Book review: Antifragile – Nassim Taleb

In his third popular book (after “Fooled by Randomness” and “black Swan”), Taleb now introduces a new concept called “antifragilty”. As in the first two books, in his opinion on the big scale, the world is shaped by “black swans”, totally unpredictable events.

Something that gets hurt by those Black Swans is fragile. Someone/Something that is not hurt by Black Swans is robust. Antifragile finally is something/someone that gains from the chaos a Black Swan event is creating.

So far so good, however if one would have expected some implications for an investment strategy, one gets almost completely disappointed. At some points, financial markets are mentioned, but not very often.

Instead, the book is more a “Paleo” style nutrition and work out guide than a finance or investment book. Taleb shares his never ending wisdom with the readers, on topics like why the Greek philosophers were idiots (or not so smart as Taleb) to all kind of medical advice and why you shouldn’t eat oranges because the are much sweeter than 3000 years ago (hint: the only way is to eat the stuff a cave man would have had access to…).

From time to time he looks at two fictional characters called Nemo and Fat Tony. If we assume that Nemo is his alter ago, we know now at least that Taleb made a “low 2 digit million” amount of money when he bet against the financial crisis.

Don’t get me wrong, there is some good “common sense” wisdom in the book, for instance that one should not take medical studies to seriously, but in total I found the book pretty much a waste of time.

Maybe I am not intelligent enough to appreciate Taleb’s genius, but for a pure mortal like me the book looks like the attempt, to cash in on the same idea for the third time.

In the view passages about investing, Taleb promoted very vaguely a style he calls the “barbel” style: Invest most of your money in “safe” assets (whatever that is) and a small part in risky stuff with lots of optionality. Although he mentions that financial options is not what he means because they are mostly overpriced.

I think this kind of “advice” shows the major issue with Taleb: He is by heart a trader, not an investor. Otherwise he migth have mentioned that “Buffet style” long term compounding plus margin of safety is a much easier way to become “antifragile”. But that wouldn’t sell as many books and create invitations to speaker events and hobnobbing at the Davos Forums.

Summary:
Unless you are a big Taleb fan and you need his advice on how and what to eat and work out, don’t buy the book. Save your time and money for something more interesting.

5 comments

  • I also have just finished reading this book and I found it excellent, thought provoking and stimulating.

    Anyone that has followed Taleb at all knows that he is hugely opinionated and this comes through increasingly as you progress through the book. Now that he has described it, he has to apply antifragility to his life or else he would be too much like the hypocrites he so rails against , hence the idiosyncratic discussions on exercise, nutrition etc. I agree that this does detract from the book a little bit as the reader ends up considering the minutiae (why does he drink coffee but not tea?)

    However , I found the description of antifragility striking and wondered immediately how the world and I had progressed for so long without recognising this concept which was hidden in plain sight. With this book Taleb has ‘outed’ antifragility and I would love to think that decision makers everywhere would incorporate the concept into their activities. Undoubtedly the book will be ignored by the establishment.

    When it comes to investing, the main conclusion I drew was that Value Investing is inherently antifragile, which is why it works. When we talk about ‘growth in for free’ we are describing the ideal Value situation of limited downside with upside optionality. Taleb talks about these situations quite extensively though applied to life rather than investing.

    The point about the Barbell approach is that low risk is often mistaken for no risk. A low risk investment can still blow up when a Black Swan arrives, a ‘no risk’ of course cannot. Applying this in the real world is, sadly, another matter, but the Barbell is a mental model you can work with.

    I was hoping there would be a summary at the end about applying antifragility to life and investments, but ultimately you are left to draw out the lessons for yourself:-(

    rgds

    • thanks for the comment. The book clearly polarizes people. Personally, I think that taleb is already part of the “establishment” but that might be another topic.

  • Halil Bahadirli

    I found his first book excellent, his second only a copycat of his first one. Two things I learned from his books.

    First, he seems to be right, that under certain circumstances out of the money options seem to be priced too cheaply. As a trader I try to figure out those so called possible black swan events in order of betting on them although I must confess that I have not been successfull in it.

    Second, Taleb mentiones his country of origin, the Lebanon, quite frequently in his books and as I happen to live in the eastern mediterranean as well I got obsessed about this part of the world and its history, having read a dozen of books since then from the crussaders to the civil war in Lebanon.

    So, a book may be a disapointment in its main aspect but as an investor or a trader you still can try to cut your losses either

    in selling the book at ebay for a fraction of it’s nominal value (but how do you cut your losses for the time you wasted in reading it???) or

    in trying to find value where you did not expect to find some (for instance relabeling an investment book as a history book)

  • The part where he talks about walking on uneven surfaces with special unstable shoes to try to antifragilize himself, then falling and breaking his nose, is alone worth the price of the book 🙂

  • Refreshing review! If you doubt being intelligent enough to appreciate Taleb’s genius, watch this http://bit.ly/11upggw (6min, starts at 47:30) …and reconsider 😉

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