What Nassim Taleb taught me

Navigating uncertainty in a complex world

I worked in the corporate strategy department of an FT100 company. When I joined, I realised my colleagues could teach me a lot. And, they did. Similarly, there are certain authors who share perspectives that fascinate me. Nassim Taleb wrote a series of books on risk, uncertainty and the unpredictable nature of the world. These include: Black Swan, Antifragile and Skin in the Game.

Black Swan

Black Swan being unpredictable does not mean that they are not explainable after the fact. - Nassim Taleb

Black Swan refers to rare, unpredictable and high-impact events. We should recognise the limitations of our predictive abilities and embrace uncertainty. The 2008 financial crisis was a Black Swan event. Few predicted it. In hindsight, it was clear that factors, including subprime mortgages, foreshadowed events.

Suffering fools

Never ask anyone for their opinion, forecast or recommendation. Just ask them what they have, or don’t have, in their portfolio. - Nassim Taleb

Avoid the influence of those who lack expertise or experience in a particular domain. Instead, seek advice from those who have skin in the game and practical knowledge. Charlie Munger suggested sound decisions are reliant on understanding people's incentives. If a stranger offers me something then I question what’s in it for them.

Barbell strategy

The strategy for the antifragile should be to first reduce fragility then increase robustness, and finally make themselves antifragile; that is, gain from disorder while being exposed to it. - Nassim Taleb

The barbell strategy involves balancing high-risk, high-reward activities with conservative ones. Avoid the middle ground. An investor could have most of their portfolio in conservative assets, e.g. treasury bonds, and a small percentage in high-risk, high-reward ventures, e.g. startups. This protects from extreme losses while benefiting from unexpected successes. I apply this strategy to my time. My corporate job pays the bills and my personal projects have large potential payoff.

Via negativa

The greatest problem in our time is complexity. - Nassim Taleb

Make decisions that eliminate the unnecessary rather than adding more. Via negativa, or the negative path, removes the negative to reveal the positive. Simplify processes and cut bureaucracy. Many successful companies focus on their core strengths. A redesign of my game Scarper (Tetris meets Candy Crush) involved removing buttons. This both improved functionality and ease of use.

The Lindy Effect

If a book has been in print for forty years, I can expect it to be in print for another forty. - Nassim Taleb

The longer a non-perishable item has been around, the longer it is likely to survive. The concept challenges the conventional wisdom that newer is better. The Lindy Effect applies to the use of technology. Choose ones with a proven track record. I have learnt and used many programming languages. A handful stood the test of time and these tend to be the ones I use most.

Other resources

How Things Gain from Disorder talk by Nassim Taleb

How to Benefit from Disorder post by Phil Martin

Demystifying Randomness post by Phil Martin

I'll let Nassim Taleb close out this post. Randomness is indistinguishable from complicated, undetected order; but order itself is indistinguishable from randomness.

Have fun.

Phil…

Nassim Taleb