Friday, July 7, 2017

Book Review: 'The Black Swan: Second Edition: The Impact of the Highly Improbable' by Nassim Nicholas Taleb

This book concerns limits to the theories of statistics. When all data is manipulated, it becomes irrelevant

As I write this in October, 2016, it appears that the whole world is engaged in fledging black swans. The system seems to be tanking. The notion that it is tanking is becoming conventional wisdom. The Black Swan would be the miraculous survival of the over-leveraged financial system and doomed demographics of the rich countries.

Statistics simply doesn't seem to work anymore. Governments are very busy both cooking the statistics they report and manipulating the underlying phenomena to the point that the data collected about them does not represent real market sentiment, merely the push of the powers that be.

Where might it be applicable today? In handicapping the winners, if any, emerging from the coming collapse of institutions and finance as we know them. My personal bet is on Central and Eastern Europe, places that have not become totally sucked into the EU and in particular are resisting the immigrant flood. I rack my brain looking for barbell shaped risk curves (see Antifragile) but cannot come up with anything but the super-obvious, precious metals options. It is hard to imagine that the Masters of the Universe don't have that so thoroughly covered that a sucker cannot get an even break, but what else is there?

Editor's note: This review has been published with the permission of Graham H. Seibert. Like what you read? Subscribe to the SFRB's free daily email notice so you can be up-to-date on our latest articles. Scroll up this page to the sign-up field on your right. 

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