#
[[A pre grammar or spelling check upload]]
Content
My Take
Summary
Summarizing My Summary LOL
Random Quotes
My Take
In this book Antifragility, Naseem Taleb introduces a new paradigm of looking at risk — a very optimistic one. Taleb approaches risk by focusing on the strength of our infrustrucutre to face them instead of predicting it. The concept is a thoughtful and well explained way of convincing you to embrass nature’s stressors. At the core, it argues, with chaos, things can fall, so become resilient, or better yet feed from it to become better. Antifragility is a fun and interesting read. That is, even if you question what Taleb is saying—and sometimes you really should —he forces you to examine your own biases and assumptions.
Nassem Taleb’s academic works including [Dynamic Hedging](https://www.fooledbyrandomness.com/dynamichedging.pdf) are the industry standards for hedging and complex systems. In his writing, tweets, or a few podcasts I’ve heard, Taleb resists categorization. If I had to pin him, I'd call him an anti-guru guru, that reached those levels organically. His ideas are usually sound, but his iconoclastic nature usually ends up side-lining them.
Contextualizing Taleb’s nature while reading the book helps put up with his antics because he's smart, funny, and fearless and tackles consequential topics. His messages are rebellious and critical of many aspects of current knowledge, demands better data from popular claims, and is aware fo understanding the meaning of the tools we use to know thing in all fields. I love his constant digs into professors that have little stake in the equations they sell as appearing “neat”. He makes fun of them as using their tools in real settings is obviously pretty dangerous, and often times infeasible. There’s some fun, good humored name calling, that is relativly less dangerous than the propogandas spewed out by his targets. “Be skeptical”, Taleb says, especially of media and people who like to forecast, because of the fact we are so bad at it — and it is easy to create plausible stories for why an event (especially a Black Swan) has happened — after it has happened. This makes people who aren't so smart, sound very smart to the uninitiated, which then leads to harm if we come to rely on these prediction-lovers (which we often do).
His iconoclastic nature becomes more apparent with his grandiose overstatements, the book jumps in and out of personal and systemic level societial criticisms. Antifragile jumps around from anecdote to technical analysis to perls-of-wisdom making it a bit of a mess to keep up. His arguments ususally go out of bounds, talking about preferences metric and imprerial systems, hedonic tredmill of more materialism, dual sex strategy, procastination, and other random topics that are discussed in relative depth, with little relation to antifragility — other than becoming adjusent examples of fragility. At points, it’s fair to question was this a book about antifragility or was antifragility simply one of the many many random topics?
Taleb constantly gives advice on his general worldview holding small threaded links to antifragility. It seems like the obviously strong principle of antifragility is so good, that it seems Taleb struggled to control hismself from applying it everywhere, and distorting some arugments to support his world view. That fills the book with some confident claims you might disagree with — but keeps the book entertaining instead of pure academic literature. Don’t get me wrong, it’s a very interesting book, and some parts even illuminating, but I didn’t see a strong common thread joining some of the ideas in delivering a potent message. Some of the ideas are scatted, and nuggets could get missed or wrongly attributed. But, I can only imagine the level of restraint needed to limit the application of such a strong and dynamic heuristic. It’s original thinking! That sort of insipired me to write the summary and grouping below to concretely pin what Taleb’s arguments and solutions.
Summary
Defining Antifragility
Core to Taleb’s world view is, humans are horrible at predicting the future, however ***black swan events are inevitable***. When modeling real-world events, where the unkown is far greater than the known, we can’t put too much emphasis and trust on our risk-assessment models. Thus, Taleb argues, one should shy away from assessments of risk and pay close attention to ***inoculation against*** risk in the first place.
A Talebian theory to initate this review should be **System Fragility**; where, humans build and optimize systems for average use, rather than for extreme scenarios. Given, these systems break at times. So, we should ***desgin our systems to benefit from this volatility*** — imitating nature.
A core distinction in reading this book his admittedly the simple concept of fragility, robustness, and antifragility. Taleb uses cool ancient examples to explain the triad of **Fragile, Robust, and Antifragile.** Damocles, who dines with a sword dangling over his head, is fragile. A small stress to the string holding the sword will kill him. The Phoenix, which dies and is reborn from its ashes, is robust. It always returns to the same state when suffering a massive stressor. But the Hydra demonstrates Antifragility. When one head is cut off, two grow back. Fragile things are exposed to volatility, robust things resist it, ***antifragile things benefit from volatility.*** It’s a very powerful model for understanding systems that should be a cornerstone in starting to fundamentally understand complex systems.
Antifragility Matters
Nature is a recurring demonstration of antifragility that Taleb uses throughout, ranging from human body and earth’s ecology. We, as a society have evolved ***have a tendency to try to reduce normal swings of life.*** Taleb mentions there’s a tendency to overmedicate and overdose with drugs such as prozac to smoothen out normal mood swings we experience. Instead of understanding how to benefit from these swings life throws around, humans have the tendency to retreat to predicting when swings come, estimating how big they could be, and lower/prevent their instances.
“This is the central illusion in life: that randomness is risky, that it is a bad thing— and that eliminating randomness is done by eliminating randomness.” The argument is don’t focus on the prevention! Embrace these swings. Taleb says he is not against intervention in any way, however. It’s just that he often sees too much, ***naive intervention. (??)***
Signal vs. Noise
The author says we often intervene because we listen too much to the news, to the noise, rather than ***looking at the substance and at the long term repercussions.*** And the shorter the time frame you observe an even, the higher the noise you will perceive. People with too much smoke and complicated tricks and methods in their brains start missing elementary, very elementary things. Persons in the real world can’t afford to miss these things; otherwise they “crash the plane”. Unlike researchers, normies were selected for survival, not complications. He alludes to less is more in action: the more studies, the less obvious elementary but fundamental things become; ***activity, on the other hand, strips things to their simplest possible model.*** I guess this idea effectively carries onto his next book of “Skin in the game”. Connecting these, the more skin you have within the systems, the clearer signals get compared to speculating from the outside — preventing naive intervention and building towards antifragile systems. It’s essential to be mindful of the Signal/Noise ratio. Trying to be very selective as the vast majority are just trying to stay relevant and get eyeballs which tends to lead to a very noisy stream of output.
Personal Levels
Humans become better after traumatic accidents. When we grow out of frustrations and hardships, we also show antifragility. Taleb states a loser is someone that is embarrassed by mistakes and tries to rationalize them away instead of introspecting and becoming better with the new piece of information. We could say, losers ego is not antifragile. Thus, honesty with oneself, and ones ego is probably the most important step you can take to make your “system” antifragile. Taleb invokes stoic principles on multiple occasions as ways of handling randomness and becoming more antifragile.
Generalizing, Nassim Taleb says it’s best to prepare with failure in mind than trying to predict how and when failure will happen and how to avoid it. I don’t think there’s anything fundametally wrong with his thesis. However, points of contention can arise in discussions about how to harness antifragility. For example, I don’t know if I agree with applying stoic techniques of “practicing poverty” helps reduce your fragility from being afraid of losing your wealth as success brings fragility alongside itself. But I love his allusions of in life, antifragility is reached by “not being a sucker”.
Developing Antifragile Systems
Ok, now we’ve established the need to develop antifragile systems, how can we prepare for it?
On principle, first step toward antifragility consists in ***first decreasing downside, rather than increasing upside;*** that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself. Taleb’s main emphasis is on ***minimal intervention*** and reliance on the self-healing abilities of organic systems.
Barbell Strategy - Situating Appropriately
The barbell strategy is a practical strategy of prioritizing decreasing downside, rather than increasing upside. Covering your downsides, while increasing your upsides. You play it very safe on one side so that you can take more risks on another side. If the risky part plays out badly, you’re still OK. If a black swan event will make the risks pay off big, you profit handsomely.
I guess using the Barbell Strategy, Taleb trys to strengthen the fact that ***antifragility is the combination aggressiveness plus paranoia***— clip your downside, protect yourself from extreme harm, and let the upside, the positive Black Swans, take care of itself. Exemplifying, from the book, it would be putting most of your money in safe investments and 10% in highly lucrative ones. Or, you can take a very safe day job while you work on your literature. You balance the extreme randomness and riskiness of a writing career with a safe job.
Taking the example a bit further, he steers close to the subject of generally avoiding mediocrity. “Do crazy things (break furniture once in a while), like the Greeks during the later stages of a drinking symposium, and stay “rational” in larger decisions. Trashy gossip magazines and classics or sophisticated works; never middlebrow stuff. Talk to either undergraduate students, cab drivers, and gardeners or the highest caliber scholars; never to middling-but-career-conscious academics. If you dislike someone, leave him alone or eliminate him; don’t attack him verbally.”
Additionally, another principle is, ***introduction/acceptance of small and constant “stressors”***. Humans tend to do better with acute than with chronic stressors, particularly when the former are followed by enough time for recovery, which allows the stressors to do their jobs as messengers. Think weight lifting. Alluding to medicine, Taleb takes a slightly controversial take of we should do nothing to those experiencing mild volatility but be wildly experimental with those experiencing extreme volatility. Again, thessue with these methods might start from their lack of universal applicability. On principle, Taleb has important and key points, but applicability can’t be universally uniform!
Options - Diversifying Against Risk
Taleb says that ***options*** are a great way to ***make the system more resistant to shocks.*** The more options you have, the more ways you have to respond to black swans and unforeseen events. An option is what makes you antifragile and allows you to benefit from the positive side of uncertainty, without a corresponding serious harm from the negative side.
According to ***Jensen’s inequality,*** if you have favorable asymmetries, or positive convexity, options being a special case, then in the long run you will do reasonably well, outperforming the average in the presence of uncertainty. The more uncertainty, the more role for optionality to kick in, and the more you will outperform. This property is very central.
Expanding into entrepreneurship, and going contrary to Peter Thiel’s advice in [Zero to One](https://thepowermoves.com/zero-to-one-summary/), Taleb seems to slightly ***mock plans and business plans*** and takes the example of a few successful corporations which started doing something completely different than what they ended up being successful for. That’s why you invest in people, not in business plans: the successful entrepreneurs must be able to change course. I sort of agree with this, and intially strong business plans are an exemplification of the founders’ ability to formulate things, not convincing on their own. (Reminds me of a [Venture or Substance](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1533384) paper that argues against viability of business plans in determining venture success in B145 class I took senior-year).
Coding the processes of building antifragility in systems,
- Look for optionality (many options), and rank them according to the their relative optionality
- Find open-ended pay offs, not closed ones
- Invest in people, not business plans that can change careers 6 times if needed
- Apply the barbell principle and limit your downside
Taleb claims, collaboration gives us huge amounts of optionality, but of course we can’t see it until it’s already happened. He advises, actively spending more time around other people and collaborate with them.
Options, are thus, vectors of antifragility. Instead of predicting what’s going to happend, ***options position you in a way that whatever happens, all you have to do is evaluate it once you have all the information and make a rational decision***. Referring, I thought the following quote from the book was a intersting take: If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself (some acts of omission) and recognize favorable outcomes when they occur. (*The key is that your assessment doesn’t need to be made beforehand, only after the outcome.)* Although I agree wiht his intial principles, I’m again worried about how extreme he takes his interpretations about optionality.
Removal and Decison Making
Taleb argues the ***solution to most things is by removing things, not adding things***. The greatest— and most robust— contribution to knowledge consists “in removing what we think is wrong— subtractive epistemology.” Disconfirmation is more rigorous than confirmation.
He mentioned a cool point of view on “giving many reasons” for anything. He says that robust, strong decisions, require just one single reason. When people try to cram too many reasons why it’s usually because they are putting up smoke screens.
The error of thinking you know exactly where you are going and assuming that you know today what your preferences will be tomorrow has an associated one. It is the illusion of thinking that others, too, know where they are going, and that they would tell you what they want if you just asked them. Accordingly these decison making processes work alongside optionality before making the decision.
The theory extends further with possibly the funniest paragraph in the entire book: “I would add that, in my own experience, a considerable jump in my personal health has been achieved by removing offensive irritants: the morning newspapers (the mere mention of the names of the fragilista journalists Thomas Friedman or Paul Krugman can lead to explosive bouts of unrequited anger on my part), the boss, the daily commute, air-conditioning (though not heating), television, emails from documentary filmmakers, economic forecasts, news about the stock market, gym “strength training” machines, and many more.”
Summarizing My Summary LOL
Important systems should be built to benefit from volatility. Getting to the nitty-gritty details and having ”skin-in-the-game” helps clear smoke-from-fire and prevents naive intervention, eventually building antifragile systems. Bulding these antifragile systems, it’s important to first decrease downside, rather than increase upside; that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself. Taleb’s main emphasis is on minimal intervention. The key is combining agressiveness with paranoia. Additionally, having more options position you in a way that whatever happens, all you have to do is evaluate the scenario once you have all the information and make a rational decision. Even in life, I you don’t end up in optimal scenarios by rigourous planning, but better alignment of values and methods of maximizing alternatives.
Random Quotes…
…but cool(some I agree with, others I find just entertaining)
Drink no liquid that isn’t at least a thousand years old (wine, water, coffee). Eat nothing invented or re-engineered by humans.
Something being marketed is necessarily inferior, otherwise it would not need to be aggressively marketed. Marketing beyond conveying information is insecurity.
The pursuit of meaning within Big Data has brought about many more spurious and random relationships than meaningful understanding. The false relationships will grow much faster than the real one, simply because chance allows so many more of them to be found.
“The best way to verify that you are alive is by checking if you like variations. Remember that food would not have a taste if it were not for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty, and an ethical life isn’t so when stripped of personal risks.”
“Ancestral life had no homework, no boss, no civil servants, no academic grades, no conversation with the dean, no consultant with an MBA, no table of procedure, no application form, no trip to New Jersey, no grammatical stickler, no conversation with someone boring you: all life was random stimuli and nothing, good or bad, ever felt like work. Dangerous, yes, but boring, never.”
“f*** you money”— a sum large enough to get most, if not all, of the advantages of wealth (the most important one being independence and the ability to only occupy your mind with matters that interest you) but not its side effects, such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of a marble-rich house renovation. The worst side effect of wealth is the social associations it forces on its victims, as people with big houses tend to end up socializing with other people with big houses. Beyond a certain level of opulence and independence, gents tend to be less and less personable and their conversation less and less interesting.”
