Even the experts find that the real world is unpredictableExcerpt:
Mr. Taleb is fascinated by the rare but pivotal events that characterize life in the power-law world. He calls them Black Swans, after the philosopher Karl Popper's observation that only a single black swan is required to falsify the theory that "all swans are white" even when there are thousands of white swans in evidence. Provocatively, Mr. Taleb defines Black Swans as events (such as the rise of the Internet or the fall of LTCM) that are not only rare and consequential but also predictable only in retrospect. We never see them coming, but we have no trouble concocting post hoc explanations for why they should have been obvious. Surely, Mr. Taleb taunts, we won't get fooled again. But of course we will.
Writing in a style that owes as much to Stephen Colbert as it does to Michel de Montaigne, Mr. Taleb divides the world into those who "get it" and everyone else, a world partitioned into heroes (Popper, Hayek, Yogi Berra), those on notice (Harold Bloom, necktie wearers, personal-finance advisers) and entities that are dead to him (the bell curve, newspapers, the Nobel Prize in Economics).
A humanist at heart, Mr. Taleb ponders not only the effect of Black Swans but also the reason we have so much trouble acknowledging their existence. And this is where he hits his stride. We eagerly romp with him through the follies of confirmation bias (our tendency to reaffirm our beliefs rather than contradict them), narrative fallacy (our weakness for compelling stories), silent evidence (our failure to account for what we don't see), ludic fallacy (our willingness to oversimplify and take games or models too seriously), and epistemic arrogance (our habit of overestimating our knowledge and underestimating our ignorance).
For anyone who has been compelled to give a long-term vision or read a marketing forecast for the next decade, Mr. Taleb's chapter excoriating "The Scandal of Prediction" will ring painfully true. "What is surprising is not the magnitude of our forecast errors," observes Mr. Taleb, "but our absence of awareness of it." We tend to fail--miserably--at predicting the future, but such failure is little noted nor long remembered. It seems to be of remarkably little professional consequence.
I suspect that part of the explanation for this inconsistency may be found in a study of stock analysts that Mr. Taleb cites. Their predictions, while badly inaccurate, were not random but rather highly correlated with each other. The lesson, evidently, is that it's better to be wrong than alone.
If we accept Mr. Taleb's premise about power-law ascendancy, we are left with a troubling question: How do you function in a world where accurate prediction is rarely possible, where history isn't a reliable guide to the future and where the most important events cannot be anticipated?
Mr. Taleb presents a range of answers--be prepared for various outcomes, he says, and don't rush for buses--but it's clear that he remains slightly vexed by the world he describes so vividly. Then again, beatific serenity may not be the goal here. As Mr. Taleb warns, certitude is likely to be found only in a fool's (bell-curve) paradise, where we choose the comfort of the "precisely wrong" over the challenge of the "broadly correct." Beneath Mr. Taleb's blustery rhetoric lives a surprisingly humble soul who has chosen to follow a demanding and somewhat lonely path.Source(For more postings from me, see TONGUE-TIED, EDUCATION WATCH, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, GUN WATCH, SOCIALIZED MEDICINE, AUSTRALIAN POLITICS, DISSECTING LEFTISM, IMMIGRATION WATCH and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here.)