The bankruptcy of FTX, the Terra collapse, the coronavirus pandemic, and other unforeseen events that have shaken the crypto industry are often referred to as "Black Swans." This term, popularized by Nassim Taleb through his bestselling book, has become synonymous with rare, impactful events.
Nassim Taleb is renowned for his legendary bestsellers such as "Fooled by Randomness," "The Black Swan," and "Antifragile." These books delve into the nature of randomness and a world where rare events dominate. Why have Taleb's concepts gained such traction in the fields of economics and finance, where he is widely quoted and recognized? It's because he thoroughly explores topics like uncertainty, probability, human error, and risk—issues that are directly linked to the work of traders and investors.
Taleb's writings are filled with deep insights, often requiring readers to revisit sections multiple times to fully grasp the underlying messages.
Today, Taleb is a professor of risk engineering and an advisor to a wide array of corporations and trading firms. Before embarking on his writing and academic career, he spent 21 years in the trading sector, holding executive positions at UBS, Credit Suisse (First Boston), Bankers Trust (now Deutsche Bank), and BNP Paribas.
Taleb's books are intellectually dense and can be challenging to fully comprehend on the first read. Those interested in his works should arm themselves with persistence, and patience, and be sure to take notes. Only in this way can you fully internalize the life experience of this author.
Exploring Taleb’s ideas, we can distill three key concepts:
- Black Swan Events: These rare and unpredictable incidents have a profound impact on the world. Often, the causes of such events only become clear in hindsight.
- Antifragility: This concept describes systems that gain from disruption, volatility, and uncertainty. Unlike fragile systems that break under stress, antifragile ones become stronger.
- Skin in the Game: This principle states that decision-makers should have a personal stake in the outcomes of their decisions. This concept is relevant across various fields including economics, politics, and education.
Taleb's writings are filled with deep insights, often requiring readers to revisit sections multiple times to fully grasp the underlying messages.
His books have achieved massive popularity: "The Black Swan" sold three million copies in its release year, and "Fooled by Randomness" is listed among the 75 "Smartest Books of All Time."
Biography and Professional Background
Nassim Taleb was born in Amioun, Lebanon, into a family of an oncologist and an anthropologist researcher. He enjoyed a comfortable childhood; his family was well-off and had notable ancestors, including a deputy prime minister and a governor of Ottoman Mount Lebanon.
Nassim Taleb, the man who predicted the 2008 financial crisis. Source: radicalreads.com
Although Taleb holds a Master of Science degree from the University of Paris, he describes himself as primarily self-taught. He spent many months reading up to 60 hours a week and writing essays.
His reflections focused on the nature of uncertainty and how people navigate a world they don't fully understand. Taleb pondered questions like:
- Why is it better not to plan a vacation?
- Why does consuming the news make a trader dumb?
- Why is forecasting futile, but preparing for "Black Swans" is crucial?
Today, Taleb is a professor of risk engineering and an advisor to a wide array of corporations and trading firms. Before embarking on his writing and academic career, he spent 21 years in the trading sector, holding executive positions at UBS, Credit Suisse (First Boston), Bankers Trust (now Deutsche Bank), and BNP Paribas.
Attitude Towards Cryptocurrencies
In June 2021, Nassim Taleb voiced skepticism regarding the value of Bitcoin. He published a work titled "Paper: Bitcoin, Currencies, and Bubbles," in which he stated.
“Bitcoin can be neither a long or short term store of value (its expected value is no higher than 0), cannot operate as a reliable inflation hedge, and, worst of all, does not constitute, not even remotely, a tail protection vehicle for catastrophic episodes.”
This viewpoint represents a stark reversal from his stance in 2017. Back then, Taleb authored the foreword for Saifedean Ammous's "The Bitcoin Standard: The Decentralized Alternative to Central Banks," where he championed the digital asset as a new form of dependable money.
Taleb wrote that Bitcoin was "an excellent idea. It fulfills the needs of the complex system ... because it has no owner, no authority that can decide on its fate. It is owned by the crowd, its users. And it now has a track record of several years, enough for it to be an animal in its own right.”
The release of his article might have extended Taleb's public fallout with Ammous, which played out on X (formerly Twitter). Previously, their views had diverged on topics such as the COVID-19 mask mandates and CO2 pollution, with Ammous dismissing the effectiveness of masks and Taleb advocating for them.
Eventually, Taleb removed the post containing his foreword and temporarily set his X account to private. Subsequently, a new edition of Ammous's book was published with a foreword by MicroStrategy CEO Michael Saylor, replacing Taleb’s.
What Can You Learn from Nassim Taleb's Books?
Incerto is a series by Nassim Taleb that consists of four works: "Fooled by Randomness," "The Black Swan," "The Bed of Procrustes," and "Antifragile." If you are new to this author's work, starting with this series is advisable. It is important to read the books sequentially, in chronological order.
Nassim Taleb, the bestselling author of "The Black Swan." Source: play.google.com
While each reader may draw their unique insights, most will agree on several key takeaways:
- Highly improbable events have the most significant impact, often adversely;
- Focus on local problems before trying to solve global issues like world hunger;
- Uncertainty can simplify decision-making. If you're told that the water in a glass could be poisoned, you wouldn't drink it.
Taleb's books are intellectually dense and can be challenging to fully comprehend on the first read. Those interested in his works should arm themselves with persistence, and patience, and be sure to take notes. Only in this way can you fully internalize the life experience of this author.
