in someway directed at me?
Also the book is mainly about why they happen, why people refuse to see them coming and how people estimate them. Also it doesn’t just deal with negative Black Swans. Oh, and typically it’s the common that gets named. For convenience when discussing it. Go read the book, maybe you would learn something from it. Knowledge you don’t know is more important than what you do.
It deals with how people view the past as well, and information they don’t know. The idea I stated as it’s premise is just that, a premise. It’s not that the book focuses solely on this. In fact, according to the philosophy of the writer, to tunnel like that would be the worst idiocy.
And the question I asked was that if people cared to glance back at their own lives and consider them without taking into account the fact that events transpired as they did, what were the events which had the biggest impact (not good, or bad necessarily) and how predictable they were. Well done to Arac for actually answering it.
Trill: No, as Arac said, the Butterfly effect is to do with how little events trigger big ones. This is what kind of events have the biggest impact.
And Wil, one of the points the book makes quite well (and often) is that the reason these kind of events have such an impact is because they are outside the scope of our imagination. It calls into question the way that forecasting is not only done, but then looked at afterwards.
Caval: I’d argue that NOTHING is beyond human imagination. That, in itself, is our most incredible ability. We can create ENTIRE worlds that can never exist within our own minds! The problem lies in the desire for conformity- to think that we know all that we need, and the fear of thinking what might happen if we left our “comfort zone.” Which is why there is a “box” to think outside of in the first place. How many people die without leaving a proper will, for example, just because they’re afraid to even think about their own deaths to begin with? Or parents who don’t discuss safe sex with their children? And so on.
My roommate just got done reading this book. It’s sitting on our bookshelf right now actually. He won’t stop talking about black swans either. I dunno, strangely enough, I have to agree with Hades. I haven’t read more than a couple pages of this book, but I’m not sure the idea that “I don’t know what’s going to happen tomorrow, and it could change my life” really does warrant an entire book. A clever article in the New Yorker maybe…
I think that singular events can definitely have profound and 180-altering effects on our lives - and indeed, that’s been the norm for me - but at the same time, these events aren’t random.
First, I think that subconsciously we intentionally create these events for ourselves. For instance Cavelcade, maybe subconsciously you saw the programming course as a way to bloom, maybe at some point you had encountered people who had taken that course or a similar course and, subconsciously observing them, subconsciously analyzed that you could be friends with such people, and you filed it away in your head so that when you saw the opportunity, you took it with the intention of meeting friends, without realizing you had made a sophisticated and intuitive analysis already that taking that course could help you branch out in your life. Gah, I’ve done a piss-poor job of explaining it but hopefully you see what I’m getting at.
Second, and this will sound crazy to some of you, but I think that, psychically, people are drawn to people and situations that will benefit them. At least, mentally healthy people are. And when I say “psychically”, I mean on an-honest-to-God metaphysical, “magical” level. So maybe Cavelcade, it wasn’t random, it was the right hemisphere of your brain, or wherever these things happen, spiritually drawing you to a good place.
Wilf, while it may be true we can imagine anything, it’s much harder to imagine it actually happening to us. For example, I can imagine dying. However, I haven’t made out a will, because I can’t imagine it happening to me. Yet quite easily it could.
And Curtis, the point isn’t what I did with the opportunity once it was presented to me, the point is rather that I couldn’t predict that it would. It was entirely random.
And Zepp/Hades, I’ve been thinking about my original post and I realised that I wasn’t entirely clear with what I said. The book is about (mainly) the markets, and business/government/economic predictions and the flaws with the models. While my question deals just with people’s lives. I wasn’t asking for you to actually think deeply philosophically about it. I was just curious about what sort of examples/counterexamples people could give from their own lives. I would recommend reading it.
Oh, and the New Yorker probably wouldn’t publish the article.
Well, the concept encourages people to think philosophically about it. It is a philosophical concept. One I disagree with…
People attach too much importance to single opportunities. When we’re looking for something, we generally have many different opportunities to get it - even if one seems somehow miraculous or God given, the truth is there probably would have been many others if that one had not been taken. And even if it is miraculous, I still think there may be some sort of psychic thing at play.
I’d never heard the phrase “black swan,” but I absolutely buy into the concept. I used to think about this all the time.
Hard work shapes the course of your life too. But the motivating factors behind that work, I believe, are chance encounters and interests that come of keeping a watchful and hopeful mind.
Yes, I see how this theory applies to financial markets. Black Monday (1987 crash) is constantly cited as the numero uno example of a black swan event hitting stock markets. The sub-prime mortgage fiasco is another black swan, and we all suffer the consequences. Taleb probabely borrowed/ stole this from some philosopher, but his warning that “the gap between what you know and what you think you know is always dangerously wide.” fits perfectly with Wall Street’s mindset. It’s somewhat ironic that the financial institutions stuffed with financial risk management specialists were all hit, to a different degree, by the sub-prime mess.
I must admit that for me the use of value at risk models equates with some voodoo pseudo-science, and reading something like this: “…a fat tail is a property of some probability distributions (alternatively referred to as heavy-tailed distributions) exhibiting extremely large kurtosis particularly relative to the ubiquitous normal which itself is an example of an exceptionally thin tail distribution. Fat tail distributions have power law decay” turns me off financial mathematics.
So, I just follow Warren Buffet’s mantra: buy low, sell high, and watch these P/E and P/S ratios like a hawk.
Then again, even my guru got blindsided by the latest black swan.
My black swan, or rather a cygnet, event wasthe Halloween Massacre – thanks to that SOB Finance Minister Flaherty, I lost some dough.
