The Black Swan

A severe limitation to our learning from observations or experience and the fragility of our knowledge.

One single observation can invalidate a general statement derived from millennia of confirmatory sighting of millions of white swans. All you need is on single black bird.

Black swan event: an outlier, carries an extreme impact, in spite of its outliers status human nature makes us concoct explainations for its occurrence after the fact making it explainable and predictable. (Rarity, extreme impact, retrospective predictability)

Life is the cumulative effect of a handful of significant shocks.

The more unexpected the success of such a venture the smaller the number of competitors and the more successful the entrepreneur who implements the idea.

What you know cannot really hurt you.

The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events.

The reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill.

We tend to learn the precise not the general.

We don't learn that we don't learn

We glorify those who left their names in history books at the expense of those contributors about whom our books are silent. We humans are not just a superficial race we are a very unfair one.

metaphors and stories are far more potent than ideas, they are also easier to remember and more fun to read.
Ideas come and go, stories stay.

We lack imagination and repress it in others.

The need to use the extreme event as a starting point and not treat it as an exception to be pushed under the rug.

I got hooked on this withdrawal into pure ideas after the constraints of an active and transactional life.

The library should contain as much of what you do not know as your financial means, mortgages rates, and the currently tight real estate market allow you to put there. You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. The more you know, the larger the rows of unread books. Antilibrary.

A skeptical empiricist.

History and societies do not crawl they make jumps. Yet we believe in the predictable small incremental progression.

Very intelligent and informed persons were at no advantage over cab drivers in their predictions, but there was a crucial difference. Cab drivers did not believe they understood as much as learned people. Nobody knew anything, but elite thinkers thought they knew more than the rest because they were elite thinkers.

Categorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from considering the fuzziness of boundaries, let alone revising their categories.

The great strength of the free market system is the fact that company executives don't need to know what's going on.

I felt in my spine the weight of the epistemically arrogance of the human race.

Not only are some sceintific results useless in real life, because they underestimate the impact of the highly improbable but that many of them may be actually creating black swans.

Betting on rare and unexpected events, those that were on the platonic fold and considered inconceivable by the platonic experts

I was totally incompetent in predicting market prices but that others were generally incompetent also but did not know it, or did not know they were taking massive risks. Most traders were just picking pennies in front of a steamroller exposing themselves to the high impact rare event yet sleeping like babies unaware of it.

fuck you money, in spite of its coarseness means that it allows you to act like a Victorian gentleman, free from slavery. It's psychological buffer: the capital is not so large as to make you spoiled rich, but large enough to give you the freedom to choose a new occupation without excessive consideration of the financial rewards. It shields you from prostituing your mind and frees you from outside authority. Independence is person-specific: I have always been taken aback at the high number of people in whom an astonishingly high income led to additional sycophancy as they became more dependent on their clients and employers and more addicted to making even more money. While not substantial by some standards, it literally cured me of all financial ambition- it made me feel ashamed whenever I diverted time from study for the pursuit of material wealth.

I stayed in the quant and trading business but organized myself to do minimal but intense work focus only on the most technical aspects, never attend business meetings, avoid the company of achievers and people in suits who don't read books., and take a sabbatical year for evert three on average to fill up gaps in my scientific and philosophical culture.

I wanted to become a flaneur a professional meditator, sit in cafes lounge unglued to desks and organization structures, sleep as long as I needed, read voraciously, and not owe any explaination to anybody. I wanted to be left along in order to build, small steps at a time, an entire system of thoughts based on my black swan idea.

Biological blindness: the problem lay not in the nature of events, but in the way we perceived them.

I had no defined specialty outside of my day job, and wanted none.
I'm a skeptical empiricist and a flaneur reader, someone committed to getting very deep into an idea.

Half the time I am a hyper skeptic, the other half I hold certainties and can be intransigent about them, with a very stubborn disposition.

I worry less about advertised and sensational risks, more about the more vicious hidden ones.

I try to worry about matters I can do something about.

Snub your destiny.

Missing a train is only painful if you run after it.
Not matching the idea of success others expect from you is only painful if that's what you are seeking.
You stand above the rat race and the pecking order not outside of it, if you do so by choice.

You have far more control over your life if you decide on your criterion by yourself.

It's more difficult to be a loser in a game you set up yourself.

You are exposed to the improbable only if you let it control you.

You are always control what you do, so make this your end.

We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions.

Remember you are a black swan.

Conflicting modification on 25 March 2017 at 00:28:45:

A severe limitation to our learning from observations or experience and the fragility of our knowledge.

One single observation can invalidate a general statement derived from millennia of confirmatory sighting of millions of white swans. All you need is on single black bird.

Black swan event: an outlier, carries an extreme impact, in spite of its outliers status human nature makes us concoct explainations for its occurrence after the fact making it explainable and predictable. (Rarity, extreme impact, retrospective predictability)

Life is the cumulative effect of a handful of significant shocks.

The more unexpected the success of such a venture the smaller the number of competitors and the more successful the entrepreneur who implements the idea.

What you know cannot really hurt you.

The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events.

The reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill.

We tend to learn the precise not the general.

We don't learn that we don't learn

We glorify those who left their names in history books at the expense of those contributors about whom our books are silent. We humans are not just a superficial race we are a very unfair one.

metaphors and stories are far more potent than ideas, they are also easier to remember and more fun to read.
Ideas come and go, stories stay.

We lack imagination and repress it in others.

The need to use the extreme event as a starting point and not treat it as an exception to be pushed under the rug.

I got hooked on this withdrawal into pure ideas after the constraints of an active and transactional life.

The library should contain as much of what you do not know as your financial means, mortgages rates, and the currently tight real estate market allow you to put there. You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. The more you know, the larger the rows of unread books. Antilibrary.

A skeptical empiricist.

History and societies do not crawl they make jumps. Yet we believe in the predictable small incremental progression.

Very intelligent and informed persons were at no advantage over cab drivers in their predictions, but there was a crucial difference. Cab drivers did not believe they understood as much as learned people. Nobody knew anything, but elite thinkers thought they knew more than the rest because they were elite thinkers.

Categorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from considering the fuzziness of boundaries, let alone revising their categories.

The great strength of the free market system is the fact that company executives don't need to know what's going on.

I felt in my spine the weight of the epistemically arrogance of the human race.

Not only are some sceintific results useless in real life, because they underestimate the impact of the highly improbable but that many of them may be actually creating black swans.

Betting on rare and unexpected events, those that were on the platonic fold and considered inconceivable by the platonic experts

I was totally incompetent in predicting market prices but that others were generally incompetent also but did not know it, or did not know they were taking massive risks. Most traders were just picking pennies in front of a steamroller exposing themselves to the high impact rare event yet sleeping like babies unaware of it.

fuck you money, in spite of its coarseness means that it allows you to act like a Victorian gentleman, free from slavery. It's psychological buffer: the capital is not so large as to make you spoiled rich, but large enough to give you the freedom to choose a new occupation without excessive consideration of the financial rewards. It shields you from prostituing your mind and frees you from outside authority. Independence is person-specific: I have always been taken aback at the high number of people in whom an astonishingly high income led to additional sycophancy as they became more dependent on their clients and employers and more addicted to making even more money. While not substantial by some standards, it literally cured me of all financial ambition- it made me feel ashamed whenever I diverted time from study for the pursuit of material wealth.

I stayed in the quant and trading business but organized myself to do minimal but intense work focus only on the most technical aspects, never attend business meetings, avoid the company of achievers and people in suits who don't read books., and take a sabbatical year for evert three on average to fill up gaps in my scientific and philosophical culture.

I wanted to become a flaneur a professional meditator, sit in cafes lounge unglued to desks and organization structures, sleep as long as I needed, read voraciously, and not owe any explaination to anybody. I wanted to be left along in order to build, small steps at a time, an entire system of thoughts based on my black swan idea.

Biological blindness: the problem lay not in the nature of events, but in the way we perceived them.

spend a couple of decades doing mass scale empirical work with data and taking risks based on such studies, you can easily spot elements in the texture of the world that the Platonified thinker is too brainwashed, or threatened, to see. Second, it allowed me to become formal and systematic in my thinking instead of wallowing in the anecdotal. Finally both the philosophy of history and epistemology seemed of numbers in time, a sort of historical document containing numbers instead of words. Studying historical data makes you conscious that history runs forward, not backward, and that it is messier than narrated accounts.

Half the time I am a hyper skeptic, the other half I hold certainties and can be intransigent about them, with a very stubborn disposition.

I worry less about advertised and sensational risks, more about the more vicious hidden ones.

I try to worry about matters I can do something about.

Snub your destiny.

Missing a train is only painful if you run after it.
Not matching the idea of success others expect from you is only painful if that's what you are seeking.
You stand above the rat race and the pecking order not outside of it, if you do so by choice.

You have far more control over your life if you decide on your criterion by yourself.

It's more difficult to be a loser in a game you set up yourself.

You are exposed to the improbable only if you let it control you.

You are always control what you do, so make this your end.

We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions.

Remember you are a black swan.

history is opaque. you see what comes out, not the script that produces events, the generator of history. Minds of the gods cannot be read just by witnessing their deeds.
triplet of opacity:

1. the illusion of understanding, how everyone thinks he knows what is going on in a world that is more complicated than they realise
2. the retrospective distortion, how we can assess matters only after the fact
3. the overvaluation of factual information and the handicap of the authoritative and learned people.

our minds are wonderful explanation machines, capable of making sense out of almost anything, capable of mounting explanations for all manner of phenomena, and generally incapable of accepting the idea of unpredictability.

history and societies do not crawl, they make jumps. yet we like to believe in the predictable, small incremental progression.

categorising always produces reduction in true complexity. any reduction of the world around us can have explosive consequences since it rules out some sources of uncertainty, it drives to a misunderstanding of the fabric of the world.

a second year wharton student told me to get a profession that is scalable—one in which you are not paid by the hour and thus subject to the limitations of the amount of your labour.
professions can be separated into which one can add zeroes of income with no greater labour from those which one needs to add labour and time (both of which are in limited supply)—subjected to gravity.

I would recommend someone pick a profession that is not scalable. A scalable profession is good only if you are successful, they are more competitive, produce monstrous inequalities, and are far more random, with huge disparities between efforts and rewards.

DNA that wins will reproduce itself, like a bestselling book for a successful record and become pervasive. Other DNA will vanish.

Mediocristan: particular events don’t contribute much individually, only collectively. When your sample is large, no single instance will significantly change the aggregate or the total.
Extremistan: inequalities are such that one single observation can disproportionately impact the aggregate, or the total.

Extremists can produce black swans, and does, since a few occurrences have had huge influences on history.

Mediocristan is where we must endure the tyranny of the collective, the routine, the obvious, and the predicted.
Extremists is where we are subject to the tyranny of the singular, the accidental, the unseen and the unpredicted.

the turkey problem: the same hand that feeds you can be the one that wrings your neck.

in general positive black swans take time to show their effect while negative ones happen very quickly.

the lesson for the small is: be human. accept that being human involves some amount of epistemic arrogance in running your affairs. Do not be ashamed of that. Do not try to always withhold judgements, opinions are the stuff of life. Do not try to avoid predicting. Be a fool in the right places. Be fooled in small matters, not in the large.

Be prepared for all relevant eventualities.

put yourself in situations where favourable consequences are much larger than unfavourable ones.
asymmetry outcomes.
I will never get to know the unknown, but i can always guess how it might affect me and i should base my decisions around that.

Uncertainty—you need to focus on the consequences (which you can know) rather than the probability (which you can’t know)

the long tail is a by-product of extremists that makes it somewhat less unfair: the world is made no less unfair for the little guy, but it now becomes extremely unfair for the big man. Nobody is truly established, the little guy is very subversive.