Antifragile

Just finished listening to Antifragile by Nassim Nicholas-Taleb. I couldn’t take any notes while driving, but the book is so damn good that I had to re-read the book summary by Derek Sivers. Here is a condensed version of his notes, for future reference.

Some things thrive and grow when exposed to volatility, randomness, disorder, and stressors: evolution, culture, ideas, revolutions, political systems, technological innovation, bacterial resistance.

Anything that has more upside than downside from random events (or certain shocks) is antifragile. Things are antifragile up to a certain level of stress. Your body benefits from some amount of mishandling, but only up to a point.

Many modern ailments seem to be associated with a lack of randomness in feeding and the absence of the stressor of occasional starvation.

The tragedy of modernity: as with neurotically overprotective parents, those trying to help are often hurting us the most.

Don’t confuse rationalizing with rational - the two are almost always exact opposites.

Policies and actions in which the benefits are small and visible, and the side effects potentially severe and invisible. The medical fragilista overintervenes in denying the body’s natural ability to heal and gives you medications with potentially very severe side effects.

Black Swans dominate society and history (and people, because of ex post rationalization, think themselves capable of understanding them). As a consequence, we don’t quite know what’s going on, particularly under severe nonlinearities.

Debt always fragilizes economic systems. Humans somehow fail to recognize situations outside the contexts in which they usually learn about them.

Layers of redundancy are the central risk management property of natural systems. Redundancy is opportunistic, so such extra strength can be used to some benefit even in the absence of the hazard.

Information is antifragile; it feeds more on attempts to harm it than it does on efforts to promote it. Many wreck their reputations merely by trying to defend it.

Criticism for a book is a truthful, unfaked badge of attention, signaling that it is not boring. Smear campaigns, if you can survive them, help enormously, conditional on the person appearing to be extremely motivated and adequately angry. It is only when you don’t care about your reputation that you tend to have a good one.

Those from whom we have benefited the most aren’t those who have tried to help us (say with “advice”) but rather those who have actively tried - but eventually failed - to harm us.

Machines are harmed by low-level stressors (material fatigue), organisms are harmed by the absence of low-level stressors (hormesis). Much of aging comes from a misunderstanding of the effect of comfort - a disease of civilization.

Humans tend to do better with acute than with chronic stressors, particularly when the former are followed by ample time for recovery, which allows the stressors to do their jobs as messengers. Your bones will get weaker if you spend a lot of time riding a bicycle.

You pick up a language best from error to error, when you need to communicate under straining circumstances, situational difficulty, being forced to read the mind of the other person - suspending one’s fear of making mistakes.

So some parts on the inside of a system may be required to be fragile in order to make the system antifragile as a result.

When you starve yourself of food, it is the bad proteins that are broken down first and recycled by your own body - a process called autophagy.

It is often the mistakes of others that benefit the rest of us. Had the Titanic not had that famous accident, we would have kept building larger and larger ocean liners and the next disaster would have been even more tragic.

Someone who has made plenty of errors - though never the same error more than once - is more reliable than someone who has never made any. My characterization of a loser is someone who, after making a mistake, doesn’t introspect, doesn’t exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on. These types often consider themselves the “victims”.

Avoidance of small mistakes makes the large ones more severe. Small forest fires periodically cleanse the system of the most flammable material, so this does not have the opportunity to accumulate.

Stability is achieved by managing noise, having a mechanism for letting it run its natural course, not by minimizing it. Inject random noise into a system to improve its functioning. Stochastic resonance, adding random noise to the background makes you hear the sounds (say, music) with more accuracy.

Some people have fallen for the naive turkey-style belief that the world is getting safer and safer.

It’s much easier to sell “Look what I did for you” than “Look what I avoided for you.” Of course a bonus system based on “performance” exacerbates the problem.

Someone imperturbable, with the ability to be calm under fire that is considered necessary to become a leader, only reacts to real information. Someone of the type we call neurotic, largely to noise. The difference between the two fellows will show us the difference between noise and signal. Noise is what you are supposed to ignore, signal what you need to heed.

If you look at the very same data on a daily basis, the composition would change to 95 percent noise, 5 percent signal. And if you observe data on an hourly basis, as people immersed in the news and market price variations do, the split becomes 99.5 percent noise to 0.5 percent signal. That is two hundred times more noise than signal - which is why anyone who listens to news (except when very, very significant events take place) is one step below sucker.

We are separated from the real world. The media only report the most anecdotal and sensational cases (hurricanes, freak accidents, small plane crashes), giving us a more and more distorted map of real risks.

By presenting us with explanations and theories, the media induce an illusion of understanding the world. The best way to mitigate interventionism is to ration the supply of information, as naturalistically as possible. The robust and antifragile don’t have to have as accurate a comprehension of the world as the fragile - and they do not need forecasting.

Next time someone in a suit and tie gave them projections for some dates in the future, they should ask him to show what he had projected in the past.

A man is honorable in proportion to the personal risks he takes for his opinion.

Seneca was the wealthiest person in the Roman Empire. He focused on the practical aspect of Stoicism: how to handle adversity and poverty and, even more critically, wealth.

To become a successful philosopher king, it is much better to start as a king than as a philosopher. Marcus Aurelius.

“I lost nothing,” after an adverse event. Stoicism makes you desire the challenge of a calamity. And Stoics look down on luxury.

He is in debt, whether he borrowed from another person or from fortune.

Stoicism: What we learn from reading Seneca directly, rather than through the commentators, is a different story. Seneca’s version of that Stoicism is antifragility from fate. No downside from Lady Fortuna, plenty of upside.

Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile.

When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth.

Possessions make us worry about downside, thus acting as a punishment as we depend on them. All upside, no downside. Even more: dependence on circumstances - rather, the emotions that arise from circumstances - induces a form of slavery.

Seneca’s practical method to counter such fragility was to go through mental exercises to write off possessions, so when losses occurred he would not feel the sting - a way to wrest one’s freedom from circumstances. It is similar to buying an insurance contract against losses.

It is 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.

Stoicism is about the domestication, not necessarily the elimination, of emotions.

The modern Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.

Seneca proposes a complete training program to handle life and use emotions properly - thanks to small but effective tricks.

A catalogue of social deeds: invest in good actions. Things can be taken away from us - not good deeds and acts of virtue.

Simple test: if I have “nothing to lose” then it is all gain and I am antifragile. If you have less to lose than to gain, more upside than downside, then you like volatility and you are also antifragile.

A Stoic is a Buddhist with attitude, one who says “f* you” to fate.

If you put 90 percent of your funds in boring cash (assuming you are protected from inflation) or something called a “numeraire repository of value,” and 10 percent in very risky, maximally risky, securities, you cannot possibly lose more than 10 percent, while you are exposed to massive upside.

Someone with 100 percent in so-called “medium” risk securities has a risk of total ruin from the miscomputation of risks.

A barbell can be any dual strategy composed of extremes, without the corruption of the middle - somehow they all result in favorable asymmetries.

Provide for the worst; the best can take care of itself. (Observe how people tend to provide for the best and hope that the worst will take care of itself.)

You can easily barbell yourself by removing the chances of ruin in any area. I am personally completely paranoid about certain risks, then very aggressive with others. The rules are: no smoking, no sugar (particularly fructose), no motorcycles, no bicycles in town or more generally outside a traffic-free area such as the Sahara desert, no mixing with the Eastern European mafias, and no getting on a plane not flown by a professional pilot.

The exercise regimen: going for the maximum weight one can lift, then nothing, compared to other alternatives that entail less intense but very long hours in the gym. This, supplemented with effortless long walks, constitutes an exercise barbell.

Talk to either undergraduate students, cab drivers, and gardeners or the highest caliber scholars; never to middling-but-career-conscious academics.

So just as Stoicism is the domestication, not the elimination, of emotions, so is the barbell a domestication, not the elimination, of uncertainty. Anything that removes the risk of ruin will get us to such a barbell.

The rational flâneur is someone who, unlike a tourist, makes a decision at every step to revise his schedule, so he can imbibe things based on new information. The flâneur is not a prisoner of a plan.

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.

“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 only occupy your mind with matters that interest you) but not its side effects, such as having to attend a black-tie charity event.

You don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself and recognize favorable outcomes when they occur.

In trial and error, the rationality consists in not rejecting something that is markedly better than what you had before.

People with too much smoke and complicated tricks and methods in their brains start missing elementary, very elementary things.

Antifragile risk taking - not education and formal, organized research - is largely responsible for innovation and growth. Birds fly and those who lecture them are the ones who write their story. So it is easy to see that history is truly written by losers with time on their hands and a protected academic position.

Knowledge formation, even when theoretical, takes time, some boredom, and the freedom that comes from having another occupation, therefore allowing one to escape the journalistic-style pressure of modern publish-and-perish academia to produce cosmetic knowledge.

The doers have not written a lot of books. Their memory has been treated very badly by history. Formal thinkers and theorizing theorizers tend to write books; seat-of-the-pants people tend to be practitioners who are often content to get the excitement, make or lose the money, and discourse at the pub. Their experiences are often formalized by academics; indeed, history has been written by those who want you to believe that reasoning has a monopoly or near monopoly on the production of knowledge.

The biologist and intellectual E. O. Wilson was once asked what represented the most hindrance to the development of children; his answer was the soccer mom. They repress children’s natural biophilia, their love of living things. Soccer moms try to eliminate the trial and error, the nerds - that is, they are like computers except slower. Further, they are now totally untrained to handle ambiguity.

One can be an intellectual without being a nerd, provided one has a private library instead of a classroom, and spends time as an aimless (but rational) flâneur benefiting from what randomness can give us inside and outside the library. 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.

Socrates’ technique was to make his interlocutor(debate partner), who started with a thesis, agree to a series of statements, then proceed to show him how the statements he agreed to are inconsistent with the original thesis, thus establishing that he has no clue as to what he was taking about. Socrates used it mostly to show people how lacking in clarity they were in their thoughts, how little they knew about the concepts they used routinely - and the need for philosophy to elucidate these concepts.

Via Negativa:


Modify your exposure and learn to get out of trouble.

If you have favorable asymmetries, or positive convexity, options being a special case, then in the long run you will do reasonably well, outperforming the average in the presence of uncertainty. The more uncertainty, the more role for optionality to kick in, and the more you will outperform. This property is very central to life.

It is the negative that’s used by the pros, those selected by evolution: chess grandmasters usually win by not losing; people become rich by not going bust.

The learning of life is about what to avoid. You reduce most of your personal risks of accident thanks to a small number of measures.

When it comes to knowledge, the same applies. The greatest - and most robust - contribution to knowledge consists in removing what we think is wrong - subtractive epistemology. In life, antifragility is reached by not being a sucker.

Since one small observation can disprove a statement, while millions can hardly confirm it, disconfirmation is more rigorous than confirmation.

Keeping one’s distance from an ignorant person is equivalent to keeping company with a wise man.

A small number of employees in a corporation cause the most problems, corrupt the general attitude - and vice versa - so getting rid of these is a great solution.

More data - such as paying attention to the eye colors of the people around when crossing the street - can make you miss the big truck. When you cross the street, you remove data, anything but the essential threat.

Technology is at its best when it is invisible. When it displaces the deleterious, unnatural, alienating, and, most of all, inherently fragile preceding technology.

Books that are one year old are usually not worth reading, no matter the hype and how “earth-shattering” they may seem to be. Time can act as a cleanser of noise by confining to its dustbins all these overhyped works.

Companies that get hyped up for their potential and called “best” on the cover of magazines or in books such as Good to Great are about to underperform and one can derive an abnormal profit by shorting their stock).

Get the proceedings of a random conference that took place five years ago. Odds are it will feel no different from a five-year-old newspaper. Attending breakthrough conferences might be a waste of time.

Diseases of civilization result from the attempt by humans to make life comfortable for ourselves against our own interest, since the comfortable is what fragilizes.

When you think you have found a free lunch, say, steroids or trans fat, something that helps the healthy without visible downside, it is most likely that there is a concealed trap somewhere.

What Mother Nature does is rigorous until proven otherwise; what humans and science do is flawed until proven otherwise. Overriding nature requires some very convincing justification on our part.

Add neurosomething to a field, and suddenly it rises in respectability and becomes more convincing as people now have the illusion of a strong causal link. An attribution problem arises when the person imputes his positive results to his own skills and his failures to luck. Applied to stockbrokers, doctors, and managers of companies.

No doctor derives pleasure from the health of his friends, no soldier from the peace of his city. All these biases lead to action, almost never inaction.

To be sophisticated you need to accept that you are not so.

Money has its own iatrogenics. Separating some people from their fortune would simplify their lives and bring great benefits in the form of healthy stressors.

It’s profoundly unethical to talk without doing, without exposure to harm, without having one’s skin in the game, without having something at risk. You express your opinion; it can hurt others (who rely on it), yet you incur no liability. Is this fair?

Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have - or don’t have - in their portfolio.