He grew up in Lebanon, a country about half Christian and half Muslim. Nassim Taleb was shocked by a black swan event early in his life. People later give convincing explanations for why it happened.He describes an event as a Black Swan when: Nicholas Nassim Taleb took this idea one step further. Later on, philosophers such as John Stuart Mill began using the black swan as a metaphor to talk about events which are totally unpredictable based on past evidence. Some European explorers walking across Western Australia saw a living, breathing black swan. Then in 1697 something totally unexpected happened. Everyone knew black swans didn’t exist, so calling something a black swan used to mean it was impossible. Yet we (and historians) like to believe in the predictable, small incremental progression.įor most of history people only saw white swans. They go from fracture to fracture, with a few vibrations in between. Black swan events are unprecedented, have a huge impact, but are later explained away as predictable From then on he was mostly free to focus on his study and writing.ġ. He’d made enough money to be set for life. Yet on that day when everyone on Wall Street was in despair, Taleb says he slept like a baby. The crash didn’t even have any clear cause, which must have been all the more distressing to them. No economist or risk manager predicted it. Sure enough, less than 5 years after he graduated, in 1987 the stock market had the biggest drop in history. But he created a financial strategy to prepare for it. Taleb knew an extreme and unpredictable event would happen, he just didn’t know when. They didn’t even seem to realize the massive risks they were taking every day, while acting like they were being conservative. And the professional investors can’t predict stock prices at all. The economists at the worlds best universities can’t predict where the market will go even with all their fancy models. He was surprised to find out none of these people really know what is going on. Afterwards he worked for an investment firm in Manhattan where he worked alongside professional traders. Near the end of his studies, Nassim Taleb went to the prestigious Wharton Business School in Pennsylvania where he listened to distinguished professors and top executives from big companies. He offers a new perspective for how we can deal with randomness, risk and uncertainty in our lives. He’s also been professor at several universities, including now being Professor of Risk Engineering at NYU.

Nassim Taleb is an author and scholar, and he used to be a financial trader.

The black swan theory book