"Antifragile: Things That Gain From Disorder", Nassim Nicholas Taleb

 

Antifragility is beyond resilience or robustness. The resilient shocks and stays the same, the antifragile GETS BETTER…The antifragile loves randomness and uncertainty, which also means-crucially- A LOVE OF ERRORS, a certain class of errors. Antifragility has a singular property of allowing us to deal with the unknown, to do things without understanding them- and do them well… Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile… At no point in history have so many non-risk-takers, that is, those with no personal exposure, exerted so much control… Man-made complex systems tend to develop cascades and runaway chains of reactions that decrease, even eliminate, predictability and cause outsized events. So the modern world may be increasing in technological knowledge, but paradoxically, it is making things a lot more unpredictable… The antifragile gains from prediction errors, in the long run… We have the illusion that the world functions thanks to programmed design, university research, and bureaucratic funding, but there is compelling-very compelling-evidence to show that this is an illusion, the illusion (Taleb) call(s) lecturing birds how to fly… The fragilista falls for the Soviet-Harvard delusion, the (unscientific) overestimation of the reach of scientific knowledge. Because of such delusion, he is what is called a naive rationalist, a rationalizer, in the sense that he believes that the reasons behind things are automatically accessible to him… The fragilista is one who makes you engage in policies and actions, all artificial, in which the benefits are small and visible, and the side effects potentially severe and invisible… The fragile breaks with time… If you see a fraud and do not say fraud, you are a fraud. Just as being nice to the arrogant is no better than being arrogant toward the nice being accommodating toward anyone committing a nefarious action condones it….. It is worth re-explaining the following: the robust or resilient is neither harmed nor helped by volatility and disorder, while the antifragile benefits from them. A lot of things people call robust or resilient are just robust or resilient, the other half are antifragile… the idea is to focus on fragility rather than predicting and calculating future probabilities, and that fragility and antifragility come on a spectrum of varying degrees… Recall that the fragile wants tranquility, the antifragile grows from disorder, and the robust doesn’t care too much… Things are antifragile up to a certain level of stress, but up to a point- it would not benefit too much from being thrown down from the Tower of Babel… Antifragility is desirable in general, but not always as there are cases in which antifragility will be costly, extremely so… ‘Please mishandle’ or ‘please handle carelessly’. Its contents would not just be unbreakable, but would benefit from shocks and a wide array of trauma… Hydra, in Greek mythology, is a serpent-like creature that dwells in the lake of Lerna, near Argos, and has numerous heads. Each times one is cut off, two grow back. So harm is what it likes. Hydra represents antifragility… We are all in a way, similarly handicapped, unable to recognize the same idea when it is presented in a different context. It is as if we are doomed to be deceived by the most superficial part of things, the packaging, the gift wrapping... Domain dependence- Some people can understand an idea in one domain, say medicine, and fail to recognize it in another. Humans somehow fail to recognize situations outside the contexts in which they usually learn about them (banker uses porter but goes to gym)…. This lack of translation is a mental handicap that comes with being human; and we will only start to attain wisdom or rationality when we make an effort to overcome and break through it…  Innovation and sophistication spark from initial situations of necessity… I find it better to whisper, not shout. Better to be slightly inaudible, less clear. When I was a pit trader, I learned that the noise produces by the person is inverse to the pecking order. One should have enough self-control to make the audience work hard to listen, which causes them to switch into intellectual overdrive… They take the worst historical recession, the worst war, the worst historical move in interest rates, or the worst point in unemployment as an exact estimate of the worst future outcome. But they never notice the following inconsistency: this so-called worst case-event, when it happened, exceeded the worst case of at the time… Even the psychologists who studies the antifragile response of post-traumatic growth, and show the data for it, don’t quite get the full concept… Focus on altering your exposure, say, by putting yourself in a position impervious to reputational advantage… These failures to self-repair come largely from maladjustment- either too few stressors or too little time for recovery between them… In the complex world, the notion of ‘cause’ itself is suspect; it is either nearly impossible to detect or not really defined- another reason to ignore newspaper, with their constant supply of causes for things… There may be a few good reasons to be on medication, but my mood, my sadness, my bouts of anxiety, are a second source of intelligence, perhaps even the first source… We will see how touristification castrates systems and organisms that unlike uncertainty by sucking randomness out of them to the last drop-while providing them with the illusion of benefit… An environment with variability does not expose us to chronic stress injury, unlike human-designed systems. If you walk on uneven not man-made terrain, no two steps will ever be identical- compare that to the randomness-free gym machine offering the exact opposite: forcing you intro endless repetitions of the very same movement. Much of modern life is preventable chronic stress injury… Had restaurants been individually robust- some parts on the inside of a system may be required to be fragile in order to make the system antifragile as a result… The most interesting aspect of evolutions is that it only works because of its antifragility; it is in love with stressors (genetic code). The code doesn’t really care about the welfare of the unit itself, quite the contrary, since it destroys many things around it. Thus, the competition between gene and organism. There is a tension between nature and individual organisms…. Nature prefers to let the game continue at the informational level, the genetic code. So organisms need to die for nature to be antifragile- nature is opportunistic, ruthless and selfish… By letting organisms go one lifespan at a time, with modifications between successive generations, nature does not need to predict future conditions beyond the extremely vague idea of which direction things should be heading (switch from POST to xxx)… The more noise and disturbances in the system, up to a point, barring those extreme shocks that lead to extinction of a species, the more the effect of the reproduction of the fittest and that of random mutations will play a role in defining the properties of the next generation… Nature is antifragile up to a point but such a point is quite high- it can take a lot, a lot of shocks… Hormesis is a metaphor for direct antifragility, when an organism directly benefits from harm; with evolution, something hierarchically superior to that organism from the damage. From the outside it looks like there is hormesis, but from the inside there are winners and losers… When you want deviations, and you don’t care about the possible dispersion of outcomes that the future can bring, since most will be helpful, you are antifragile… The story of the Titanic illustrates the difference b/w gains for the system and harm to some of its individual parts… There are hundreds of thousands of plane flights every year, and a crash in one plane does not involve others, so errors remain confined and highly epistemic- whereas globalized economic systems operate as one: errors spread and compound… Someone has made plenty of errors- though never the same error more than once- is more reliable than someone who has never made any… Warn about the illusion of antifragility when it is not really there… Someone paid a price for the system to improve- “what did not kill me did not make me stronger, but spared me b/c I am stronger than others; but it killed others and the average population is now stronger b/c the weak are gone… There is no such thing as a failed entrepreneur or failed scientific researcher, any more than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take personal risks… It is often with the most noble intentions that we do so, as we are pressured to ‘fix’ things, so we often blow them up with our fear of randomness and love of smoothness… This is the central illusion in life: that randomness is risky, that it is a bad thing- and that eliminating randomness is done by eliminating randomness (taxi driver, carpenter vs. mid-level banker)… Small is beautiful in so many other ways. Take for now that the small (in the aggregate, that is, a collection of small units) is more antifragile than the large… You can double your net worth or lose half of it in a single moment… Antifragile systems are hurt when they are deprived of their natural variations (mostly thanks to naïve intervention. Beyond municipal noise, the same logic applies to: the child who, after spending time in a sterilized environment, is left out in the open; a system with dictated political instability from the top, the effects of price controls; the advantages of size for corporations. We switch from a system that produces steady but controllable volatility (Mediocrestan), closer to the statistical Bell curve, into one that is highly unpredictable and moves mostly by jumps, called ‘fat tails’. Fat tails-  a synonym for Extremistan- mean that remove events, those in what is called the ‘tails’, play a disproportionate role…. Regarding planning: the world is too random and unpredictable to base a policy on visibility of the future. What survives comes from the interplay of some fitness and environmental conditions… The mother of all harmful mistakes: mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in social sciences… Ottomans, like the Romans before them, let local elites run the places so long as sufficient tax was paid… Disorganized is invigorating; but the Lebanese state was one step too disorganized… “A little bit of agitation gives resources to souls and what makes the species prosper isn’t peace, but freedom” (Machiavelli)… Some people have fallen for the naïve turkey-style belief that the world is getting safer and safer, and of course attribute it to the holy “state” (though bottom-up Switzerland has about the lowest rate of violence of any place on the planet). It is exactly like saying that nuclear bombs are safer because they explode less often… In the markets, fixing prices (could argue happening now with bonds), fixing prices, or equivalently, eliminating speculators, the so called “noise traders” and the moderate volatility that they bring, provide an illusion of stability… The longer one goes without market trauma, the worse the damage when commotion occurs… The absence of fire lets highly flammable material accumulate. People are shocked and outraged when I tell them that absence of political instability (Saudi Arabia), even war, lets explosive material and tendencies accumulate under the surface (ISIS)…  We seek vaccination at every new school year (injecting ourselves with a little bit of harm to build immunity) but fail to transfer the mechanism to political and economic domains… To summarize, the problem with artificially suppressed volatility is not just that the system tends to become extremely fragile; it is that, at the same time, it exhibits no visible risks… The longer it takes for the blowup to occur, the worse the resulting harm to both economic and political systems (why need catalyst investing and recycled cash flow). Example: rotten governments like the ones in Egypt, supported by the U.S. for four decades in order to avoid chaos, identical to bankers using their too big to fail status… The bitterness of the Iranians towards the U.S. comes from the fact that the U.S.- a democracy- installed a monarch, the repressive Shah of Iran, who pillaged the place but gave the U.S. the ‘stability’ of access to the Persian Gulf… The definition of Modernity is humans’ large-scale domination of the environment, the systematic smoothing of the world’s jaggedness, and the stifling volatility of stressors… The idea of replacing Gods and Gods running future events with something even more… One should not expect laurels for bringing the truth… harm from doctors-NOT including risks from hospital germs- account for more deaths than any single cancer… An agency problem, for instance, is present with the stockbroker and medical doctor, whose ultimate interest is their own checking account… Hackers make systems stronger (contradicts iatragenics- relating to illness caused by medical treatment)… An ethical problem arises when someone is put in charge. Greenspan’s actions were harmful, but even he knew that, it would have taken a bit of heroic courage to justify inaction in a democracy where the incentive is to always promise a better outcome than the other guy, regardless of the actual, delayed cost… I am equally worried about underintervetion when it is truly necessary. I am just warning against naïve intervention and lack of awareness and acceptance of harm done by it… We need to avoid being blind to the natural antifragility of systems, their ability to take care of themselves, and fight our tendency to harm and fragilize them by not giving them a chance to do so…  The famine in China that killed 30 million people b/w 1959 and 1961 can enlighten us about the effect of the state ‘trying hard’. A larger than expected share of famine over the past century has occurred in economies with central planning… Sweden and other Nordic countries experienced a severe recession at the end of the cold war, around 1900, to which they responded admirably with a policy of fiscal toughness, thus effectively shielding them from the severe financial crisis that took place about two decades later… Obama’s blaming ‘bad intelligence’ for his administration’s failure to predict the uprising that took place in Egypt is symptomatic of both the misunderstanding of complex systems the bad polices involved… Governments (and business) are wasting billions of dollars on attempting to predict events that are produced by interdependent systems and therefore not statistically understandable at the individual level… It is the system and its fragility, not events, that must be studied… Political and economic ‘tail events’ are unpredictable, and their probabilities are not scientifically measurable… Our track record in figuring out significant rare events in politics and economics is not close to zero; it is zero… If you have extra cash in the bank (in addition to stockpiles of tradable goods such as cans of Spam and hummus and gold bars in the basement), you don’t need to know with precision, which event will cause potential difficulties. It could be a war, a revolution, an earthquake, a recession, an epidemic, a terrorist attack, the secession of New Jersey… Make things more robust to defects and forecast errors, or even exploit errors, making lemonade out of lemons. Antifragility is necessarily how things move forward under the mother of all stressors, called time. Not seeing a tsunami or an economic event coming is excusable, building something fragile is not… We can put a man, a family, a village with a mine town hall on the moon, and predict the trajectory of planets or the most minute effect in quantum physics, yet governments with equally sophisticated models cannot forecast revolutions, crises, budged deficits, or climate change. Or even the closing prices of the stock market a few hours from now… There is in the Black Swan zone, a limit to the knowledge that can never be reached… My work is about WHERE one should be skeptical, and where one should not be so. In other words, focus on getting out of the f*** Fourth quadrant- the Fourth Quadrant is the scientific name I gave to the Black Swan domain, the one in which we have high exposure to rare, “tail” events and these events are incomputable. Opportunists are now into predicting, predictioning, and predictionizing Black Swans with even more complicated models (useless in dynamic, interconnected systems)… Yet again, the answer is simple: less is more; move the discourse to (anti) fragility… barbell strategy and explains why the dual strategy of mixing risks and highly conservative actions is preferable… Fat Tony spent a lot of his time doing nothing, with occasional commercial transactions (anti-fragility would be buying in times of crisis with levered $ that was in partnership)… Curiosity is antifragile, like an addiction, and is magnified by attempts to satisfy it (about me on site)… System built on illusions of understanding probability is bound to collapse… There is another dimension in the need to focus on actions and avoid words: the health-eroding dependence on external recognition. People are cruel and unfair in the way they confer recognition, so it is best to stay out of that game (quarterly letter- tweet to update positions)… These hotshots-who-depended-on-words were deprived of Tony’s serenity; they remained fragile to the emotional toll from the compliments they did not get… And of those who saw it coming, not a single one realized that the crisis was a product of modernity…  Fat Tony did not believe in predictions. But he made big bucks predicting that some people- the predictors- would go bust (when don’t understand something in ’00 and ’07 don’t need to figure out; need to construct so benefit from collapse while understanding that cannot predict the exact time- VERY TRICKY)… You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble, perhaps even go bust. Why? Someone who predicts will be fragile to prediction errors…  Fat Tony is antifragile because he takes a mirror image of his fragile prey. Fat Tony’s model is quite simple. He identifies, fragilities, makes a bet on the collapse of the fragile unit, and collects big after the collapse. Then he has lunch. (Easier said than done)… Re Seneca: the idea of symmetry that are central to his book… And the key phrase reverberating in Seneca’s oeuvre is nihil perdidit, “I lost nothing”. Stoicism makes you desire the challenge of calamity. And Stoics look down on luxury: about a fellow who led a lavish life. Seneca wrote: “He is in debt, whether he borrowed from another person or from fortune…” Re: Seneca: the standard message of the Stoics- robustness, protection against harm from emotions, how to move away from the first column of the Triad, how he truly proposed antifragility… I always hated employment and the associated dependence on someone else’s arbitrary opinion… For my last job, I wrote my resignation letter before starting the new position, locked it up in a drawer, and felt free while I was there… I would go through the mental exercise of assuming every morning that the worst possible thing has actually happened, which had advantages way beyond the therapeutic, as it made me take a certain class of risk which for the worst case was clear and unambiguous (option hedging)… It’s hard to stick to a good discipline of mental write-off when things are going well, yet that’s when one needs the discipline the most… Seneca: wealth is the slave of a wise man and the master of the fool… Eliminating harm from fate and un-philosophically keeping the upside: upside-downside asymmetry, antifragility in its purest form…  Antifragility implies more to gain than to lose, equals more upside than downside, equals (favorable) asymmetry…  The first step toward antifragility consists in first decreasing downside, rather than increasing upside. .. As Publilius Syrus wrote, nothing can be done both hastily and safely- almost nothing. As to growth in GDP, it can be obtained very easily by loading future generations with debt- and the future economy may collapse upon the need to repay such debt… Economic growth with fragilities is not to be called growth, something that has not yet been understood by governments. Indeed, growth was very modest, less than 1 percent per head, through the golden years surrounding the Industrial Revolution, the period that propelled Europe into domination. But as low as it was, it was robust growth- unlike the current fools’ race of states shooting for growth like teenage drivers infatuated with speed…  For antifragility is the combination aggressiveness plus paranoia- clip your downside, protect your upside from extreme harm, and let the upside, the positive Black Swans, take care of itself… In risky mattes, instead of having all members of the staff on an airplane be ‘cautiously optimistic’, or something in the middle, I prefer flight attendants to be maximally pessimistic, or better, paranoid… We have ample evidence that people are averse to small losses, but not so much toward the very large Black Swan risks (which they underestimate), since they tend to insure for small probable losses, but not large infrequent ones. Exactly backwards… Exploration of barbells: where the bimodal strategy (maximally safe plus maximally speculative) applies…  I find it preferable (and less painful) to work intensely for very short hours, then do nothing for the rest of the time (assuming doing nothing is really doing nothing), until I recover completely and look forward to repetition…  In social policy, it consists in protecting the very weak and letting the strong do their job, rather than helping the middle class to consolidate its privileges, thus blocking evolution and bringing all manner of economic problems that tend to hurt the poor the  most… Talk to either undergraduate students, cab drivers, and gardeners or the highest caliber scholars; never to middling-but-career-conscious academics. If you dislike someone, leave him alone or eliminate him; don’t attack him verbally… The barbell does not need to be in the form of inflation protected cash and the rest in investment in speculative securities. Anything that removes the risk of ruin will get us to such a barbell. The legendary investor Ray Dalio has a rule of making speculative bets “Make sure that the probability of the unacceptable (i.e. the risk of ruin) is nil.”  The barbell is simply an idea of insurance of survival, not an option…

 

This entire heritage of thinking, grounded in the sentence “An agent does not move except out of intention for an end,” is where the most pervasive human error lies, compounded by two or more centuries of the illusion of unconditional scientific understanding. The error of thinking you know exactly where you are going and assuming that you know today what your preferences will be tomorrow has an associated one; it is the illusion of thinking that others, too, know where they’re going, and that they would tell you what they want if you asked them… Steve Jobs strength was precisely in distrusting market research and focus groups- those based on asking people what they want- and following his own imagination. This ability to switch from a course of action is an option to change… Optionality will take us man places, but at the core, an option is what makes you antifragile and allows you to benefit from the positive side of uncertainty, without a corresponding serious harm from the negative side… In modern Japan, by contrast (to the U.S), shame comes with failure, which causes people to hide risks under the rug, financial or nuclear, making small benefits while sitting on dynamite… perhaps our greatest asset is the one we distrust the most: the built-in antifragility of risk-taking systems…. F you money- a sum large enough to get most- if not all, of the advantages of wealth (the most important one being independence and the ability to occupy your mind with matters that interest you) but not its side effects, such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of a marble-rich house renovation… It is an option, “the right but not obligation” for the buyer and, of course, “the obligation but not the right” for the other party, called the seller… If you make more when you are right than you are hurt when you are wrong, then you will benefit, in the long run, from volatility. You are only harmed if you repeatedly pay too much for the option… Financial options may be expensive b/c people NOW THEY ARE OPTIONS AND SOMEONE IS SELLING THEM and charging a price, but most interesting options are free, or at worst cheap… the edge from this optionality is in the larger payoff when you are right, which makes it unnecessary to be right too often… You are better off having a high percentage of people disliking you and your message (even intensely), combined with a low percentage of extremely loyal and enthusiastic supporters… Growth in society may not come from raising the average the Asian way, but from increasing the number of people in the ‘tails’, that small, very small number of risk takers crazy enough to have ideas of their own, those endowed with that very rare ability called imagination, that rare quality called courage, and who make things happen… For you don’t need to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself (some acts of omission) and recognize favorable outcomes when they occur… A central feature of positive Black Swans: the gains are unbounded (unlike a lottery ticket) or rather with an unknown limit, but the losses are limited and known… We are here b/c of risk taking outside the casinos… Risk taking ain’t gambling, and optionality ain’t lottery tix… The largest generators of wealth in America historically have been, first, real estate (investors have options at the expense of the banks) and second technology (which relies almost completely on trial and error). Further, business with negative optionality (that is the opposite of having optionality) such as banking have had a horrible performance through history: banks lose periodically every penny made in their history thanks to blowups… Worse, this (wheels on suitcase) took place three decades or so after we put a man on the moon… This tells us something about the way we map the future. We humans lack imagination, to the point of not even knowing what tomorrow’s important things look like… There is something sneaky in the process of discovery and implementation- something people usually call evolution… Both governments and universities have done very, very little, for innovation and discovery, precisely because, in addition to their blinding rationalism, they look for the complicated… In many pursuits, every trial, every failure provides additional information, each more valuable than the previous one… It also happens that birds write no such papers and books, conceivably because they are just birds so we never get their side of the story… Directed research would tell you what has worked from funding (like AIDS drugs or some modern designer drugs), not what has failed, so you may have the impression that it fares better than random…  A dictator- just like a government- will feel indispensable because the alternative is not easily visible, or is hidden by special interest groups… Can dig out epiphenomena in the cultural discourse of consciousness by looking at the sequence of events and checking whether one always precedes the other… Trust the disconfirmatory more than the confirmatory… “You too, had you stayed here, would have become a beach bum. People from Amioun only do well when shaken.” That’s antifragility… the fooled by randomness effect: mistaking the merely associative for the causal, that is, if rich countries are educated, immediately inferring that education makes a country rich, without even checking… War could cause a rise in oil prices, but not scheduled war. “There are so few occasion’s in one’s life, you can’t miss them… Good speculative bets come to you, you don’t get them by just staying focused on the news”… Identify betting opportunities with big upside and small downside… make forays into the future by opportunism and optionality… Religions often use the equivalent method to help adults get out of trouble, or avoid debt. But intellectuals tend to believe their own b***T and take their ideas too literally, and that is vastly dangerous… An idea does not survive b/c it is better than the competition, but rather b/c the person who holds it has survived. Accordingly, wisdom you learn from your grandmother should be vastly superior to what you get from a class in business school (and of course, considerably cheaper). My sadness is that we have been moving farther and farther away from grandmothers… When you are fragile you need to know a lot more than when you are antifragile. Conversely, when you think you know more than you do, you are fragile (to error)… Put under scrutiny, there seems to be no operational validity to (Purchasing Power Parity)- currencies that get expensive tend to get even more expensive, and most Fat Tony's in fact made fortunes following the inverse rule… You cannot centralize innovations, we tried that in Russia… They need to pay to figure out where they are going. Yet there is no evidence that strategic planning works; also makes corporations option blind, as it gets locked into a non-opportunistic course of action… Coca-Cola began as a pharmaceutical product. Tiffany & Co. started as a stationary store. Raytheon, a refrigerator maker... Again he may be right about the pitiful potential of bio-tech investments, but not on the data he showed (most don’t make $, but the big winners dominate the losses)…  1) look for optionality; rank things according to optionality, 2) preferably with open-ended- not closed ended payoffs 3) do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career; o ne gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust to do so 4) Make sure you are barbelled, whatever that means in your business … Provided we have the right type of rigor, we need randomness, mess, adventures, uncertainty, self-discovery, near-traumatic episodes, all these things that make life worth living, compared to the structured, fake, and ineffective life of an empty-suit CEO with a preset schedule an d and alarm clock… Consider the difference between lions in the wild and those in captivity… be a person of knowledge compared to the students called ‘swallowers’ in Lebanese dialect, those who ‘swallow school material’ and whose knowledge is only derived from the curriculum… But I read voraciously, wholesale initially in the humanities, later in mathematics and science, and now in history- outside a curriculum, away from the gym machine so to speak… The minute I was bored with a book or a subject I moved to another one… I started, around the age of thirteen, to keep a log of my reading hours, shooting for between thirty and sixty a week, a practice I’ve kept for a long time. I read the likes of Dosteyevsky, Turgenev, Checkhov, Bishop Bosuet, Stendhal, Dante, Prourst, Borges, Calvino, Celine, Schultz, Zweig (didn’t like), Henry Miller, Max Brod, Kafka, Ionesco, the surrealists, Faulkner, Malraux ( along with other wild adventurers such as Conrad and Melville; the first book I read in English was Moby-Dick) and similar authors in literature, many of them obscure, and Hegel, Schopenhauer, Nietzche, Marx, Jaspers, Husserl, Levi-Strauss, Levinas, Scholem, Benjamin, and similar ones in philosophy… exercise by buying a few hundred books in English (buy authors ranging from Trollope to Burke, Macaulay, and Gibbon, with Anais Nin and other fashionable authors de scandale) not showing up to class, and keeping the thirty to sixty hour discipline, as I had figured out that when one could write essays with a rich literary, but precise vocabulary, and maintain some coherence throughout, the examiner gets a hint about one’s style from that. It was a barbell- play it safe at school and read on your own, have zero expectation from school…  When at Wharton, I discovered that I wanted to specialize in a profession linked to probability and rare events, a probability and randomness obsession took control of my mind. I also smelled flaws with statistical stuff that the professor could not explain, it was what the professor was brushing away that had to be the meat…. So I went to the bookstore (no web) and ordered almost every book with probability or stochastic in its title. I read nothing else for a couple of years, jumping from one book to the next when stuck with something I did not get immediately or felt ever so slightly bored… “much of what other people know isn’t worth knowing”…  What I was given to study in school I have forgotten; what I decided to read on my own, I still remember… Nietzsche:  “What is not intelligible to me is not necessarily unintelligent”… The need to focus on the payoff from your actions instead of studying the structure of the world (or understanding ‘true’ and ‘false’) has been largely missed in intellectual history…  Education (inflation) and those who benefit has been growing without external stressors (yet Taleb went to Wharton which have him job where made all $- ironic) eventually the thing will collapse… Accordingly, we are necessarily immune to the cumulative effect of small deviations, or shocks of very small magnitude… This leaves me with the principle that the fragile is what is hurt by a lot more extreme events than by a succession of intermediate ones… Weight lifting: every additional pound brings more benefits, until one gets close to the limit, or failure… I have been advocating the injection of redundancy in people’s lives and had been boasting to him and others that, since my new year’s resolution of 200, I have never been late to anything, not even by a minute. Such personal discipline forces me to build buffers, and as I carry a notebook, it allowed me to write an entire book of aphorism. The greatest benefit of such discipline is that it prevents me from cramming my day with appointments… The central problem of efficiency; types of errors compound (traffic), multiply, swell, with an effect that only goes in one direction- the wrong direction… Consuming protein at all on Monday and catching up on Wednesday seemingly causes a different- better- physiological response, possibly because the deprivation, as a stressor, activates some pathways that facilitate the subsequent absorption of the nutrients. And, until a few recent empirical studies, this convexity has been totally missed by science… A squeeze occurs when people have no choice but to do something and do it right away, regardless of the costs… Squeezes are exacerbated by size. When one is large, one becomes vulnerable to some errors, particularly horrendous squeezes. The squeezes become nonlinearly costlier as size increases… In spite of what is studies in business schools concerning economies of scale, size hurts you at times of stress… Smooth functioning at regular times is different from the rough functioning at times of stress… Black Swan effects are necessarily increasing, as a result of complexity, interdependence between parts, globalization, and the beastly thing called ‘efficiency’ that makes people now sail too close to the wind. Add to that consultants and business schools. The world is getting less and less predictable, and we rely more on technologies that have errors and interactions that are harder to estimate, let alone predict… Non-linear structure of projects. Just as time cannot be negative, a three month project cannot be completed in zero or negative time. So on a timeline going left to right, errors add to the right end, not the left end of it… Global disaster costs are today more than three times what they were in the 1980’s, adjusting for inflation… The French have in the past focused on nuclear energy as it seemed ‘clean’ and cheap. And ‘optimal’ on a computer screen. Then after the wake-up call of the Fukushima disaster of 2011, they realized that they needed additional safety features and scrambled to add them, at any cost… The harm from polluting with ten different sources is smaller than the equivalent pollution from a single source… We can certainly attribute the fragilizing effect of contemporary globalization to complexity, and how connectivity and cultural contagions make gyrations in economic variables much more severe- the classic switch to extremistan… But there is another effect: wealth. Wealth means more, and because of nonlinear scaling, more is different. We are prone to make more sever errors because we are simply wealthier. Just as projects of one hundred millions of dollars are more unpredictable and more likely to incur overruns than five-million dollar ones, simply by being richer, the world is troubled with additional unpredictability and fragility… Think of the exact opposite of airplane delays or project overruns, something that benefits from uncertainty. And discovery presents the mirror image of what we saw as fragile, randomness-hating situations… So this is the key to the TRIAD- we can classify things by three simple distinctions: things that, in the long run, like disturbances (or errors), things that are neutral to them (equity neutral), and those that dislike them… Someone with a linear payoff needs to be right more than 50 percent of the time. Someone with a convex payoff, much less. The hidden benefit of antifragility is that you can guess worse than random and still end up outperforming. Here lies the power of optionality- your function of something is very complex, so you can be wrong and still do fine, the more uncertainty, the better… The hidden ‘convexity bias’ comes from a mathematical property called Jensen’s inequality. This is what common discourse on innovation is missing. If you ignore the convexity bias, you are missing a chunk of what makes the nonlinear world go round… In life antifragility is reached by not being a sucker… Keeping one’s distance from an ignorant person is equivalent to keeping company with a wise man… Focus means saying yes to the things you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are… Innovation is saying no to 1,000 things… Few realize that we are moving into far more uneven distribution of 99/1 across many things that used to be 80/20: 99 percent of internet traffic is attributable to less than 1 percent of sites, 99 percent of book sales come from less than 1% of authors, and I need to stop b/c numbers are emotionally stirring… 1% modification of systems can lower fragility (or increase antifragility) by about 99 percent- and all it takes is a few steps, very few steps, often at a low cost, to make things better and safer… removing the pebble in your shoe… Obvious decisions (robust to error) require no more than a single reason… Antifragility implies- contrary to initial instinct- that the old is superior to the new, and much more than you think, time will know more about its fragilities and break it when necessary…  Recall the foundational asymmetry: the antifragile benefits from volatility and disorder, the fragile is harmed. Well, time is the same as disorder… Take away from the future, reduce from it, simply, things that do not belong to the coming times. Via negative. What is fragile will eventually break; and luckily, we can easily tell what is fragile. Positive Black Swans are more unpredictable than negative ones… Now thanks to convexity affects, we can put a little bit of science in these, and produce our own taxonomy of what should be devoured the fastest by that inexorable time. The fragile will eventually break- and, luckily, we are capable of figuring out what is fragile. Even what we believe is antifragile will eventually break, but it should take much, much longer to do so…  I will be walking there wearing shoes hardly different from those worn fifty-three hundred years ago by the mummified man discovered in a glacier in the Austrian Alps. At the restaurant, I will be using silverware, wine, cheese, etc… Absence of literary culture is actually a marker of future blindness because it is usually accompanies by a denigration of history, a byproduct of unconditional neomania… Just by setting foot into a museum, the aesthetically minded person is connecting with the elders… You just need the following: some respect for the past, some curiosity about the historical record, a hunger for the wisdom of the elders, and a grasp of the notion of ‘heuristics’… For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable, every additional day may imply a longer life expectancy… This simply, as a rule, tells you why things that have been around for a long time are not ‘aging’ like persons, but ‘aging’ in reverse. Every year that passes without extinction doubles the additional life expectancy… Technologies that were prone to aging are already dead… The second mistake is to believe that one would be acting ‘young’ by adopting a ‘young’ technology, revealing both a logical error and mental bias. It leads to the inversion of the power of generational contributions, producing the illusion of the contribution of the new generations over the old- statistically, the ‘young’ do almost nothing… Much progress comes from the young b/c of their relative freedom from the system and courage to take action that older people lose as they become trapped in life… How to teach children skills for the twenty first century? Make them read the classics. The future is in the past… Since failures are buried and we don’t hear about them, investors are led to overestimate their chances of success… It also happens that whatever is technological tends to be fragile. Articles made by an artisan cause fewer treadmill effects. And they tend to have some antifragility- recall how my artisanal shoes take months before becoming comfortable. Items with an on-off switch tend to have no such redeeming antifragility… I also enjoy writing facing trees, and, if possible, wild untamed gardens with ferns. But white walls with sharp corners and Euclidian angles and crisp shapes strain me… West Village: Thanks to Jane Jacobs petitions and unremitting resistance that the neighborhood- the prettiest in Manhattan, has survived nearly intact… The most expensive neighborhoods in Paris today were the ones that had been left alone by the nineteenth-century renovators… Just as with the unintrusive shoes that allow us to feel the terrain, modern technology allows some of us to reverse that trend, as expressed by Oswald Spengler. Now modern technology allows us to merge with nature, and instead of a small window, an entire wall can be transparent and face lush and densely forested areas…  Like many people watching cancer research like a hawk, I fell for the following; seemingly uninteresting results that go unnoticed (failed trials, etc.) can years later turn out to be breakthroughs. So time can act as a cleanser of noise by confining to its dustbins all these overhyped works. Some organizations even turn such scientific production into a cheap spectator sport, with ranking the ten ‘hottest papers’, in say rectal oncology or some such –sub-sub specialty… Amateurs in any discipline are the best, if you can connect with them. Unlike dilettantes, career professionals are to knowledge what prostitutes are to love… One of my students asked me for a rule on what to read. “As little feasible from the last twenty years, except history books that are not about the last fifty years.”  Friends read timely material that becomes instantly obsolete… Corporations that are large today should be gone, as they have always been weakened by what they think is their strength; size, which is the enemy of corporations as it causes disproportionate fragility to Black Swans…  I surmise that those human technologies such as writing and reading that have survived are like the tile to the dog, a match between natural friends, because they correspond to something deep in our nature… The non-natural needs to probe its benefits, not the natural... This is the same error as mistaking absence of evidence for evidence of absence, the one that tends to affect smart and educated people… Everything convex is antifragile, up to a certain dosage. You don’t need empirical data to prove that one plus one equals two, or that probabilities need to add up to 100%... via negative as a rigorous approach to life…Life expectancy has increased b/c of the combination of many factors: sanitation, penicillin, a drop in crime, life-saving surgery, and of course medical practitioners operating in severe life-threatening situations (only)…  via negative: removing things can be quite a potent (and, empirically, a more rigorous) action. Why? Subtraction of a substance not seasoned by our revolutionary history reduces the possibility of Black Swans while leaving one open to improvements…  It has been shown that many people benefit from the removal of products that did not exist in their ancestral habitat: sugars and other carbohydrates in unnatural format, wheat products (those with celiac disease, but almost all of us are somewhat ill-adapted to this new addition to the human diet), milk and other cow products (for those of non-Northern European origin who did not develop lactose tolerance), sodas (both diet and regular), wine (for those of Asian Origin who do not have a history of exposure), vitamin pills, food supplements, the family doctor, headache medicine and other painkillers… I just drink wine, water and coffee. From such examples, I derived the rule that what is called ‘healthy’ is generally unhealthy, just as ‘social networks are antisocial, and the ‘knowledge’ based economy is typically ignorant… In my own experience, a considerable jump in my personal health has been achieved by removing offensive irritants: the morning newspapers (the mere mention of fragilista journalists Friedman, Krugman), the boss, the daily commute, air-conditioning (though not heating), television, emails from documentary filmmakers, economic forecasts, news about the stock market, gym “strength training” machines, and many more… While the gene is antifragile, since it is information, the carrier of the gene is fragile, and needs to be so for the gene to get stronger…  When someone gets the upside and someone else gets the downside: the worst problem of modernity lies in the malignant transfer of fragility and antifragility  from one party to the other, with one getting the benefits, the other one (unwittingly) getting the harm, with such transfer facilitated by the growing wedge b/w the ethical and the legal. The state of affairs existed before, but is acute today, modernity hides it especially well… Never have people who talk and don’t do been more visible, and played a larger role, than in modern times. This is the product of modernism and division of tasks… Stiglitz syndrome: corresponds to a combination of remarkable analytical skills, blindness to fragility, selective memory, and absence of skin in the game = fragilista (with good intentions) + ex post cherry-picking… Never ask the doctor what you should do. Ask him what he would do if he were in your place… Makes pennies to lose dollars in the fragile case; makes dollars to lose pennies in the antifragile one… For the fragile, a single loss can be terminal…Suckers try to win arguments, nonsuckers try to win… Behavior called ‘irrational’ can be good if it is harmless… Never put your enemy’s back to the wall… A type of belief-pledge that to Fat tony and Nero needed to be translated into deeds… The problem of the commercial world is that it only works by addition (via positive), not subtraction (via negative): pharmaceutical companies don’t gain if you avoid sugar; the manufacturer of health club machines doesn’t benefit from your deciding to lift stones and walk on rocks(without a cell phone); your stockbroker doesn’t gain from your decision to limit your investments to what you see with your own eyes, say your cousin’s restaurant or an apartment building in your neighborhood… Another attribute of the artisanal. There is no product that I particularly like that I have discovered through advertising and marketing…  A corporation does not have natural ethics; it just obeys the balance sheet. The problem is that its sole mission is the satisfaction of some metric imposed by security analysts, themselves (very) prone to charlatanism… Or how they use public office as a means to satisfy personal greed…. There seems to be a survival- advantage to small or medium-sized owner-operated or family-owned companies… At the local level, it looks like we get socialized in a certain milieu, hence exposed to a treadmill. You do better, move to Greenwich, then become a pauper next to a twenty-million dollar mansion and million-dollar bday parties. And you become more dependent on your job, particularly as your neighbors get big tax-sponsored wall street bonuses…The point isn’t that making a living in a profession is inherently bad; rather, it’s that such a person becomes automatically suspect when dealing with public affairs.. For Fat Tony, humanity started at the level of “self ownership”, someone who cannot be squeezed into doing something he would otherwise never do… In larger organisms like the mega holy nation-state, with a smaller role for face-to-face encounters, and social roots, shame ceases to fulfill its duty of disciplinarian. We need to reestablish it… Ethical optionality: people fit their beliefs to actions rather than fit their actions to their beliefs… Evidence against one’s interest: a pharmacist or an executive of big pharma who advocates starvation via negative methods to cure diabetes would be more credible than another one who favors the ingestion of drugs…  More data means more information, perhaps, but it also means more false information… Someone looking at history from the vantage point of a library will necessarily find many more spurious relationships than one who sees matters in the making, in the usual sequences one observes in real life. He will be duped by more epiphenomena, one of which is the direct result of the excess of data as compared to real signals… Swelling number of potential spurious relationships (big data): explains why in the twelve years or so since we’ve decoded the human genome, not much of significance has been found… Modernity provides too many variables (but too little data per variable), and the spurious relationships grow much, much faster than real information, as noise is convex and information is concave… Everything gains or loses from volatility . Fragility is what loses from volatility and uncertainty. The glass on the table is short volatility… Education in the sense of formation of character, personality, and acquisition of true knowledge, likes disorder; label-driven education and educators abhor disorder. Some things brake because of error, others don’t… We may never get to know x, but we can play with the exposure to x, barbell things to defang them; we can control a function of , f(x)even if x remains vastly beyond our understanding. We can keep changing f(x) until we are comfortable with it by a mechanism called convex transformation, the fancier name for the barbell.