The Black Swan, by Nassin Nicholas Taleb

This book examines the fallacies of forecasting and the hidden risks we all (usually unknowingly) accept by ignoring the problems with our statistical methods. For instance, Wall Street brokers use amazingly complicated models to predict which stocks will rise and fall, but none of these models ever seem to protect the public from crashes due to events such as 9-11 or Enron. These rare events affect our portfolios in a much more significant way than any daily gain or loss, yet the future-looking models don’t warn us when needed. Taleb believes that this is because the most important changes in our world can’t be predicted: “History does not crawl, it jumps.”

I really liked the writing style the author uses here. Uncommon words and complicated sentences are often encountered, but I never got the impression that Taleb was trying to impress anyone; he simply comes across as smart: “The discovery of human epistemic arrogance ... was allegedly inadvertent.” He doesn’t dumb down the admittedly intricate topic, but treats the reader as an equal. Refreshing. I also enjoyed the author’s sly sense of humor. “Assume that you round up a thousand people randomly selected from the general population and have them stand next to one another in a stadium. You can even include Frenchmen (but please, not too many out of consideration for the others in the group), Mafia members, non-Mafia members, and vegetarians.” Lines like these often made me smile, something I didn’t expect from an opinionated book discussing history, philosophy, and statistics.

First Sentence:

The writer Umberto Eco belongs to that small class of scholars who are encyclopedic, insightful, and nondull.