Finance

The book challenges the Enlightenment ideal of rationality and control. Instead of believing the world is orderly and predictable, Taleb suggests we embrace uncertainty and randomness. True wisdom lies in humility—acknowledging how little we truly know and resisting the urge to explain away the unpredictable.

Taleb defines a Black Swan event as having three traits: It is an unpredictable event. It has a massive impact – it can change lives, industries, even nations.It seems obvious in hindsight – after it happens, we think we saw it coming. Example – 9/11, Covid-19 etc.

Taleb shares following ideas to better understand the concept of Black swan:

1. The Turkey Problem: A turkey is fed every day,

getting fatter and more comfortable—until the day it is ready to become food for thw owner. 

We mistake stability for safety. Just because something has always worked doesn’t mean it will tomorrow.

2. Silent Evidence: We judge based on what we see. But what about what we don’t? We praise entrepreneurs who “made it,” not the thousands who failed quietly. We credit generals who won wars, not those whose wisdom prevented them

Here’s the philosophical gold:🔍 “Absence of evidence is not evidence of absence.”he gives examples like:

We don’t see the people who failed, only those who survived (e.g., entrepreneurs, generals, artists), so we wrongly assume their strategies worked.

We don’t see diseases that didn’t get diagnosed, so we think they’re rare, when they’re just undetected.

We don’t see terrorist attacks that were prevented, so we underestimate the success of prevention.

3. The Narrative Fallacy – The Stories We Tell Ourselves Are Often Lies.

Humans are natural storytellers. Our brains are wired to connect dots and make sense of chaos. That’s why, after a shocking event—a market crash, a failed relationship, a political revolution—we quickly build a neat story around why it happened.

Taleb calls this the narrative fallacy: our tendency to create stories that simplify complex events, even if those stories are wrong or incomplete.

👉 Why it matters:These narratives give us the illusion of control and understanding. But in reality, they often ignore randomness, hide true causes, and make us overconfident about the future.

For example:The stock market crashed because of a speech the Fed Chair gave.”

→ Maybe. Or maybe it was just a random trigger in a fragile system.

“My startup failed because the market wasn’t ready.”

→ Or maybe it was bad timing, bad luck, or invisible risks you couldn’t control.

4. Experts are not often experts – Taleb takes direct aim at so-called experts—especially in fields like economics, finance, and forecasting. He argues that many experts sound confident but are often no better than random chance at predicting real-world outcomes.

They suffer from the illusion of knowledge, armed with complex models that ignore rare, high-impact events. Their suits, spreadsheets, and jargon mask a troubling truth: they can’t predict the future any better than you can.

Taleb’s ideas are not just theoretical—they can reshape how you live, work, and make decisions:

Question certainty: Be cautious of people (and systems) that claim to know the future.

Avoid over-planning: Rigid life or business plans often crumble when randomness strikes.

Embrace randomness wisely: Expose yourself to good luck (serendipity), but protect yourself from ruin.

Build around the unknown: Focus more on what you don’t know than what you do.

Philip Fisher, an investor offers three reasons for selling stocks .

One should only sell stocks when :

1. If a mistake was made in original purchase – Some times people get attached with regards to holding stocks for long term in a way that they overlook the mistake they committed while purchasing stock .
If as a result when stock prices fall, they do not sell it. They keep it in their portfolio with a hope that price will correct itself in long run.

But when price do not correct , they end up making huge losses.

So whenever you realize that you committed mistake at the time of purchasing stock, sell it without waiting for corrections.

2. The stock no longer satisfy the criteria that were looked into while purchasing it – The facts you considered when you originally purchase share may have been deemed to be correct, but facts can change negatively over the passage of time. Say you bought a stock looking at the integrity of the management and strong business model, what if management of the company changed and new management is not showing integrity or the business model is changed drastically.

3.     A more attractive stock is identified – If you find better investment opportunity and you have shortage of cash, It is the best option to sell the stock for better opportunity. Make sure that the benefit of the new investment opportunity outweigh the implication of capital gain tax resulting from sell of previous stock.

Philip Fisher also noted that selling stocks should not turns out to be very often.
“If the job has been correctly done when a common stock is purchased, the time to sell it is almost never.”
 – Philip Fisher