The Black Swan
The Black Swan

The Black Swan

Table of Contents

It illustrates 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 sightings of millions of white swans. All you need is one single (and, I am told, quite ugly) black bird. (Location 427)

Tags: blackswan

Note: .blackswan one single Observation can invalidate generations of common belief

First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact (unlike the bird). Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. (Location 433)

Tags: blackswan

Note: .blackswan an outlier, big impact and we try to explain after the fact

stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. (Location 436)

Tags: favorite, blackswan

Note: .blackswan

Black Swan logic makes what you don’t know far more relevant than what you do know. (Location 463)

The strategy for the discoverers and entrepreneurs is to rely less on top-down planning and focus on maximum tinkering and recognizing opportunities when they present themselves. So I disagree with the followers of Marx and those of Adam Smith: 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. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can. (Location 497)

Tags: luck

Note: .luck tinker as much as possible and take advantage of opportunities when they arrive

CHAPTER ONE The Apprenticeship of an Empirical Skeptic

History and societies do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between. Yet we (and historians) like to believe in the predictable, small incremental progression. (Location 817)

Most traders were just “picking pennies in front of a streamroller,” exposing themselves to the high-impact rare event yet sleeping like babies, unaware of it. (Location 960)

Tags: wellphrased

Note: .wellphrased

CHAPTER TWO Yevgenia’s Black Swan

CHAPTER THREE The Speculator and the Prostitute

In Extremistan, inequalities are such that one single observation can disproportionately impact the aggregate, or the total. (Location 1191)

CHAPTER FOUR One Thousand and One Days, or How Not to Be a Sucker

Black Swan problem in its historical form: the central difficulty of generalizing from available information, or of learning from the past, the known, and the seen. (Location 1474)

Tags: blackswan

Note: .blackswan generalising from available information

CHAPTER FIVE Confirmation Shmonfirmation!

someone who observed the turkey’s first thousand days (but not the shock of the thousand and first) would tell you, and rightly so, that there is no evidence of the possibility of large events, i.e., Black Swans. You are likely to confuse that statement, however, particularly if you do not pay close attention, with the statement that there is evidence of no possible Black Swans. (Location 1504)

Tags: blackswans

Note: .blackswans

Popper introduced the mechanism of conjectures and refutations, which works as follows: you formulate a (bold) conjecture and you start looking for the observation that would prove you wrong. This is the alternative to our search for confirmatory instances. (Location 1622)

The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship, upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding. (Location 1723)

We, members of the human variety of primates, have a hunger for rules because we need to reduce the dimension of matters so they can get into our heads. Or, rather, sadly, so we can squeeze them into our heads. The more random information is, the greater the dimensionality, and thus the more difficult to summarize. The more you summarize, the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is. (Location 1823)

Elders are repositories of complicated inductive learning that includes information about rare events. Elders can scare us with stories—which is why we become overexcited when we think of a specific Black Swan. I was excited to find out that this also holds true in the animal kingdom: a paper in Science showed that elephant matriarchs play the role of superadvisers on rare events. (Location 1992)

Tags: elders

Note: .elders elders may be better placed for information on rare events

We learn from repetition—at the expense of events that have not happened before. Events that are nonrepeatable are ignored before their occurrence, and overestimated after (for a while). (Location 1995)

The economist Hyman Minsky sees the cycles of risk taking in the economy as following a pattern: stability and absence of crises encourage risk taking, complacency, and lowered awareness of the possibility of problems. Then a crisis occurs, resulting in people being shell-shocked and scared of investing their resources. (Location 1999)

Tags: investing

Note: .investing people become complacent and ignore risks until the market crashes

“One death is a tragedy; a million is a statistic.” (Location 2023)

Tags: stats, death

Note: .death .stats

Much of the trouble with human nature resides in our inability to use much of System 2, or to use it in a prolonged way without having to take a long beach vacation. In addition, we often just forget to use it. (Location 2072)


In some strategies and life situations, you gamble dollars to win a succession of pennies while appearing to be winning all the time. In others, you risk a succession of pennies to win dollars.

In other words, you bet either that: The Black Swan will happen or that it will never happen,

Two strategies that require completely different mind-sets. (Location 2320)

Tags: blackswan

Note: .blackswan you bet that the black swan wiill or wont happen


One Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where were the pictures of those who prayed, then drowned?” The drowned worshippers, being dead, would have a lot of trouble advertising their experiences from the bottom of the sea. This can fool the casual observer into believing in miracles. (Location 2383)

Tags: survivorship bias, prayer

taking a “scalable” profession is not a good idea, simply because there are far too few winners in these professions. Well, these professions produce a large cemetery: the pool of starving actors is larger than the one of starving accountants, even if you assume that, on average, they earn the same income. (Location 2496)

Tags: career

Note: .career there are few winners in scalable professions

those who start gambling will be either lucky or unlucky (given that the casino has the advantage, a slightly greater number will be unlucky). The lucky ones, with the feeling of having been selected by destiny, will continue gambling; the others, discouraged, will stop and will not show up in the sample. They will probably take up, depending on their temperaments, bird-watching, Scrabble, piracy, or other pastimes. Those who continue gambling will remember having been lucky as beginners. The dropouts, by definition, will no longer be part of the surviving gamblers’ community. This explains beginner’s luck. (Location 2551)

Tags: gambling

Note: .gambling those who are lucky at the start are more likely to continueong term



professions that deal with the future and base their studies on the nonrepeatable past have an expert problem (Location 3189)

What matters is not how often you are right, but how large your cumulative errors are. (Location 3235)

Tags: avoid mistakes

most delays and cost overruns arise from unexpected elements that did not enter into the plan—that (Location 3391)

Tags: estimation, project

Note: .project .estimation

With human projects and ventures we have another story. These are often scalable, as I said in Chapter 3. With scalable variables, the ones from Extremistan, you will witness the exact opposite effect. Let’s say a project is expected to terminate in 79 days, the same expectation in days as the newborn female has in years. On the 79th day, if the project is not finished, it will be expected to take another 25 days to complete. But on the 90th day, if the project is still not completed, it should have about 58 days to go. On the 100th, it should have 89 days to go. On the 119th, it should have an extra 149 days. On day 600, if the project is not done, you will be expected to need an extra 1,590 days. As you see, the longer you wait, the longer you will be expected to wait. (Location 3426)

Tags: planning, project

Note: .project the longer a project is overdue the longer it is likely too take to finslly complete

You would take a different set of clothes on your trip to some remote destination if I told you that the temperature was expected to be seventy degrees Fahrenheit, with an expected error rate of forty degrees than if I told you that my margin of error was only five degrees. The policies we need to make decisions on should depend far more on the range of possible outcomes than on the expected final number. (Location 3462)

Tags: forecasting

Note: .forecasting the range of a forecast can be more important than the expected final number

The second fallacy lies in failing to take into account forecast degradation as the projected period lengthens. We do not realize the full extent of the difference between near and far futures. Yet the degradation in such forecasting through time becomes evident through simple introspective examination—without even recourse to scientific papers, which on this topic are suspiciously rare. Consider forecasts, whether economic or technological, made in 1905 for the following quarter of a century. (Location 3469)

Tags: forecasting

Note: .forecasting forecasting far into the future is extremely difficult


The classical model of discovery is as follows: you search for what you know (say, a new way to reach India) and find something you didn’t know was there (America). (Location 3543)

Tags: america

There is actually a law in statistics called the law of iterated expectations, which I outline here in its strong form: if I expect to expect something at some date in the future, then I already expect that something at present. (Location 3641)

the turkey problem. You look at the past and derive some rule about the future. (Location 3894)

Tags: forecasting

Note: .forecasting the turkey problem

This ability to mentally play with conjectures, even if it frees us from the laws of evolution, is itself supposed to be the product of evolution—it is as if evolution has put us on a long leash whereas other animals live on the very short leash of immediate dependence on their environment. For Dennett, our brains are “anticipation machines”; for him the human mind and consciousness are emerging properties, those properties necessary for our accelerated development. (Location 3942)