Anti-Fragile Nassim Nicholas Taleb

 

• The Black Swan problem: the impossibility of calculating the risks of consequential rare events and predicting their occurence.
• Heuristics are simplified rules of thumb that make things simple and easy to implement.
• One's personal experience gives the stamp of authenticity and sincerity of opinion.
• Abundance is harder for us to handle than scarcity.
• Using error as a source of information.
• What Erasmus called ingratitudo vulgi, the ingratitude of the masses, is increasing in the age of the globalization and the Internet.
• Techme: crafts and know how, not episteme: book knowledge, know what.
• Principle of subsidiarity: things should be handled by the smallest possible unit that can manage them with efficacy.
• It seems, wore Machiavelli, that in the midst of murders and civil wars, our republic became stronger and its citizens infused with virtues...A little bit of agitation gives resources to souls and what makes the species prosper isn't peace, but freedom.
• One of life's packages: no stability without volatility
• And the final lesson is that one should not expect laurels for bringing the truth.
• People take more risks when supply with a forecast.
• Fail early (so they can start again)
• Fooled by randomness: we have a tendency to underestimate the role of randomness in human affairs.
• Avoid being blind to the natural antifragility of systems, their ability to take care of themselves, and fight our tendency to harm and fragile them by not giving a chance to do so.
• Accès to data increases intervention.
• Junk food is iatrogenic.
• Too much information becomes harmful.
• People had real links, unlike in social networks.
• There are ample empirical findings to the effect that providing someone with a random numerical forecast increases his risk taking, even if the person knows that the projections are random.
• If you have extra cash in the bank, you don't need to know with precision which event will cause potential difficulties.
• We should first make things more robust to defects and forecasts errors.
• The mother of all stressors called time.
• Books, being robust, are immune to power outages.
• Focus on exposure to failure.
• Warren Buffet tries to invest in businesses that are "so wonderful that an idiot can run them. Because sooner or later, one will".
• Excess wealth, if you don't need it, is a heavy burden.
• Curiosity is antifragile, like an addiction, and is magnified by attempts to satisfy it, books have a secret mission and ability to multiply, as everyone who has wall-to-wall bookshelves knows well.
• Stay robust to how others treat you.
• Someone who predicts will be fragile to prediction errors.
• Robustness: protection against harm from emotions.
• Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.
• Men feel the good less intensely than the bad.
• When I was trader, a profession rife with a high dose of randomness, with continuous psychological harm that drills deep into one's soul.
• Wealth is the slave of the wise man and master of the fool.
• You are anti fragile for a source of volatility if potential gains exceed potential losses (and vice versa)
• Nothing can be done both hastily and safely, almost nothing.
• Provide for the worst; the best can take care of itself.
• When I left the office, my day job ceased to exist until the next day and I was completely free to pursue what I found most valuable and interesting.
• And professions can be serial: something very safe, then something speculative.
• Montaigne have done a serial barbell: pure action, then pure reflection.
• Or, if I have to work, I find it preferable (and less painful) to work intensely for very short hours, then do nothing for the rest of the time (assuming doing nothing, is really doing nothing).
• If you dislike someone, leave him alone or eliminate him; don't attack him verbally.
• Reduced pains from adverse events, while keeping the benefits of potential gains.
• So just as Stoicism is the domestication, not the elimination, of emotions, so is the barbell a domestication, not the elimination, of uncertainty.
• An agent does not move except out of intention to an end.
• So let us call the teleological fallacy the illusion that you know exactly where you are going, and that you know exactly where you were going in the past, and that others have succeeded in the past by knowing where they were going.
• Flâneur continuously, and what is crucial, rationally, modifies his targets as he acquires information.
• People don't know what they want until you provide them with it.
• The advantages of wealth: the most important one being independence and the ability to only occupy your mind with matters that interest you.
• Limited loss and large possible outcome.
• And if you make more when you are right than you are hurt when you are wrong, then you will benefit, in the long run, from volatility (and the reverse).
• You will never get to know yourself, your real preferences, unless you face options and choices.
• "long gamma" means benefits from volatility and variability.
• An option is the weapon of anti fragility.
• The option is a substitute for knowledge.
• People look for books that support their mental program.
• Necessity is the mother of invention.
• Poverty makes experience.
• Good speculative bets come to you, you don't get them just by staying focused on the news.
• A way to domesticate uncertainty is to work rationally without understanding the future.
• You cannot look at the future by naive projection of the past.
• This brings us to the difference between doing and thinking.
• In theory there is no difference between theory and practice, in practice there is.
• Practitioners don't write; they do. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is truly written by losers with time on their hands and a protected academic position.
• Small amounts per trial, lots of trials, broader than you want. Why? Because in Extremistan, it is more important to be in something in a small amount than to miss it. As one venture capitalist told me "The payoff can be so large that you can't afford not to be in everything".
• Consider the difference between lions in the wild and lions in captivity. Lions in captivity live longer; they are technically richer, and they are guaranteed job security for life, if these are the criteria you are focusing on...
• When I worked in trading rooms, where you sit most of the time waiting for things to happen, a situation similar to that of people sitting in bars or mafia men "hanging around".
• Avoidance of boredom is the only worthy mode of action. like otherwise is not worth living.
• I ordered most of every book with "probability" or "stochastic" in its title. I read nothing else for a couple of years, no course material, no newspaper, no literature, no nothing. Five years later I was set for life.
• Much of what other people know isn't worth knowing.
• What I decided to read on my own, I still remember.
• But Fat Tony's power in life is that he never lets the other person frame the question. He taught Nero that an answer is planted in every question; never respond with a straight answer to a question that makes no sense to you.
• Traditions provide an aggregation of filtered collective knowledge.
• Friedrich Hayek: the pricing system reveals through transactions the knowledge embedded in the society.
• Replacing our currency holdings with precious metals, as there are not owned by governments.
• The need to focus on the payoff from your actions instead of studying the structure of the world.
• The payoff, what happens to you (the benefits or harm from it), is always the most important thing, not the event itself.
• Education is an institution that has been growing without external stressors; eventually the thing will collapse.
• When a collection of people write "there is nothing new here" and each one cites a different originator of the idea, one can safely say there is something effectively new.
• For the fragile, shocks bring higher harm as their intensity increases.
• If you earn more than you lose from fluctuations, you want a lot of fluctuations.
• Small may be beautiful, it is certainly less fragile.
• It is completely wrong to use the calculus of benefits without including the probability of failure.
• As with the European Union's subsidiary principle, "small" here means the smallest possible unit for a given function or task that can operate with a certain level of efficiency.
• The idea that smooth functioning at regular times is different from the rough functioning at times of stress.
• Planning fallacy.
• This has led me to install a governmental golden rule: no borrowing allowed, forced fiscal balance.
• Globalization has had the effect of making contagions planetary.
• The technique, detecting acceleration of harm, applies to anything that entails decision making under uncertainty, and risk management.
• The notion of average is of no significance when one is fragile to variations.
• The more uncertainty, the more for optionality to kick in, and the more you will outperform. This property is very central to life.
• Remember from the logic of the barbell that it is necessary to first remove fragilities.
• We know a lot more what is wrong than what is right.
• Negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works).
• In general, failure (and disconfirmation) are more informative than success and confirmation, which is why I claim that negative knowledge is just more "robust".
• Paul Valéry : "Que de choses il faut ignorer pour agir".
• Obvious decisions (robust to error) require no more than a single reason.
• Antifragility implies, contrary too initial instinct, that the old is superior to the new, and much more than you think.
• Recall the foundation asymmetry: the anti fragile benefits from volatility and disorder, the fragile is harmed. Well, time is the same as disorder.
• The large multinational bureaucratic corporation with "empty suits" at the top.
• Much progress comes from the young because of their relative freedom from the system and courage to take action that older people lose as they become trapped in life.
• New technology is easier to hype up.
• The future is in the past. Actually there is an Arabic proverb to that effect: he who does not have a past has no future.
• Information has a nasty property: it hides failure. Many people have been drawn to, say, financial markets after hearing success stories of someone getting rich in the stock market and building a large mansion across the street, but since failures are buried and we don't hear about them, investors are led to overestimate their chances of success.
• If you announce to someone "you lost 10 000€", he will be much more upset than if you tell him "your portfolio value, which was 785 000€, is now 775 000€".
• Our brains have a predilection for shortcuts, and the variation is easier to notice (and store) than the entire record. It requires less memory storage. This psychological heuristic (often operating without awareness), the error of variation in place of total, is quite pervasive, even with matters that are visual.
• We notice what varies and changes more than what plays a large role but doesn't change. We rely more on water than on cell phones but because water does not change and cell phones do, we are prone to thinking that cell phones play a larger role than they do.
• Treadmill effects: we notice differences and become dissatisfied with some items and some classes of goods.
• If something that makes no sense to you (say, religion if you are an atheist, or some age-old habit or practice called irrational); if that something has been around for a very, very long time, then, irrational or not, you can expect it to stick around much longer, and outlive those who call for its demise.
• The link everyone is obsessing about between salt and blood pressure has no statistical basis.
• What I am against is naive rationalized, pseudo learned discourse, with green lumber problems, one that focuses solely on the known and ignores the unknown.
• Whenever possible, replace the doctor with human anti fragility. But otherwise don't be shy with aggressive treatments.
• I derived the rule that what is called "healthy" is generally unhealthy, just a "social" networks are antisocial, and the "knowledge" based economy is typically ignorant.
• In a large set of circumstances (marginal diseases), anything that takes you away from the doctor and allows you to do nothing (hence gives nature a chance to do its work) will be beneficial.
• When we are herbivores, we eat steadily; but when we are predators we eat more randomly.
• Human response to hunger: that biological mechanisms are activated by food deprivation.
• Religion with ritual fasts have more answers than assumed by those who look at them too literally.
• The economic system is loading future generations with public governmental debt, causing depletion of resources, and environment blight (fléau) to satisfy the requirements of the security analysts and the banking establishment (once again, we cannot separate fragility from ethics)
• Place aux autres.
• Ethics. Under opacity and in the newfound complexity of the world, people can hide risks and hurt others, with the law incapable of catching them. Iatrogenics has both delayed and invisible consequences. It is hard to see causal links, to fully understand what's going on.
• If we are today, it is because someone, at some stage, took some risks for us.
• There is a pseudo courage that comes from risk blindness, in which people underestimate the odds of failure. We have ample evidence that the very same people become chicken and overreact in the face of real risks; the exact opposite. For the Stoics, prudence is connatural to courage, the courage to fight your own impulses.
• The courage to stand up for an idea, and enjoy death in a state of thrill, simply because the privilege of dying for truth, or standing up for one's value, had become the highest form of honor.
• You express your opinions; it can hurt others (who rely on it), yet you incur no liability. Is it fair?
• Words are dangerous: postdictors, who explain things after the fact, because they are in the business of talking, always look smarter than predictors.
• Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have, or don't have, in their portfolio.
• The psychologist Gerd Gigerenzer has a simple heuristic. Never ask the doctor what you should do. Ask him what he would do if he were in your place. You would be surprised at the difference.
• You were wrong for years, right for a moment, losing small, winning big, so vastly more successful than the other way.
• For Mother Nature, opinions and predictions don't count; surviving is what matters.
• Behind you is the sea, before you, the enemy. You are vastly outnumbered. All you have is sword and courage.
• Never put your enemy's back to the wall.
• I rely on my naturalistic and ecological instincts.
• It would be nice if he acted with some personal humility.
• You can't fool too many people for too long a period of time.
• Never trust the words of a man who is not free.
• The definition of the free man, according to Aristotle, is one who is free with his opinions, as a side effect of being free with his time.
• He is free who owns his own opinion.
• Not deriving your personal and emotional identity from your work, and viewing work as something optional, more like a hobby.
• "Absence of evidence" and "evidence of absence".
• The researcher's free option in his ability to pick whatever statistics can confirm his belief.
• The fooled-by-data effect is accelerating.
• All I want is to remove the optionality, reduce the anti fragility of some at the expense of others. It is simply via negativa.
• Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty.
• Convexity is the response by a thing that likes disorder.
• Via negativa: in action, it is a recipe for what to avoid, what not to do, substratction, not addition, say, in medicine.