{"id":2375,"date":"2010-10-23T22:14:12","date_gmt":"2010-10-24T05:14:12","guid":{"rendered":"tag:google.com,2005:reader\/item\/491f56451221d873"},"modified":"2010-10-23T22:14:12","modified_gmt":"2010-10-24T05:14:12","slug":"opacity-8","status":"publish","type":"post","link":"https:\/\/www.blackswanreport.com\/blog\/2010\/10\/opacity-8\/","title":{"rendered":"Opacity"},"content":{"rendered":"

Shared by JohnH
\n
\nHints of the new book. HatTip to Dave Lull.<\/p><\/blockquote>\n

137-<\/b><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font><\/font> The Science of Antifragility, an Ignored Ubiquitous Concept<\/h2>\n

Just as a package sent by mail bears a stamp “fragile” on it, “handle with care”, imagine the opposite: “please mishandle” or “be careless”, as it benefits from shocks.<\/strong> Such package is said to be “antifragile”.<\/p>\n

My next book, announced under the vulgar title Tinkering<\/em> will be actually called Antifragility<\/em>.<\/p>\n

Ask anyone the antonym of fragility, they will answer robustness. Wrong -and this is a mistake made in a variety of dictionaries of synonyms and antonyms. This seems to come from a mental bias, of the same category of the mistakes we make without any self-awareness of the reasoning process involved in them; ask the same person the opposite of cold, they will answer hot, not neutral -or the opposite of destruction, they will answer construction. Clearly, therefore the opposite of unstable is not stable or sturdy; likewise the opposite of brittle is not solid -but antibrittle, or antifragile. <\/p>\n

This seems quite a universal traits of languages (I tried Mediterranean, classical, and Semitic languages),where the notion of antifragility is totally absent.
\n So there are three layers:<\/p>\n

    \n
  • fragile<\/em><\/li>\n
  • robust<\/em>: not fragile, can resist shocks.<\/li>\n
  • antifragile: <\/em>benefits from shocks, “long volatility” in trader parlance, has positive optionality. This is my life in the markets. This is my situation now: a breakdown in the banking system benefits my portfolio.<\/li>\n<\/ul>\n

    When I defined them mathematically, fragile became concave to errors; antifragile became convex (i.e., with a positive second derivative that makes it benefit from uncertainty). Actually I have written an ENTIRE book on that (Dynamic Hedging,<\/em> published 14 years ago).<\/p>\n

    The absence of such word -and absence of the awareness- is symptomatic of the error of fragility: if you shoot for robustness, you ususally get robustness, but on the occasion you get fragility. If you shoot for antifragility, at worst you get robustness.<\/p>\n

    Antifragile benefits from randomness (as expressed, for a given probability distribution, by an increase in dispersion, i.e., variance for a Gaussian, etc. -just as an option benefits from an increase in volatility).<\/p>\n

      \n
    • Evolution:<\/em>it benefits from variance (up to a point). It has positive optionality.<\/li>\n
    • Economic growth<\/em>: it does not come from anything EXCEPT antifragility.<\/li>\n
    • Creative destruction<\/em>: why bailouts fragilize.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

      Shared by JohnH <\/p>\n

      Hints of the new book. HatTip to Dave Lull.
      \n137- The Science of Antifragility, an Ignored Ubiquitous Concept
      \nJust as a package sent by mail bears a stamp “fragile” on it, “handle with care”, imagine the opposite: “please mishandle” …<\/p>\n","protected":false},"author":14,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-2375","post","type-post","status-publish","format-standard","hentry","category-feeds"],"_links":{"self":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/2375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/users\/14"}],"replies":[{"embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/comments?post=2375"}],"version-history":[{"count":0,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/posts\/2375\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/media?parent=2375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/categories?post=2375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.blackswanreport.com\/blog\/wp-json\/wp\/v2\/tags?post=2375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}