BOOK REVIEW: ANTIFRAGILE

I’ve had many of you ask me for my thoughts on Nassim Taleb’s latest risk management book, Antifragile. So, in the spirit of the main criticism I’d give the book (it’s repetitive), here are some brief notes (< 1000 words = Top 50 highlights):

Summary Thoughts

1. He doesn’t like academic/unaccountable government policy. Neither do I.
2. He likes the recent work of Dan Kahnemann (Thinking, Fast and Slow). So do I.
3. He’s transitioning from market practitioner to philosopher. I wouldn’t do that.

Bottom line: Buy the book. A must read as we continue to narrow the gap between Chaos Theory and Behavioral Finance.

Content Highlights

1. “I’d rather be dumb and antifragile than extremely smart and fragile” (pg 4) Wall St “smart” is changing
2. “anything that has more upside than downside from random events is antifragile; the reverse is fragile (pg 5)
3. “This is the tragedy of modernity… those trying to help are often hurting us the most (pg 5) #agreed
4. “ I.A.N.D (International Association of Name Droppers)” (pg 6) #funny
5. “academics with too much power and no real downside and/or accountability” (pg 6) #yep
6. “Less is more and usually more effective”, cites Steve Jobs  (pg 11); good advice, #practice it
7. “only practitioners (or people who do things) tend to spontaneously get to the point” (pg 13)
8. “Table 1: The Central Triad (3 Types of Exposures” (pgs 24-27) very #thoughtful/concise on Behavioral Econ
9. “We are all… similarly handicapped, unable to recognize the same idea…” (pg 39) good pt on #context #bias
10. “Abundance is harder for us to handle than scarcity” (pg 42)
11. “Equilibrium, Not Again” (pg 60) solid complexity theory (Stuart Kaufman) reference vs #Keynesian
12. “Leopards… are not instructed by personal trainers on the “proper form” to lift a deer up a tree” (pg 73) #true
13. “you learn from the errors of others…” (pg 73),  #important lessons, especially on Wall St
14. “National Entrepreneur Day” (pg 79) #Obama, please read
15. “what is made to fly will not do well on the ground… volatility comes from volare, “to fly” in Latin” (pg 81)
16. “Nature loves small errors… humans don’t.” (pg 85) #evolve
17. “those experiencing a brand of variations called chaos can be stabilized by adding randomness to them” (pg 103)
18. “For a theory is a very dangerous thing to have… Theories are superfragile.” (pg 116) #awesome quotes
19. “Men feel good less intensely than bad.” (pg 155) good quote by Livy in the context of #Seneca’s thoughts
20. “Seneca’s Barbell” (pg 161) #important pg to read related to your #Cash position and #Drawdown risk
21. “An agent does not move except out of intention for an end.” (pg 169) #quote from St Thomas Aquina
22. “Convex Tinkering” (pg 182) makes an #excellent risk mgt pt on asymmetry with a picture
23. “Life is long Gamma” (pg 184) would love to hear the anti-free market #answer to that
24. “Risk taking ain’t gambling, and optionality ain’t lottery tickets” (pg 185) this ain’t Kansas, and I ain’t Toto
25. “Few want to jeopardize their jobs and reputation for the sake of change” (pg 192) #truth
26. “Evolution does not rely on narratives, humans do” (pg 207) #money quote
27. Table 4: “The difference between teleological and optionality” (pg 214) good thinkers framework
28. Chapter 15 = “History Written by the Losers” #rant
29. “The difference between humans and animals lies in the ability to collaborate” (pg 233), bingo #collaboratio
30. “Nokia … began as a paper mill” (pg 235), #re-learn, find a way to win
31. “Trial and error is freedom.” (pg 246) #RiskMgt101
32. “You are taking the joy of ignorance out of out of the things we don’t understand” (pg 253) Fat Tony to Socrates
33. “What is not intelligible to me is not necessarily unintelligent” (pg 256) #Nietzsche
34. “It would be like prostitutes listening to technical commentary by nuns” (pg 264) Bernanke, comments?
35. “Smile! A better way to understand convexity and concavity” (pg 272) #pics summarize hundreds of pages
36. “Squeezes are exacerbated by size” (pg 279) think #HedgeFundBubble, Short Interest, etc.
37. “If you have favorable asymmetries, or positive convexity… in the long run you will do reasonably well” (pg 300)
38. “Innovation is saying no to 1,000 things.” (pg 305) quotes Steve #Jobs again
39. “we are moving into the far more uneven distribution of 99/1 across many things that used to be 80/20” (pg 306)
40. “absence of literary culture is actually a marker of future blindness” (pg 314) on some #techies vs the classics
41. “Medicine, Convexity, and Opacity” (pg 337), you can skip this chapter unless you like to rip on doctors
42. “mention of the fragilista journalists Friedman or Krugman can lead to explosive bouts of anger” (pg 362) #lol
43. Chapter 23 = “Skin In The Game” (pg 375) 1^st three pages and Table 7 of this chapter #excellent
44. “a person is only as respectable … as the downside he is willing to face for the sake of others” (pg 376) #skin
45. “you can’t feel insulted by a dog” (pg 380) #woof
46. “in traditional societies even those who fail have a higher status than those who are not exposed” (pg 383)
47. “Isn’t this unethical?” (pg 413) crushes Princeton’s Alan #Blinder for his conflicts of interest as an academic
48. “Everything gains or losses from volatility. Fragility is what loses from volatility and uncertainty” (pg 421) #conclusion
49. “Prometheus is long disorder; Epimetheus is short disorder” (pg 422) #conclusion
50. “living things are long volatility. The best way to verify that you are alive is by checking if you like variations” (pg 423)