Black Swans

I just got done reading a wonderful book called "The Black Swan: The Impact of the Highly Improbable" by Nassim Taleb. The author, an investor by trade, defines "black swans" as events that are unpredictable, that carry a massive impact, and for which we concoct an explanation after the fact that makes the events appear less random than they actually were.

The author believes that history is driven by these types of events--that we see the output of history but have little understanding of the mechanisms behind it (although we try to convince ourselves otherwise).

In a nutshell, his conclusion is that the future is impossible to predict. Knowing this helps us spend our time more wisely, and helps us position ourselves to benefit from "black swans". (He actually suggests turning off the TV, putting down the newspaper, and ignoring blogs, because they are not as relevant to events around us as we think.)

This is my favorite quote in the book:

Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think. Remember that positive Black Swans have a necessary first step: you need to be exposed to them. Many people do not realize that they are getting a lucky break in life when they get it. If a big publisher (or a big art dealer or a movie executive or a hotshot banker or a big thinker) suggests an appointment, cancel anything you have planned: you may never see such a window open up again. I am sometimes shocked at how little people realize that these opportunities do not grow on trees. Collect as many free nonlottery tickets (those with open-ended payoffs) as you can, and, once they start paying off, do not discard them. Work hard, not in grunt work, but in chasing such opportunities and maximizing exposure to them.