Rating: 9/10Author: Nassim Nicholas Taleb Read The Original
The Book in 3 Sentences
- Antifragile things get better with stress, fragile things such as a vase do the opposite and the sum of fragile parts make up an antifragile system.
- Absence of evidence isn’t evidence of absence.
- The more data you have, the less you know what’s going on
"I’d rather be dumb and antifragile than extremely smart and fragile, any time. " - Nassim N. Taleb
What is Fragile?
- Does not like uncertainity, randomness, disorder, errors, stressors, etc.
- When you are fragile, you depend on things following the exact planned course, with as little deviation as possible—for deviations are more harmful than helpful.
- The banking system is fragile as every crash makes the next impeding crash more likely to occur.
- Someone who predicts will be fragile to prediction errors. An overconfident pilot will eventually crash the plane.
What is Antifragile?
- Likes randomness, uncertainty, chaos. Something thats gets stronger due these factors for example a hydra you cut off one head, you get two more. Another example would be eating a non-lethal dose of poison everyday and slowly amping up the dosage little by little to the point when someone tries to poison you, you are essentially immune.
- Smooth streams of income (job as a clerk -> only one employer) are fragile, compared to that of a taxi driver (multiple employers) where there is constant volatility is anti-fragile.
- Switzerland is one of the most antifragile countries in the world even with a lack of a central government and bank. They let the noise between municipals run its own natural course, not by minimizing it.
- Even with a low level university education system, they managed to become one of the most successful countries in the world thanks to its apprenticeship models.
Why Randomness is Good
- Small forest fires periodically cleanse the system of the most flammable material, so this does not have the opportunity to accumulate, if it did not do this, all it would take it one really bad fire to decimate the ecosystem.
- Every plane crash makes the less one less likely to occur, we gather data and the errors and make the overall system better.
- Inexperienced traders run to the door the moment the market drops to a low that hasn't been seen in a long time. If such a low market level has not been seen in years, say two years, it will be called “a two-year low” and will cause more damage than a one-year low. Tellingly, they call it a “cleanup,” getting the “weak hands” out of the way. When many of these inexperienced traders rush to leave, they collectively cause crashes. A volatile market, therefore, takes care of the newbies, thereby preventing a real market collapse.
The Sum of Fragile Parts
- You need risk-takers the people who think their restaurant will succeed even though the odds are against them, to make the whole restaurant ecosystem become antifragile. Individual restaurants have to be fragile because in that way only the best resturants will survive, making the aggregate of resturants extremely good.
- While individual organism are relatively fragile, the gene pool takes advantage of shocks to enhance its fitness.
- Loser -> someone who after a mistake, doesnt introspect, feels embarassed and defensive rather than enriched with a new piece of information.
- A person who has made of plenty of errors (though never the same one) is more reliable than someone who has never made any.
- Extreme risk takers are healthy for the economy -- under the condition that not all people do this.
- The fragility of every startup is necessary for the economy to be antifragile, and that’s what makes, among other things, entrepreneurship work: the fragility of individual entrepreneurs and their necessarily high failure rate.
- stochastic resonance, adding random noise to the background makes you hear the sounds (say, music) with more accuracy.
- Alessandro Pluchino and his colleagues showed how adding a certain number of randomly selected politicians to the process can improve the functioning of the parliamentary system.
- Volatility is information
- fragility in any domain, from a porcelain cup to an organism, to a political system, to the size of a firm, or to delays in airports, resides in the nonlinear.
- 90,000 cars for an hour, then 110,000 cars for the next one, for an average of 100,000, and traffic will be horrendous. On the other hand, assume we have 100,000 cars for two hours, and traffic will be smooth and time in traffic short.
- Do you think the nuclear reactor is likely to explode in the next year? False. Yet you want to behave as if it were True and spend millions on additional safety, because we are fragile to nuclear events
- If you sat with a pencil and jotted down all the decisions you’ve taken in the past week, or, if you could, over your lifetime, you would realize that almost all of them have had asymmetric payoff, with one side carrying a larger consequence than the other. You decide principally based on fragility, not probability. Or to rephrase, You decide principally based on fragility, not so much on True/False.
- we are moving into the far more uneven distribution of 99/1 across many things that used to be 80/20: 99 percent of Internet traffic is attributable to less than 1 percent of sites, 99 percent of book sales come from less than 1 percent of authors.
- The Soviet-Harvard illusion (lecturing birds on flying and believing that the lecture is the cause of these wonderful skills) belongs to a class of causal illusions called epiphenomena.
- In an epiphenomenon, you don’t usually observe A without observing B with it, so you are likely to think that A causes B, or that B causes A, depending on the cultural framework or what seems plausible to the local journalist.
- Scientific studies show no evidence that raising the general level of education raises income at the level of a country. But we know the opposite is true, that wealth leads to the rise of education—not an optical illusion.
- Scranton showed that we have been building and using jet engines in a completely trial-and-error experiential manner, without anyone truly understanding the theory. Builders needed the original engineers who knew how to twist things to make the engine work. Theory came later, in a lame way, to satisfy the intellectual bean counter.
- Take again the steam engine, the one artifact that more than anything else embodies the Industrial Revolution. As we saw, we had a blueprint of how to build it from Hero of Alexandria. Yet the theory didn’t interest anyone for about two millennia. So practice and rediscovery had to be the cause.
- Options are the weapons of antifragility.
- 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.
- If you are looking for your misplaced wallet in your living room, in a trial and error mode, you exercise rationality by not looking in the same place twice. In many pursuits, every trial, every failure provides additional information, each more valuable than the previous one—if you know what does not work, or where the wallet is not located. With every trial one gets closer to something, assuming an environment in which one knows exactly what one is looking for. We can, from the trial that fails to deliver, figure out progressively where to go.
- Optionality tames and harvests randomness.
- You don’t go to school to learn optionality, but the reverse: to become blind to it.
- When someone has more upside than downside in a certain situation, he is antifragile and tends to gain from volatility.
- "The researcher gets the upside, truth gets the downside. The researcher’s free option is in his ability to pick whatever statistics can confirm his belief—or show a good result—and ditch the rest. He has the option to stop once he has the right result."
Green Lumber Fallacy
- The situation in which one mistakes a source of visible knowledge — the greenness of lumber — for another, less visible from the outside, less tractable, less narratable. The main takeaway is that the real causative factors of success are often hidden from us.
- What works in the real world does not necessarily match our stories of why it works. Unimportant details can often seduce us into thinking we know the reasons for something when we really don’t.
- "He remarks that a fellow named Joe Siegel, one of the most successful traders in a commodity called “green lumber,” actually thought it was lumber painted green (rather than freshly cut lumber, called green because it had not been dried). And he made it his profession to trade the stuff!"
- An American ship carrying mustard gas off Bari in Italy was bombed by the Germans 1942. It helped develop chemotherapy owing to the effect of the gas on the condition of the soldiers who had liquid cancers.
- Or, another way to see it, studying the chemical composition of ingredients will make you neither a better cook nor a more expert taster—it might even make you worse at both
The Barbell & the Bimodal Strategy
- A dual strategy, a combination of two extremes, one safe and one speculative, deemed more robust than a "monomodal" strategy; often a necessary condition for antifragility.
- Playing it safe in some areas (robust to negative Black Swans) and taking a lot of small risks in others (open to positive Black Swans), hence achieving antifragility.
- In other words, extreme risk aversion on one side and extreme risk loving on the other, rather than just being moderate. Example of this is 90% in cash (no inflation) and 10% in extremely risky securities, compared to 100% in "moderate" securities which has the chance of total ruin.
- 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.”
- The best writers of the past were people who had full-time day jobs with stable incomes, and then they wrote afterwards unhindered by anyones judgement.
Skin in the Game
- Every captain goes down with every ship.
- Researchers who live by their work are worth listening to compared to those who merely write about what they observed or heard from other people, rather then experiences they actually undertook themselves.
Via Negativa (by removal)
- chess grandmasters usually win by not losing; people become rich by not going bust
- negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works). So knowledge grows by subtraction much more than by addition—given
- Steve Jobs: “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying no to 1,000 things.”
- The Lindy Effect -> The Lindy effect is a theory that the future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy. So a book that has been in print for a 100 years is likely to stay in print for another 100 years.
- The odds of the paper’s being relevant—and interesting—in five years is no better than one in ten thousand.
- scientists are in the process of discovering the effects of episodic deprivation of some, or all, foods. Somehow, evidence shows, we get sharper and fitter in response to the stress of the constraint.