I’ve recently finished reading The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb. Taleb is a philosopher, economic thinker, researcher and scholar of randomness and knowledge. He has some really strong opinions against the current tools used in the financial markets and he voices them repetitively through out the book. That relates to the books subject, our blindness with respect to randomness, particularly large deviations. The book is broken into sections covering the topic of the book in relations to various situations in our life and examples that Taleb feels demonstrate his point. These examples range from literature in the beginning of the book to finance with mathematical explanations of his subject in the last parts.
The book is extremely repetitive and could have easily been half it’s size and Taleb still would have gotten his point across quite well. Also he sometimes goes on rants that are useless and just make him look like an asshole. But overall it’s a good read and provides a good viewpoint on the importance of qualitative rather than a quantitative view of risk management. I recommend reading the book if you have a interest in statistics and finance but if not it will most likely not hold your interest.
Next up: Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets.
Video where Taleb talks about what he thinks of VaR and other “riskmetrics” on the BBC in October 2008:
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