Nassim Nicholas Taleb is one of my favorite authors out there. His Wikipedia page’s intro paragraph should convince you that his ideas are worth taking seriously:
…is a Lebanese–American essayist, scholar, statistician, former trader, and risk analyst,whose work focuses on problems of randomness, probability, and uncertainty. His 2007 book The Black Swan was described in a review by The Sunday Times as one of the twelve most influential books since World War II.
Taleb’s books are heavy and full of mental models and wisdom that will make your life better. I read The Black Swan a few years ago and loved it, and picked up Antifragile this summer since I felt I was ready to absorb more of his wisdom. Below’s everything I learnt. This is going to be a long one.
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”
When you lift weights, your body adapts to lift heavier weights next time. We’re naturally antifragile! In fact, nature is a recurring demonstration of antifragility. Antifragility also extends to ideas: the desire to kill an idea directly leads to its proliferation — banned books are a good example. This is also known as the Streisand Effect. Taleb talks about fragile and antifragile jobs in this context. An author’s job is antifragile — you cannot fire an author from it, and a desire to reduce the sales of his books will more likely only increase them. On the other hand, a banker’s job is fragile: if you get arrested for a minor crime, it can go on your arrest record, making you unhirable.
Procrustes was the bandit from Greek mythology who used to stretch or amputate the limbs of the travelers to make them conform to the length of his bed. We create harm by reducing variations. When we destroy variations to fit a model, we set ourselves up to be more fragile.
A turkey raised and fed from birth only becomes more sure each passing day that it will continue to be fed well — of course, the past evidence for the turkey squarely points to it! Until, of course, the day of Thanksgiving arrives. We make a similar mistake as the turkey by building Fukushimas — nuclear power plants that can withstand the worst earthquake that we’ve seen so far.
A donkey equally hungry and thirsty stuck between a bale of hay and water will die of starvation and thirst, unable to make a decision between the two. However, a random nudge in one direction will save his life. When we reduce randomness, we lose a beneficial stressor that can help us with decision making and becoming unstuck.
The stoic practice of “practicing poverty” makes you antifragile by making you less afraid of losing your wealth. Stoics know how to handle randomness, and are immune to black swan events.
“Hormesis is a biological phenomenon whereby a beneficial effect (improved health, stress tolerance, growth or longevity) results from exposure to low doses of an agent that is otherwise toxic or lethal when given at higher doses.” Vaccinations, lifting weights, fasting and running are all great examples of small stressors that make us stronger. Taleb argues that lack of stress in modern life is arguably one of the bigger causes of aging, and not the other way around.
There’s a mistaken desire to intervene, particularly from doctors, that can lead to iatrogenics, which means “harm caused by the healer.” There’s the obvious iatrogenics, such as amputating the wrong leg, and the non-obvious iatrogenics, such as carelessly prescribing antidepressants to someone who’s not suicidal yet. Sure, if the problem is urgent, the healers need to intervene — but in modern life, we intervene too soon. Procrastination isn’t always bad. It’s something deep within us that identifies the urgency of a problem.
The Barbell strategy represents a strategy where you either play extremely safe and stay robust to negative black swans, or take extreme risks and gain from positive black swans, while avoiding being the sucker in the middle of the spectrum. If you invest 90% of your wealth in U.S. Treasury bonds, and invest in startups with the remaining 10%, you will never lose more than 10% of your net worth, while exposing yourself to the massive upside.
Optionality is another means of robustness or antifragility. The more freedom of choice you have to respond to unforeseen circumstances, the less fragile you will be to negative black swan events.
A teleological fallacy occurs whenever you assert that, because a certain thing currently serves a certain purpose, it must have been designed to serve that purpose. Taleb points to “teaching birds how to fly” to explain this: we can explain the mathematics behind the flight of birds, but birds do not need to understand that in order to fly.
There was a trader who made considerable profit selling green lumber thinking it was literally logs of wood painted green, not knowing that it’s just fresh wood. When we assume some information is necessary and important, we’re committing the Green Lumber Fallacy.
For the antifragile, small shocks bring more benefits as their intensity increases (up to a point): squatting 250 pounds once is more beneficial than squatting 50 pounds five times.
Via Negativa translates to “by removal.” Taleb argues that a lot of problems can be solved by removing things, and not by adding more. In decision making, if you have to come up with more than one reason to do something, it’s probably because you’re just trying to convince yourself to do it. Decisions that are robust to errors don’t need more than one good reason. You can observe the beneficial effects of Via Negativa effects in a vast number of fields from Medicine and Diet to Wealth.
For the perishable, every additional day in life reduces remaining life expectancy by a day. For the non-perishable, every additional day in life increases remaining life expectancy by another day. A book that has been in print for 100 years can be expected to remain in print for another 100 years. You can’t say the same for a man who’s been alive for 100 years.
Make sure the person who’s giving you their recommendation, opinion, or the forecast has skin in the game. Just ask them what they have, or don’t have in their portfolio. That should suffice.
This is it for the review. You should follow Nassim Nicholas Taleb on Twitter where he makes fun of fragilistas all day:
This is #31 in a series of book reviews published weekly on this site.