Apr

20

 Last night I attended the launch party for Nassim Taleb's new book, The Black Swan — The Impact of the Highly Improbable. The event was well attended with approximately 120 people. The audience included several heavyweight quantitative people such as Dr. Emanuel Derman. It was well-orchestrated compared to the madhouse of George Soros's signing event, which I attended earlier in the year. Little touches like serving Black Swan wines as a marketing tie-in added to the friendly, collegial ambiance. The jovial crowd appeared to consist of academics, young suits, and book types.

An animated and vocal Nassim took the stage, first stressing that his new book was not about finance, then admitting that he does not like the subject and finds it exceedingly boring. In true Nassim fashion he began by ripping on history books, saying most historians are full of beans and not to take any history book seriously. He added that historians and stock analysts are similar. During his speech, he raised the following question, "How many traders are in the room?" Sitting near the back of the room, we counted perhaps eight hands — I was expecting a much larger representation of the trading community.

Nassim then jumped into the issue of retrospective distortion — using the recent Virginia Tech shootings as fodder for his idea. By retrospective distortion he meant the way humans tend to evaluate and make sense of matters after the fact, constructing an orderly event in hindsight. The more significant things he talked about included his belief that experts do not exist in complex domains, that using cumulative advantage loops and preferential advantage concepts is not a proper way to conceptualize black swans and, perhaps his most interesting statement, that all design has its genesis in randomness — the implications of this idea are profound. He elaborated a little on several topics, then opened the floor up for questions.

Not surprisingly, the first question focused on Malcolm Gladwell's New Yorker article . He was visibly annoyed and without delay stated that the article was an example of a "false narrative" — another concept he talks about in the book. He said that the article worked wonders for selling his book, but for the wrong reasons. However, he made it clear that the right reason for buying his book was boring. Nassim then quickly moved on to the next question.

He fielded questions about the central aspect of his new book, claiming that the Normal and Gaussian distributions are frauds, primarily because probabilities drop when moving away from the mean, while with Mandelbrot's variations this does not occur. He then was asked several specific financial questions, which he politely dodged and commented that he does not know what the next Black Swan is or how to predict it. Time was up and the book signing began — several of the audience members carried a dozen or more books for his autograph. Not sure if they were for resale on eBay, but I'll monitor for a bit to see if they end up there.

Nassim was very energetic and his occasional irritation was short-lived. He dropped the F bomb on several occasions, quickly changing to proper words with a chuckle — not sure if this was done purely for effect or if it is his natural vocabulary. His lively delivery and friendly demeanor made it an entertaining and unique evening. My initial impressions of the book, after a cursory read, are that it appears interesting, well documented and entertaining. I'm looking forward to further reading this week.


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