The Black Swan

This may be a little deeper than I should get for just a second post, but since it’s on my mind, I figure I better roll with it. I will chat about more intellectual stuff like the Diamondbacks, The Hold Steady, and the virtues of ales over pilsners later. For today, I would rather discuss the meaning of everything.

We tend to rationalize everything. Everything must have meaning. That is just the way our brains work.

After catching an interview of Nassim Nicholas Taleb on CSPAN last week, I decided to pick up his latest book The Black Swan. I am generally not all that smart. In fact, I have a box full of old report cards to prove it. But something about the interview struck my intellectual funny bone, so I headed out to the bookstore. I quickly realized this book had way too many pages and an intimidating amount of big words, so I made a bee line for the audio book section. This Black Swan thing is over my head, but I was fascinated enough to buy it, none-the-less.

In The Black Swan and Taleb’s earlier book, Fooled By Randomness, he asserts that most of what we believe is wrong, or more precisely, what our beliefs are premised on are often incorrect. This is because we are wired to assign rational causes to the world around us, when really, the causes are more random than our minds can handle. When I first heard him talk about this concept, I thought about the traders on Wall Street. They use technical analysis--the reading of historical performance charts--to explain which direction a stock is headed. They discover patterns and assign meaning to them, but this is all done after the fact. The charts really mean nothing, the traders just assign meaning as a way of rationalizing why the stock has arrived to it’s price. Worse yet, then they try to use these chart patterns to explain what is happening with other stocks!

I remember Mr. Gust teaching this cause and effect concept in my high school English class, explaining how the Romans and Greeks used gods to explain the world around them. In other words, events happen in the world, then these things must be explained. So if the Romans kicked some butt on the battlefield, it was because their god Jupiter was in a good mood that day. This was essentially their “science”, their way of explaining the world. We do the same thing today, arrogantly believing that because we have “real” science to explain things, we understand the world better than the Romans. I would guess Taleb would say we probably miss the point. We, like the Romans, rationalize meaning into things that have little or no correlation to the event we may be trying to explain.

Taleb uses some headlines to illustrate this: “Bond Prices Up On Saddam’s Capture”. Four hours later another one exclaims “Bond Prices Down On Saddam’s Capture.” In reality, the two events had nothing to do with each other, but we needed meaning so we connect them.

I just started this audio book, so if its good, I may elaborate more on it later. But in the next post, I promise to write about something more relevant, like Lindsay versus Paris or something...

If you have an hour to kill, here is where you can find Taleb’s CSPAN interview:

http://download.rbn.com/cspan/cspan/download/podaudio/arc_btv092207_4.mp3

BTW- I am pretty sure the Diamondbacks will win the Series this year. After all, I have my lucky underwear on...