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Black Swan

Once a while we read a book. And once every decade we stumble over a truly remarkable writing which broadens our horizon. One of such a rare event happened when we discovered Nassim Nicholas Taleb in October '08.

While most statisticians deal with the bell shaped Gauss curve and drop outliers from their considerations, he focuses on the opposite side: Being a trader in New York he likes to think about extremely rare, but high impact events (as we experience one in these weeks).

Then he shows, that the more information one has, the less one understands. Especially in our globalized, criss cross linked world. This world has chaotic behavior, what means in a mathematical sense, that an arbitrary small change of an input can have a total disproportional result in the output; the causality is lost.

Sometimes one feels that things in our live are on the odd side, but Taleb has the gift (and experiences from his work) to make a story out of it. Quote from his website: "My major hobby is teasing people who take themselves & the quality of their knowledge too seriously & those who don’t have the courage to sometimes say: I don’t know....". Teasing is friendly description for his style.

His first book is Fooled by Randomness. The Hidden Role of Chance in Life and in the Markets from 2001. The second is, Black Swan. The Impact of the Highly Improbable is written between 2003-2006. Both are an intellectual joy to read. Taleb is, overall, a Black Swan itself. IfF you want to read only one book from him, then the first one.

This links the Chaos Theory in which we have been interested since 25 years with today's arrogant CEOs behavior. Talebs insight won't change the world, but he put a few things back on ground. A random ground.

2008-11-05