The Black Swan

1. Human nature makes us concoct explanations for black swans after he fact, making it explainable and predictable
2. Literally, just about everything of significance might quality as a black swan
3. Black Swan logic makes what you don't know far more relevant than what you do know
4. It is much easier to deal with the Black Swan problem if we focus on robustness to errors rather than improving predictions
5. What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it
6. Certain professionals, while believing they are experts, are in fact not
7. You can set yourself up to collect serendipitous Black Swans (of the positive kind) by maximizing your exposure to them. Tinker as much as you possibly can to collect as many Black Swan opportunities as possible
8. People often get into trouble as they tend to learn the precise, not the general. Also, people tend to only learn facts and not rules
9. To the author, the rare event = uncertainty
10. Platonicity - mistaking the map for the territory, forcing categorizations and forms when it is inappropriate (almost always)
11. Read books are far less valuable than unread ones (antilibrary)
12. History is opaque. You see what comes out, not the script that produces events, the generator of history
13. Triplet of opacity - the illusion of understanding (world is more complicated than we realize); retrospective distortion (can only assess matters after the fact); overvaluation of "factual" information
14. Our minds are incredible explanation machines - often creating stories to fit the facts
15. History and society does not crawl. It jumps
16. Categories are necessary to survive but people get in trouble when they don't realize the fuzziness of boundaries
17. The problem lies not in the nature of the events, but in the way we perceive them
18. Extremistan (real world) where Black Swans exist and have a huge impact (notion of Bill Gates distorting average wealth in a group) vs. Mediocristan (average) where there is no person tall/heavy enough to distort group averages
19. Be suspicious of knowledge you derive from data
20.  Don't simplify anything beyond what is necessary
21. Black Swans differ per person - it occurs relative to the person's expectations and they don't have to be instantaneous surprises
22. Positive Black Swans tend to take time to show their effects whereas negative ones happen very quickly
23. Blindness to black swans can come from: error of confirmation, narrative fallacy, human nature is not programmed for Black Swans, distortion of silent evidence and we "tunnel" (focus on a few well-defined sources of uncertainty)
24. Domain specificity - our reactions, mode of thinking, intuitions, depend on the context
25. Naive empiricism - finding evidence of what suits your beliefs (NED - no evidence of disease vs. END - evidence of no disease)
26. People build stories in order to help tie events, facts together but can hurt us when it increases our impression of understanding
27. It takes considerable effort to see facts while withholding judgment and resisting explanations
28. The Black Swans we imagine, discuss and worry about do not resemble those likely to be Black Swans. We worry about the wrong "improbable" events
29. Favor experimentation over storytelling, experience over history and clinical knowledge over theories. Another approach is to predict and keep a tall of the predictions
30. The relevant is often boring, nonsensational and we tend to favor the sensational and the extremely visible
31. Your happiness depends far more on the number of instances of positive feelings than on their intensity when they hit
32. Silent evidence - you only see survivors and hear their stories, you don't hear of the "drowned sailors who also prayed to God"
33. The gravest of all manifestations of silent evidence is the illusion of stability
34. Has been shown that people often take risks not because of bravado but because of ignorance and blindness to probability
35. Reference point argument - don't compute odds from the vantage point of the winning gambler but from all those who started in the group
36. Be very careful of the "because," especially in situations where you suspect silent evidence. People harbor a natural scorn for the abstract
37. Ludic fallacy - the attributes of the uncertainty we face in real life have little connection the sterilized ones we encounter in exams and games
38. Knightian risks you can compute whereas Knightian uncertainty is incomputable
39. Prediction, not narration, is the real test of our understanding of the world
40. The larger the role of the Black Swan the harder it will be for us to predict
41. People are arrogant about what we think we know. Increasing knowledge helps but it can hurt as even more by increasing our confidence, ignorance and conceit
42. Ideas are sticky - once we produce a theory, we are not likely to change our minds - those who delay forming theories are better off
43. Certain fields like astronomers and physicists tend to have experts whereas stockbrokers, court judges, etc. tend not to be experts
44. You cannot ignore self-delusion
45. What matters is not how often you are right, but how large your cumulative errors are
46. We cannot truly plan because we do not understand the future but we can plan while bearing in mind such limitations
47. People cannot work without a point of reference (anchoring)
48. The policies we need to make decisions on should depend far more on the range of possible outcomes than on the expected final number
49. When new technology emerges, we either grossly underestimate or severely overestimate its importance
50. Choose to follow evidence over theory as we cannot explain everything and often underestimate the complexity of nature and biology
51. We fail to learn about the difference between our past predictions and the subsequent outcomes (when we think of tomorrow we just project it as another yesterday)
52. We don't learn much from our past experiences and we also don't know what to epect from the future
53. Randomness is incomplete information (opacity)
54. Doesn't advise always withholding judgment, opinions, predicting, being a fool - but be a fool in the right places. Avoid unnecessary dependence on large-scale harmful predictions. Avoid the big subjects that may hurt you in the future. Do not listen to economic forecasters or to predictors in social science but do make your own forecasts. Know how to rank beliefs not according to their plausibility but by the harm they may cause
55. Make many small bets with asymmetric payoffs and where the harm is minimal
56. Maximize the serendipity around you
57. Trial and error means trying a lot
58. You need to love to lose - series of small failures are necessary in life
59. Barbell strategy - be hyperconservative and hyperaggressive instead of being mildly aggressive or conservative (90% in extremely safe instruments and 10% in extremely speculative bets)
60. Do not try to predict precise black swans. Invest in preparedness, not in prediction
61. Seize anything that looks likeopportunity - free options
62. Beware of precise plans by governments
63. Nobody in particular is a good predictor of anything
64. Pascal's wager - eliminates the need for us to understand the probabilities of a rare event and focus on the payoff and benefits of an event if it takes place
65. Gray Swan - reducing Black Swans surprise effect by getting a general idea about the possibility of their outcomes
66. An early, initial advantage tends to follow people through life
67. For something to become "contagious" it must agree with human nature
68. Luck is the grand equalizer
69. Moving forward we will have fewer but more sever crises
70. 80/20 rules can become the 50/01 rule - 50% of work done by 1% of workers (80/20 might even be more extreme in Extremistan, like 97/20)
71. Study the intense, uncharted, humbling uncertainty in the markets as a means to get insights about the nature of randomness that is applicable to psychology, probability, mathematics, decision theory and even statistical physics . You will see the sneaky manifestations of the narrative fallacy, the ludic fallacy and the great errors of Platonicity (going from representation to reality)
72. Fractal randomness is a way to reduce these surprises, to make some of the swans appear possible, so to speak, to make us aware of their consequences, to make them gray. Fractal randomness does not yield precise answers
73. Worries less about small failures than large, catastrophic ones ("safe" blue chips vs. venture capital)
74. "Missing a train is only painful if you run after it." - it is more difficult to lose in a game that you set up yourself
75. Redundancy equals insurance
76. Mother Nature does not like overspecialization, anything too big, too much connectivity and globalization,
77. The organism which has the highest number of secondary uses is the one that will gain the most from environmental randomness and opacity
78. Certain fields make distinctions which make sense in their narrow world but have no effect in the real world
79. Let human mistakes and miscalculations remain confined - artificially reducing volatility and ordinary randomness increases exposure to Black Swans as it creates an artificial quiet
80. Living organisms need variability and randomness in order to avoid become fragile - diet, workouts, tabata, slow meditative walks, thermal variability, sleep deprivation, fasting - trade duration for intensity
81. A little bit of extreme stress is vastly better than a little bit of stress all the time
82. Volatility does not equal risk
83. Do not bet on Black Swans taking place - he is advocating acts of omission and not comission
84. Evolution does not work by teaching but by destroying
85. The Black Swan corresponds mainly to an incomplete map of the world
86. Focus more on the consequences of decisions than on their probabilities
87. People are suckers and will gravitate to those variables which are unstable but appear stable
88. There is no reliable way to compute small probabilities
89. It is much more sound to take risks you can measure than to measure the risks you are taking
90. Recommendations of the style "do not do" are more robust empirically. Success consists mainly in avoiding losses, not in trying to derive profits
91. Acting, doing something, often more harmful than doing nothing
92. How to move from the Third to Fourth Quadrant (Black Swan)
    1. Have respect for time and nondemonstrative knowledge
    2. Avoid optimization; learn to love redundancy (do not overspecialize)
    3. Avoid prediction of small-probability payoffs - thought no necessarily of ordinary ones
    4. Beware the "atypically" remote events
    5. Beware moral hazard with bonus payments
    6. Avoid some risk metrics
    7. Positive or negative Black Swan?
    8. Do not confuse absence of volatility with absence of risk
    9. Beware presentations of risk numbers
93. 10 Principles for Black Swan Robust Societies
    1. What is fragile should break early, while it's still small
    2. No socialization of losses and privatization of gains
    3. People who were driving a school bus blindfolded (and crashed it) should never been given a new bus
    4. Don't let someone making an "incentive" bonus manage a nuclear plant - or your financial risks
    5. Compensate complexity with simplicity
    6. Do not give children dynamite sticks, even if they come with warning labels
    7. Only Ponzi schemes should depend on confidence. Governments should never need to "restore confidence"
    8. Do not give an addict more drugs if he has withdrawal pains (no leverage)
    9. Citizens should not depend on financial assets as a repository of value and should not rely on fallible "expert" advice for their retirement (investments should be for entertainment)
    10. Make an omelet with broken eggs (have the right people like entrepreneurs take the risks, not bankers; smaller firms with less effects if the fail)

    What I got out of it

1. Awesome book. I think Antifragile ties in all his books into one but still makes a lot of great points and might be worth re reading at some point