Book Review of Antifragile by Nassim Nicholas Taleb

Genre: Investing
Author: Nassim Nicholas Taleb
Title: Antifragile: Things That Gain from Disorder (Buy the Book)

Summary

Imagine you are a turkey on a farm, tasked with the goal of analyzing the turkey population. You start in January and chart the population, noticing a steady increase with decreasing volatility as each month ticks by. Every day you are able to confirm a continual growth in the turkey population “with increased statistical evidence” right up until Thanksgiving, when the turkeys all lose, despite your confidence being at its maximum.

What’s the lesson here? The absence of evidence is not the evidence of absence. You have been made the victim of “artificial stability,” something The Black Swan author Nassim Taleb believes has become omnipresent in today’s world. In his newest book, he argues that it isn’t stability that should be the goal, but rather “antifragility.”

Antifragility is a term Taleb coined to describe the ability to gain from disorder, randomness, and chaos. It is what separates the living from the dead and what allows a system and its component parts to evolve and strengthen. It is important to distinguish antifragility from robustness, which is commonly thought of as the opposite of fragility, but in actuality is at the center of the fragility spectrum.

On one end we have fragile things, which break when confronted with stressors or disorder. Things that are robust are better – they are not impacted by disorder – but best of all are those things that are antifragile, that benefit from and are strengthened by chaos and disorder. Taleb’s archetypal example of antifragility is the Hydra from Greek mythology, who after a beheading grows back two heads, becoming stronger than before.

As illustrated by the turkey parable, Taleb argues that society overestimates the importance of scientific knowledge, and gives its seeming precision too much credit. As many eventually find out, it is better to be generally correct than to be precisely wrong. The desire to tame inherently complex and chaotic systems leads to what Taleb call the “Soviet-Harvard Delusion,” which has two main features – the illusory belief in experts’ ability to predict future circumstances as well was the belief that these same experts can foster innovation through top-down structures.

This second factor he calls “lecturing birds how to fly,” since, much as birds don’t need instructions on flight, humans don’t need to be told how to innovate. Innovation is a natural human trait that can only be hindered by university and government programs.

How can one build an antifragile system, one that is capable of gaining from the disorder which is inevitably down the road? First, prefer many small entities over a few large ones. If one fails, it will not take the whole system down with it. Decentralization also ties in with this theme. As the 2008 financial crisis showed, interconnectedness can lead to fragility.

Finally, overcompensation is an important aspect of antifragility as well. When a system is stressed, it should overshoot in its response to that stressor, much as muscles and bones overcompensate and become stronger after a workout.

By taking advantage of the benefits of smallness, decentralization, and overcompensation, society at large can benefit from failure without massive collective ruin, as the system naturally strengthens via a form of evolution and prepares itself for a more significant test that will inevitably arrive in the future. In this paradigm, small or short-term failures are a positive, as they ultimately bring about greater strength and long-term benefit.

Ignoring the conditions that foster antifragility puts one on the fast road to instability. Some people, who Taleb calls “fragilistas,” seek to control natural volatility in systems and in doing so prevent antifragility and eventually create black swan events.

Attempts to flatten the business cycle through the manipulation of markets and accumulation of debt are a perfect example of this. Debt is in fact the fastest way to bring about fragility – when a society takes on debt, it is giving away optionality in the future. Inundation by data is also contributing to fragility in today’s society.

Data is available in unprecedented quantities today, but much of it is noise rather than signal, and distracts rather than informs. Finally, another path to instability is through iatrogenic practices, actions performed with the intent to help, but actually harm through the removal of necessary stressors. The clearest examples of this can be found in medicine, where many treatments throughout history have been shown to do more harm than good.

The concept of antifragility can be applied as an investment strategy, where the goal is to have a portfolio that benefits from random, chaotic events. Certain options strategies fit the bill because their payouts demonstrate convexity, an asymmetry of payouts.

An antifragile investor should be willing to incur many small losses in order to benefit from an asymmetric upside that pays out when a seemingly unlikely event occurs. By creating a portfolio of 90% cash and 10% high convexity options, an investor can reverse the more traditional model of seeing many small gains, only to be wiped out when the Black Swan inevitably hits. Making antifragile investment decisions can be achieved by following six rules:

1. Strive for increasing positive convexity (creating asymmetry by reducing the downside)
2. Maintain a large number of diversified investments
3. Maintain optionality
4. Learn heuristically rather than academically. Focus on those who do the work rather than those who theorize about it.
5. Simplicity is preferable to complexity
6. Consider small failures more positively as ways to learn and innovate

These rules can also have broader career and relational applications. When choosing a career path, one can create optionality by pursuing two options at once – one in their spare time with a high payoff but low probability of success, along with a safer fallback option.

This bimodal barbell philosophy can also be applied when selecting friends. Avoid friends in the middle of the pack, instead choosing the extremes (both the top and bottom) to achieve the best results.

Antifragility is an important, if somewhat difficult concept to comprehend. It explains why certain systems work and others fail despite societies best efforts. Most importantly, it teaches us to embrace, rather than try to control, disorder and chaos. By acknowledging our lack of control, we are better able to set ourselves and our institutions up for long term success.

INTRODUCTION

Nassim Taleb is a former Wall Street trader and hedge fund manager who became a best-selling author through his books on randomness and uncertainty. His first two books, Fooled by Randomness and The Black Swan, convinced society that random, unpredictable events dominate life as we know it.

The most important from this group are the unpredictable events with major consequences, which Nassim defines as Black Swan events. The invention of the internet, the rise of Hitler, the Challenger disaster and the 2008 economic crisis are all examples of Black Swan events. His solution to living in the modern world that is filled with volatility and uncertainty is to create organizations, policies and ideas that are antifragile.

Nassim’s Antifragile is a book that readers will both love and hate.

His writing style mimics his love for randomness, as it has no organization. It is filled with narcissistic anecdotes about lifting weights, personal attacks on those who hold different viewpoints and contradictory statements that leave the reader wondering about Nassim’s sanity.

These three mechanisms are simultaneously frustrating and thought provoking. Nassim’s egotistical stories are so memorable, that it is impossible to forget even the smallest concepts he introduces. His attacks are ruthless and one-sided, which begs the reader to develop arguments defending the opposing side.

His contradictory ideas are so blatant that the reader has no choice but to decide on the issue using their own intuition. As the reader suffers through the rants, chest-beating and cheesy stories, they will unconsciously assimilate ideas, debate topics and extend their knowledge.

THE ANTIFRAGILITY CONCEPT

Antifragility is the term Nassim created to describe an object that gains from disorder. It is the complete opposite of fragile, or things that break when facing chaos. It is important not to confuse this with robustness, which describes something that is not affected by disorder.

A good way to think about this is by contemplating negative, neutral and positive. The opposite of negative is positive, not neutral. Very similarly, the opposite of fragile is antifragile, not robust. For example, a coffee cup is a fragile object, a rubber ball will represent the robust and the hydra from Greek mythology will be the antifragile.

A coffee cup is fragile because when exposed to unexpected outside stressors, such as a fellow employee bumping the table on which your coffee cup sits, the coffee cup is prone to falling off the table and breaking.

A rubber ball is robust because if knocked off the table or thrown by a rowdy child, it will continue functioning as a rubber ball. The hydra from Greek mythology is antifragile because when exposed to beheading, it will regrow two heads, coming back stronger than before.

It is important to note that many objects are not completely fragile or antifragile, but somewhere in between.

To help illustrate this point, it is best to view the idea on the following spectrum. On the far left is the completely fragile, in the middle there is robust and on the far right lie the perfectly antifragile. We then place objects, professions, people and everything else on this spectrum to determine which exhibits more antifragility.

The more antifragility an endeavor demonstrates, the more attractive that option should become. Take an artisan, a banker and a writer for example. The banker is the most fragile because he depends on a constant salary, requires consistency in his days and must maintain a good reputation.

He does show signs of robustness by being smart with his money and investing on his own. For this reason, we place him in between fragile and robust. An artisan is fragile in that his trade may make him limited in application. If his trade loses value, he will need to change skill sets.

He is antifragile in the fact that he sets his own schedule and makes variable income based on the products he makes. This places the artisan between fragile and robust, but much closer to robust than the banker. The writer is the most antifragile of the group because a writer gains from disorder.

The more criticism, hype and challenging ideas a book presents, the better sales and notoriety an author gets. Some writers believe it is more important to have a cult following of critics than it is to have a cult following of fans.

In order for most mechanisms to achieve antifragility, the parts that make up the mechanism need to be fragile.

This leads to obtaining antifragility by layers. Let us start the discussion on the human that is made up of individual cells that are fragile. If the cells get old, or deformed, they will die and be replaced with better healthy cells. This makes the entire collection of cells, or the human body, antifragile.

However, we can also inspect from the society level. Society is made up of humans that are fragile. If a mistake is made, a human dies. Society can then learn from these mistakes and society as a whole should become better. This makes society antifragile, but requires the human to be fragile. Understanding the layer of inspection is crucial in being able to identify fragile and antifragile components.

Ultimately, this analysis leads to the realization that the greater components in life attain the antifragility at the expense of the smaller component fragility. The process we just described is evolution and it is one of the most antifragile phenomenons in the world. A great example of an antifragile industry is the major airline companies. Every plane crash, or fragility of a small component of the system, makes the entire system better.

THE NEED FOR ANTIFRAGILITY

Nature, life and other complex systems are inherently chaotic. Human’s attempts to tame these complex systems have failed because these systems cannot live at a constant. For example, the United States government has been attempting to establish equilibrium in the economy through stimulus and the result has been huge volatility.

Another example is pharmaceutical drugs creating antidepressants to make the world permanently happy. Without the sad, there would be no happy. Language learning is even a problem now in the modern era of ruin. Rosetta Stone attempts to make learning a language so easy that the whole world can learn every language from behind a computer.

Learning a language is about immersing in the culture and passion. Human’s attempts to simplify and remove randomness from the systems will never be fulfilled. There will always be fluctuations, ranging emotions and learning by doing in a world with life. For this reason, we must stop suppressing volatility and deal with the randomness using antifragility.

Since the beginning of time, humans have been trying to predict the future.

Since the beginning of time, humans have failed miserably. This belief that humans can predict the future is described by the teleological fallacy. Life and nature are non-predictive and yet humans continue embarrassing themselves by forecasting visions of the future.

Incredibly, to this day, society bases its biggest decisions on an engineer’s assessment of risk-adjusted safety based on future visions. Does it make any logical sense that we have thousands of years of history proving we cannot predict the future and yet we use future predictions to determine if we should build the nuclear reactor in a specific location? Society should use some common sense and assess the antifragility to determine if the plant should be built.

Society continues to trust engineers with the ability to predict the future because of two illusions that the majority of society holds. The “Soviet-Harvard” delusion states that society overestimates the importance of scientific knowledge. This causes people to believe that engineers can predict all possible outcomes from behind their desk.

Take the Fukushima nuclear disaster as a paradigm case. Nuclear energy generation is a highly advanced topic that makes predicting an earthquake, tidal wave combination with the ability to cause a full nuclear meltdown nearly impossible. The odds are so low, that our current methods cannot account for Black Swan events such as this one.

An antifragile system is the only way to combat these events. The second illusion is that structured learning through universities and government programs drives innovation. This illusion is known as “lecturing-birds-on-how-to-fly.” Following the name given to the illusion, humans are born with the natural ability to innovate; there is no reason to teach them something they naturally know how to do.

Yet, lessons on innovation are taught at the university level and the government spends millions of dollars a year on directed research projects. The majority of a person’s time should be spent tinkering as most innovations historically have been heuristically developed. Take the industrial revolution, cooking and computers as proof that tinkering innovates.

The only true examples of success in academia are the Manhattan Project and the space program. However, society tends to believe the epiphenomena that health and wealth are created by academia’s research. In reality, the wealthy and healthy countries are the only ones who can afford the research, giving the false illusion that research drives success.

As the world we live in becomes more complex and globally intertwined due to technological advances, the public understands less and less of the complex interactions.

This has allowed people in positions of power to get away with taking zero risk. This antifragility-at-the-expense- of-others is completely unacceptable. At no point in history has the world ever seen so many powerful people with no “skin in the game.” Politicians are a great example of having no skin in the game.

They wage war like Caesar, Alexander and Hannibal from behind a desk. They then leave this position to accept million dollar jobs in the defense or banking industry to help skirt loopholes they created. Society needs to restrict any public servant from ever making more than the highest paid civil servant makes.

This would remove the tainted from office and ensure spots were filled by the priestly. The Romans had a perfect law to guarantee that those who made important decisions were willing to pay the consequences. They required an engineer who built a bridge to sleep under it when it was complete.

These laws later spurred others like an eye for an eye and the golden rule. Why is society swiftly moving from the distilled wisdom of the ancients to the stupidity of the internet? These non-risk-taking big shots have now led to increases in the occurrence and severity of Black Swan events. They have essentially placed their risk on society. By ensuring the chaos is completely hidden under the rug, they protect themselves from harm and leave the public to fend for themselves during Black Swan events.

BUILDING THE ANTIFRAGILE

Becoming antifragile means building a system that gains from disorder. The only way to accomplish this is through making the large, small, and requiring them to over compensate upon failure. The first step is to create a process that is able to survive disorder.

By having small fragile constituents, if one fails, it does not cause the failure of the whole system. The second part, overcompensation, is crucial to moving from robust to antifragile. Without overshooting, there would be no advances.

The first component of being antifragile involves creating small entities that thrive on disorder.

This requires a change in the public view. Large-scale companies are seen as the future even though they tend to overrun budget and hide risks. In the end, this causes them to eradicate their gains. Another major issue with large corporations is that they suffer from the agency problem.

This occurs when management’s interests separate from what is good for the company. This causes managers to milk the company for bonuses and offer the bones to the taxpayers. Society needs to take a lesson from life and understand that smaller is better. Consider a mouse and an elephant.

The elephant breaks a leg at the slightest fall while a mouse can be dropped from a distance several times it height and easily survive unharmed. The antifragile concept of smaller being better and more efficient, explains why there are many more mice than elephants.

This concept of small being more efficient follows closely hand in hand with decentralization. Society recently found out the hard way that centralization of the banking system can be dangerous when the financial crisis occurred in 2008. As the world grew more connected, the banking sector began working as a single unit.

Then, when a few banks made some poor decisions, they brought down the entire system. This process of creating large centralized organizations is not only occurring in the financial sector, but across all industries. Political systems are becoming more and more centralized as the population expands and diversifies.

Experience has shown that overarching political entities create an abundance of chaos. Society itself is even moving into the far more uneven distribution of 99/1 across many things that used to be 80/20. For example, 1 percent of internet sites get 99 percent of internet traffic and 1 percents of authors get 99 percent of book sales.

This allows the people in charge of the 1 percent to get away with things that they should not be doing. The big boys play the game at the expense of a fragile population base. In order to prevent this from happening in the future, it is essential that processes be kept as decentralized as possible.

The second component to antifragility is overcompensation.

This allows us to move from being simply robust to antifragile. After the stress of working out, muscles over compensate during recovery to become better equipped to handle the same weight in the future. Bones show the same overshooting response to working out by becoming denser. This allows the body to be better suited for the extra weight.

Overcompensation even runs into the office life when you need something done. It is a commonly known fact that if you need something to be done, it is best to find the busiest person in the office and give it to them. Other organisms even show similar overcorrection responses to errors. Yeast exposed to small amount of toxins will exhibit enhanced growth to prepare for the next round of toxins. It is imperative that the processes we create are able to overshoot the previous location, so that our ideas pass over robust into the antifragile.

LIVING ANTIFRAGILY

The secret to life is antifragility. The ability to gain from disorder, randomness and chaos is what separates the living from the nonliving. A defining characteristic of the antifragile is the responses due to small stressors.

Living things benefit from small stressors while non-living things are harmed by them. For example, consider a cat and washing machine. A cat will learn from having a dog bark that it should not hang around that yard. Where as a washing machine will eventually break due to many washing cycles. These small stressors are information to life for the living and ruin for the mechanical.

This allows us to consider time to be the ultimate test of fragility because as time approaches infinity, all the fragile will be destroyed. Famine, disease, meteors and war are just some of the stressors that life has survived. The main and most important driving force behind life is evolution which allows the most antifragile to pass their genes on to future generations, ensuring survivability.

This ability for life to adapt to changing conditions over the long run implies that antifragility prepares for the future. Nature, by nature, assumes the worse possible harm and prepares for what it has not seen.

In the post-enlightenment era, society is confusing systems that exhibit life with the mechanical.

We classify systems that exhibit life as complex systems. Failing to make this distinction between the cat and the washing machine is allowing humans to rationalize their attempts to suppress the short-term volatility through micromanagement in living markets, resulting in tragedies of epic proportions.

What humans are doing is hiding the flammable material that accumulates on the forest floor. By taking out the small indications of there being a problem, we are encouraging belief in the absence of evidence being evidence of absence. If it is not there, or we cannot understand it, it does not exist.

This causes the problems to accumulate under the surface, hidden from view, and explode when no one is ready for it. The recent attempt to eradicate the business cycle is cited as a prime example of a “fragilista”, e.g. a person who displays and loves fragile qualities, meddling in a living space, the economy.

Through his naïve interventionism, the fragilista lead the world into the real-estate bubble and hidden leverage by attempting to iron out the business cycle. Removing the natural life from a complex system will create Black Swans. On top of this, debt levels have been flying through the roof. If you want a fast track to fragility, start racking up debt.

When society takes on debt, it is giving away optionality in the future. The government and humans should only intervene with complex and living systems upon chronic stresses. Bailing out every firm that goes under means there are no losers, and in turn, society never improves. Nanny-style overmedication only causes people to get sicker.

This hiding of volatility due to interventionism is causing more and more people to become like turkeys. Suppose a turkey is analyzing the market of the turkey population over the course of the past year, starting in January. The graph shows a steady increase in population with decreasing volatility.

Every day the turkey staff confirms that butchers love turkeys “with increased statistical evidence.” Right when confidence is maximal, Thanksgiving comes and all the turkeys lose. Thanksgiving represents the Black Swan event. It is an important reminder that the past is not a predictor of the future.

Had the turkeys known what the butcher knew, and been able to identify the artificial stability, the turkeys might have been better prepared and better off. In order to be antifragile, the mission is not to be a turkey.

Another important part of living an antifragile life is adequately handling today’s data inundation.

There are two major components of information available today: noise and signal. Noise is the useless “junk” that means nothing, while “signal” is the precursor to important events.

The web, smart phones and Apple products allow constant connection to the media, introducing more noise than ever before. Daily users can experience up to 99.5% noise and .5% signal. The more news you get, the less you know about what is going on. This provides a strong argument against newspapers.

A newspaper always publishes a certain length paper filled with noise to fill its space and make money. They should publish two-lines on some days and a hundred pages on other days that are full of signals. Stay connected, but only read the big news.

If you want to live, do not hire a doctor, not even a good one; they will kill you, too. Medical errors account for three to ten times the amount of deaths as car accidents. One of the biggest problems in medicine is described by the principal-agent problem.

The argument starts that doctors are normal people who strive to over-fill their bank accounts. They do this by making people feel sick so that they can prescribe more medication. The more medication they prescribe, the larger the bank account gets. This argument leads doctors to cause more harm than benefit if it is in their best interest.

Every time they prescribe medicine, they are also robbing you of potentially lifesaving information. By taking a vaccine, or removing the chance for the body to heal now, you have removed a stressor. This stressor could have provided vital information to cure an illness later in life when the body can no longer win entering a fight blindfolded. Taking into account the long-term losses from over-interventionism by doctors is crucial to realizing that doctors destroy humans using iatrogenic techniques.

Iatrogenic practices are those preformed by a caretaker that are intended to help the patient, when in reality they result in hurting the patient more than helping them. This usually occurs when the current treatment or medicine given to a patient leads to a net loss in the patient’s health over his or her lifetime.

For example, diabetes medicine gives the patient a small health benefit upfront, but usually results in unhealthy lifestyle choices over the remainder of their life, causing more harm than benefit. Cancer treatments are another prime example of an iatrogenic practice. Almost every cancer treatment leads to a severe detraction in a person’s quality of life.

The few who actually survive are not able to make up for the losses caused in those who did not make it. One real world example of iatrogenic practices was when Michael Jackson’s doctor got caught prescribing massive amounts of medication to “save” his patient.

The doctor was later sued for iatrogenic practices, but the courts could not determine the appropriate name for the offense because they had not read Antifragile. There are endless amounts of iatrogenic practices in the medical field throughout history.

A few of these are Vioxx, antidepressants, bariatric surgery, cortisone, disinfectants, Lysol, hysterectomies, hormone replacement therapy, and iron supplementation. All of these examples cause side effects or long-term losses in overall health.

Changing the way failures are viewed is imperative to creating an antifragile world.

In order to make progress in society, failures are a necessity. We ought to honor these heroes with a National Entrepreneur Day. The message will be that the antifragility and success of our society is based on the risks, disrespect and sacrifices that the failed entrepreneurs have made.

The research sector is a prime example of how a group negatively views failures. The things that do not work in research never get published. We learn from our mistakes and yet we refuse to acknowledge them. In order for society to become antifragile, mistakes must be known so that society can improve. People who make the mistakes should be the true heroes, as they took the bullet for the greater good by showing everyone what didn’t work.

Another important component of living an antifragile life is to change the emotional response to small losses. The world views a small loss as a step in the wrong direction and a series of small losses as a path to ruin. In reality, these small losses are the cheapest form of learning that people can experience in their life and should be treated that way.

Take a new business for example. It is better for the company to take many small losses rather than one big loss that ruins the company. This way of thinking is crucial to utilizing the most antifragile economic strategy available: the option.

ECONOMICS THE ANTIFRAGILE WAY

Antifragile investing is truly having more upside than downside in random events. It does not require intelligence, advanced economic understanding, nor insider information. It only requires that people use option contracts and rationality. The basic theory behind this investing style is to take advantage of the asymmetry that occurs when possible gains are higher than possible losses.

This occurs because options have a convex relationship with bounded losses and an unbounded gain potential. Let us define the difference between these gains and losses from random trials in options the convexity bias. In a linear system, as most academics assume exists, these values would be equal. In reality, the relationship for options is convex. This means that the higher the convexity bias, the higher the potential benefit. In a world with increasing volatility, people have the potential for higher benefits.

The option is an agent of antifragility because it thrives in Black Swan events. A story about Thales from Aristotle demonstrates the first known use of options. Thales purchased the right, but not the obligation, to use olive presses in the area.

This allowed him to pay a small fee, for a potentially large gain in the event olives were extremely bountiful that year. Luckily, for Thales, this event paid off in year one, and he became rich. Today options are fairly cheap and being right, once, can compensate for multiple wrong investments.

A typical return involves many small losses followed by a very large return when the bet pays off.

In order to make this strategy even more antifragile, one should practice “blind funding.” This means spreading investments over as many trials as possible. Since we cannot predict the future, this strategy is the only way to gain exposure to companies that are on their way to becoming extremely successful.

Optionality allows a person to fail seven times plus or minus two. This is the benefit of open-ended payoffs and requires no understanding of what is going on because asymmetry works in our favor. This asymmetry is the backbone to the barbell strategy.

The barbell strategy follows the same logical argument of asymmetry. Choose a solid strategy that minimizes your losses while being exposed to high upsides. The way to accomplish this is by putting 90 percent of funds in “boring cash” and the rest in very risky investments. This gives the opportunity for very large gains and, at the very least, small to no losses.

This model inverts the traditional model where small gains are made, and people lose everything when a Black Swan hits. It completely avoids the middle ground “risk of total ruin” when putting 100 percent of funds in medium risk securities. The only economics expression that comes close to echoing antifragility is long gamma, which is used for financial packages that benefit from volatility.

BEING ANTIFRAGILE

There are six major rules to follow in order to make antifragile investing decisions. The first is to strive for increasing convexity by reducing the downside. This is much easier than predicting the future or following speculation.

Engineers reinforce this idea with every major disaster they fail to avoid through expected outcomes forecasting.

The second major rule is to utilize the dispersion property. Have small exposures to a large number of diversified investments rather than high exposure to a small number of investments. This allows a person to gain from the Black Swan events and not be harmed by them.

The third major rule is to maintain optionality. Strive to have short commitments, and in turn, more options. This idea explains why top-down centralized decisions fail; no one has options. The fourth rule states that heuristic tinkering is superior to academic credentials.

Read, learn and understand those who do the work instead of those who theorize about the work. History shows that those who do, produce results. The fifth rule states that less is more. Unless a person is in academia, there is no reason to make things more complicated than it needs to be in order for people to use it. Society should pay a premium for simplicity.

Finally, rule six, states that society needs to rethink the way they view failures. Failures are what drives learning and innovation. These ideas should be viewed as a learning experience.

This barbell technique can be applied to ensure economic success in your life.

Take a high school student who aspires to be an actor. Using the barbell strategy, the student should pursue acting on his free time, while learning accounting. In the worst-case scenario, you work in the finance world and are a hit at the local theatre; at best, an idolized, Grammy Award winner who never had to starve.

When people fly on planes, they hope that the pilots and flight attendants follow the barbell strategy. Pilots need to be 10 percent confident and 90 percent paranoid, while the flight attendants need to be 90 percent confident and 10 percent paranoid. This strategy also lets people decide on how to pick friends. Never shoot for friends in the middle of the pack; they have limited value. Pick the people at the top and the bottom for best results.

CONCLUSIONS

Chaos, uncertainty, volatility and randomness are inherent in life and all complex systems. We cannot tame or predict the outcomes from these systems and therefore must strive to build the antifragile, or things that gain from disorder.

Society can accomplish this by building systems that are small and over compensate for failure. This ensures ideas, people and businesses live to see another day and move from being simply robust to being antifragile.

Incorporating antifragility into the world starts with a difficult task: change the way the world thinks. Failures are now heroes, small stressors are information, and minor losses are the start to large gains. This will lead to a future where National Entrepreneur Day is a celebrated holiday and naïve intervention is nonexistent. Black Swans will be welcomed with open arms.

Making economics antifragile begins with the option. It is the perfect vessel of convex asymmetry, which results in unbounded upside and clipped downsides. Coupled with diversity, the payoffs are so good that you cannot afford not to be in everything.

The option also inspired the barbell investment portfolio that aims to take little to no losses while being exposed to huge upside. This technique should also be applied to life in order to improve the likelihood of success.

Britt always taught us Titans that Wisdom is Cheap, and principal can find treasure troves of the good stuff in books. We hope only will also express their thanks to the Titans if the book review brought wisdom into their lives.

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