Without unnecessary flourishes convincing

THE BLACK SWAN,

THE POWER

OF THE UNPREDICTABLE

by Nassim Nicholas Taleb (translated from English)

Editions Les Belles letters, 496 pages, 23 euros.

If, while walking on a Lake, you see a Black Swan gliding on water in its congeners of white, take your legs to your neck and go safe as it is without doubt of great misfortune will fall on the world. "Bird of misfortune", bad omen, would announce disasters and tragedies to come because, since the origins, the exception or the unusual are perceived by human as signs of dysfunction of the cosmos or its environment. The manifestation of a disorder that calls a correction, or even a sanction of divine nature.

In his book, which was a bestseller in its English version, Nassim Nicholas Taleb tracking precisely these random and unpredictable, figures which haunt the mind of men or investors. They have common features. These are aberrations that upset traditional thinking frameworks because the past is more than no help to anticipate. Meteor in the sky of thought. Crash or typhoon, these events have a disproportionate impact and cause major upheaval. So random that they are, human nature tends, however, after the fact, to rationalize to explain. Of unpredictable, these accidents and these shocks become suddenly explainable and therefore less mysterious. This retrospective penchant is very pronounced in the financial, yet of high places of the uncertainty, markets markets on which the author has carried out a large part of his career. Moreover, he is working his former colleagues.

The risk approach

Thus, investors have bad reflexes and reasoning. Stuck in the daily life of the markets, they digest and crushing masses of facts and data permanently, but often they lack the essential: the real failures, swings, because "history does not ramp, it breaks." In other words, investment professionals do not have the capacity to see the famous black marks of destiny. They ignore the rules and principles as they focus on details. Hence a bad understanding of risk, but their craft, with a mathematical more sophisticated tools, which is often the veil of ignorance. Operators and managers are proof of blindness, overconfidence in their self-proclaimed ability to be experts of the uncertain. They develop strange Mania: make forecasts on everything and anything, and most often, despite the good sense. Probably just for reassurance and justify a posteriori their decisions to try to see clearer. The author finds that our "world is dominated by the extreme, the unknown and the highly improbable", and more boldly that "despite our evolution and the increase of our knowledge, the future is less and less predictable, while human nature as social science seem to conspire to conceal us this idea". The new stoic posture of the investor would be to accept this unpredictable, which also throws a new light the more ordinary phenomena. Accepting also that "what it is not known account much more than you know". Difficult to accept for a financial world which must encourage the accession of the clients, and give them a sense of confidence in his ability to navigate by all time dismantled same markets. While the "Black Swan" today extended its wings in markets dominated by fear, and beset by financial and stock market meltdown unprecedented, this book reminds with force that the investors must learn to live with the "worst", the watch face, instead of playing hide-and-seek with him in the hope of escape. "Hence the need to take the extreme event as a starting point" of a new philosophy and approach to risk.

Erudition and clarity

This book managed the feat of scholarship and clarity, pedagogy and depth, a little like an investigator-philosopher Umberto Eco. Mixing thousand anecdotes from his career trader and his meetings on five continents, Nassim Nicholas Taleb guides us through the maze of unclassifiable book between test and history of the risk, which borrows literature, philosophy, science, or the economy. Without unnecessary flourishes, convincing.