The Black Swan – Nassim Taleb

The Black Swan – Nassim Taleb – Book review

This book is about dealing with uncertainty. I like Nassim’s books.

Ho do you deal with uncertainty? How do you know if it is about to play out out or not?

It’s funny how all financial people do DCF analysis and modeling, and i am pretty convinced that they were doing the same thing before 2008, and using the forecasts like no external factor would not through a monkey wrench on the theory. Lehman went under, Bear Stearns went under, and all people working there were making daily dcf modelling. So, what is the conclusion to all of this?

We need to put things in boxes, we need certainty, in order to make the most possible assumptions regarding any decision. It is important, at least in my perspective, to see things from the negative perspective, and ask yourself: “If i wanted to fail what would i need to do regarding this business plan?” “What would make it fail?”.  We all have our biasis in judgment. It always takes longer, it always takes more money, and there are always external factors that can change the whole thing. The best you can do is not to be delusional, count on the average between the mean, because it is unlikely that you are going to have much better results than everyone else if you think like them.

I like  a saying from Sam Zell when asked about predictability: “They pay a NBA Start to hit 7-10, i keep my money if i get 7-10 right. They key here is cover your risk, because when you fail you don’t get a game over”.

You can get this book here

Be great, nothing else pays.

DM

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