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Has anyone read "The Black Swan", by Nassim Taleb. This is about the impact of highly improbable events on life.

This seems to be entirely appropriate in the frenetic investing in property.

It worries me that many people here are putting all their eggs in the property basket - some are planning on using rising property prices to fund their retirement in 40 years time - it might be a good idea but who knows? We like to think, even though the past provides plenty of counter examples, that tomorrow wilbe much the same as today which was barely different from yesterday.

He gives an example of a casino in Las Vegas which spends a fortune on the prevention of cheating using security cameras etc etc. The losses the casino suffered from using this were 1000 times less than the unpredictable events which they occasionally suffered - a law suit when a tiger bit a performer, the kidnap of the owners daughter etc..

I could write more but will await any response. :rolleyes:

Regards

Richard

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The author was interviewed on Puplava's radio show on financialsense.com a while ago. It sounds interesting, but does is say much more than 'completely unexpected events happen'?

Isn't the trouble with black swan events is that they can't really be predicted or timed?

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Reading it now, I liked his earlier book.

VMR.

I have read both Fooled by Randomness and The Black Swan. Both very interesting and thoughful, though Fooled by Randomness was an easier read and perhaps had more entertaining story telling and examples of overblown egos blowing up.

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I'm just finishing Black Swan now. I'm impressed that he managed to predict that the "normal distribution curve" applied to the market cause another disaster. I think the "Credit Crunch" caused by just that (i.e. "top-slicing") came along pretty quickly.

I keeping Fooled by Randomness for my holiday.

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...

It worries me that many people here are putting all their eggs in the property basket - some are planning on using rising property prices to fund their retirement in 40 years time - it might be a good idea but who knows?

I think you will find that the people "here" (i.e. this message board) are absolutely not the people who are doing this! I know people who think like this, but they are not on this site!

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The author was interviewed on Puplava's radio show on financialsense.com a while ago. It sounds interesting, but does is say much more than 'completely unexpected events happen'?

Isn't the trouble with black swan events is that they can't really be predicted or timed?

Yeah pretty much.

While started off well it soon got very very tedious for me. He often says if your not interested in this aspect skip the next chapter, but if you did that the book would have been totally pointless. As you say the whole point of a Black Swan is it is totally unexpected and therefore there is nothing that can be done about them.

Never judge a book by it's cover but.... had it explored actual Black Swan events in more detail as it seemed to suggest it would, why they were Black Swans the effects etc it might have been a better read. The book basically looks at why things are unpredictable and goes into great detail about why they are wrong, to be fair he can't offer up much of an alternative as there isn't really one.

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Reading it at the moment. I've had 8 black swans in my life this decade, only 2 in the 90's. The world is getting more volatile.

I have a black swan to thank for my current career. I spent 6 years training to be a scientist, but couldn't find a job afterwards. I spent 2 weeks reading a JavaScript for Dummies book, and ended up with a lucrative career in IT.

Another black swan - the dot com boom/collapse allowed me to experience a 3rd black swan - accidentally starting my own business (which is still going strong).

:blink:

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Reading it at the moment. I've had 8 black swans in my life this decade, only 2 in the 90's. The world is getting more volatile.

I have a black swan to thank for my current career. I spent 6 years training to be a scientist, but couldn't find a job afterwards. I spent 2 weeks reading a JavaScript for Dummies book, and ended up with a lucrative career in IT.

Another black swan - the dot com boom/collapse allowed me to experience a 3rd black swan - accidentally starting my own business (which is still going strong).

:blink:

I think thr 6 years of training as a scientist would give you the right mindset for a career in IT too even without reading the bluffers guide to Javascript. God I got a call from a recruitment agent saying "got some Javascript jobs...". I mean come on Javascript is one tiny part of programming on the web!

It's like saying to a mechanic "got some great wheel balancing opportunities".

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How can he have written two books stating the obvious?

Inductive logic is flawed but inductive logic is the basis of all of our knowledge of the world, therefore all our knowledge of the world is flawed.

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How can he have written two books stating the obvious?

Inductive logic is flawed but inductive logic is the basis of all of our knowledge of the world, therefore all our knowledge of the world is flawed.

The Randomness book makes an interesting insight that clever traders bet on things that are unlikely to happen, as long as they are getting good odds. Because very one else thinks they wont happen, usually they will get those good odds. E.g. betting on the crunch before 2007.

A lot of "successful" traders who go busto bet on things that will almost certainly happen, get arrogant on their continual success and then fail when the unexpected happens. This is the gist I got from the book, perhaps I am over simplifying.

It's like poker - a good player looks at the odds - they'll bet on a 20% chance of winning if the odds being offered by the other players justify it. They are betting on black swans all the time like the succesful traders. This can make them look like a losing strategy over a short term interval, but will show their success in the long term, that is a mathematical certainty.

If I was offered 10-1 by a bookie on a housing crash (say 10% + falls yoy) each year from 2003-2008, and I bet £1000 each year I'd look like a fool each year 2003, 2004, 2005... but in 2008 I would be bagging £10000 having lost £5000 so far, it would transpire to be profitable, because lets face it the crash was inevitable, but not likely to happen in any of the particular years. (Timing it was hard)

You can apply this to life in general - apply for 200 high paid jobs you are not likely to get, rather than 10 low ones you'll breeze through. The cost of drycleaning & cv printing vs. extra money earned, does it stack up?

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