Monthly Archives: December 2012

MN Progressive Project:: Book Review: Antifragile

Leave a reply

9) Bottom up is better than top down. Bottom up is the fight for success of little small parts, easily fixed and changed. Top Down is good as long as it is always right. However the errors are huge and institution threatening. Taleb actually makes the case that freedom is more important than peace.

10) React to signal not noise. Only look at very large changes in conditions not small ones. Otherwise you can get problems from intervening, causing unintended consequences. Information has a nasty property of hiding failures because of the great opportunities to cherry pick results. Detail gives us comfort when it should not. We react to change more than direction.

11) Have a surplus of options. Get out of debt. It would be better to live in a smaller house with no debt than a fancy house with a huge debt. Have multiple career options and a backup plan. Need and want less, then you are not susceptible. Avoid stupid risks like smoking. Use emotions to make one successful by transforming fear into prudence, pain into information, mistakes into initiation and desire into undertaking.

12) Avoid banking on the mean or the middle, instead build a bimodal strategy that builds for maximally safe and maximally speculative. For example, in every economy the super rich have money to waste. Better yet instead of doing a single path analysis, do multiple path assessments. Taleb gives some great examples where one can win big with a 20% chance of winning as long as the winning is huge and one invests in multiple 20% big win chances. Asymmetrical relationships are key here. A 10% increase in New York Traffic does not cause a 10% slowdown, it causes total blockage. Track payoffs not probabilities.

via MN Progressive Project:: Book Review: Antifragile.

OVERTREATMENT as short volatility…

2 Replies

OVERTREATMENT as short volatility: Huge vindication of the argument of Chapters 21 and 22 on the convexity of iatrogenics (only treat the VERY ill): Mortality is convex to blood pressure. Spyros Makridakis found this graph from the Farmingham study.

The implication is obvious: only treat the seriously ill (and overtreat them!). But for every person very ill (say 4 STD away for the norm), there are 5000 slightly ill (1 STD away). There we see why pharma has an incentive to treat mildly ill people.

Note that the iatrogenics are the same for both mildly ill and very ill.

via Timeline Photos | Facebook.

Black Swan author Nassim Nicholas Taleb divides the world into three – Arts, Books, Uncategorized – Macleans.ca

2 Replies

But what’s the book about? It’s part philosophy, part theories of political economy with a smattering of Taleb’s rules for living “antifragile” in a fragile world.

Antifragile divides the world into three categories: antifragile, robust and fragile. Taleb says, “If I asked you what the opposite of fragile is, you would say, robust. That is wrong.” The author suggests antifragile means something that grows stronger under pressure. Antifragility welcomes stresses and adapts and thrives during black swans. On the other hand, something that is fragile avoids disorder and is susceptible to destruction during unpredictable shocks. If something is robust, it can absorb shocks but it remains unchanged. According to Antifragile, bureaucrats are fragile while entrepreneurs are antifragile; politicians are fragile, a truck driver is robust and an artist is antifragile; debt is fragile, equity is robust and venture capital is antifragile.

As for where Canada rates on his antifragile scale, Taleb says Canada is not antifragile but robust. “Canada is more robust than the United States because you have natural resources and less debt and you are more decentralized because of the Quebec problem.”

Can’t resist a few more snippets from this excellent review (one of the few I’ve read where I learned anything new. Kudos to Macleans and Jana Juginovic).

“Canada survived because you had lower levels of debt in the system. What happened is you have commodities, and when there is hyperinflation, you guys go through the moon. I own Canadian dollars as a hedge against inflation. Canada is like Russia without the Russians.”

And is this really what’s behind Taleb’s ‘The Pinker Problem’?

But he also displays an incredible sense of loyalty. After the 2002 New Yorker profile, of which Taleb complained that Gladwell “made me seem gloomy and I’m not gloomy,” the two writers became friends. In 2009, Gladwell told a C-SPAN interviewer that he feels an intellectual kinship with Taleb.

So, when the renowned Canadian-born Harvard psychologist Steven Pinker penned a critical review in The New York Times of fellow Canadian Malcolm Gladwell’s novel, What the Dog Saw, Taleb rushed to Gladwell’s defense. “I got furious. I feel loyalty for someone who does something nice for you, when you are nobody.” Taleb wrote a scathing critique of Pinker’s research in The Better Angels of Our Nature: Why Violence has Declined. In his critique, titled “The Pinker problem,” Taleb claims Pinker’s book is riddled with errors in sampling and doesn’t “recognize the difference between rigorous empiricism and anecdotal statements.” Pinker responded with his own paper in which he writes, “Taleb shows no signs of having read Better Angels.”

via Black Swan author Nassim Nicholas Taleb divides the world into three – Arts, Books, Uncategorized – Macleans.ca.

Give us a break – NYPOST.com

Leave a reply

Taleb’s new word is in the title of his new book “Antifragile.” It’s a kind of philosophical essay that reinforces and expands upon 20th-century economist Joseph Schumpeter’s concept of creative destruction. Some things need to break in order for the whole to improve, and we resist this tendency — by coddling fragile systems such as banking — at our peril. Yet at this moment, the coddlers, or “fragilistas,” as Taleb calls them, are very much in charge.

If antifragility means redundancy — when you keep extra commodities on hand in case of natural disaster, you are actually better off after a hurricane because the price of the items you hold skyrockets — then debt is a particularly dangerous kind of fragility. Debt can spiral, accelerate. At a firm, doubts about your solvency can lead to a “margin call,” which in turn means you have to raise more money.

via Give us a break – NYPOST.com.