Antifragile: Things That Gain from Disorder

This book is now part of my required reading list.  If you enjoy my recommendations at all, go get this book now.

AntriFragile is about taking a different kind of look at risk. Instead of simply coming up with statistical probabilities, focus on determining if entire systems are fragile or not. Antifragile is an odd word and the closest one in the English language is robust, but robust doesn’t go far enough. Robust means that something is more survivable. Antifragile is something that actually improves over time when exposed to stress or volatility. Muscle is a perfect example of something that is antifragile. The more it is abused (up to a point) the stronger and more efficient it becomes.

Nassim applies this to many areas, specifically finance, medicine, and diet to name a few.

A key distinction that really stuck with me was that the more we predict and create models, the more fragile we become because we now operate inside such a narrow window of viability. We trim waste and become more efficient, but also become more fragile to anything that would push a system out of those narrowing parameters. Such events he calls Black Swans. See his previous book of the same name that predicted the housing crisis in 2008.

Other systems benefit from volatility, like financial traders and bankers. They have an asymmetric risk reward system set up such that they disperse the downside risk onto the public while maintaining the upside for every trade. Over the long run, volatility ensures growth for their pocketbooks. They are antifragile. This by no means is an endorsement. In fact it illustrates that the system is broken and fundamentally unfair.

However, thinking this way you can apply the principles of anti-fragility to your own life. Look for asymmetric risk-reward by limiting your downside with an option for greater upside. I suspect this is the fundamental nature of option trading and how VCs approach investing. When an upside is potentially 10X the downside, you only have to be right 2 our of 10 times.

Antifragile also explores the topic of iatrogenics heavily which is the harm done by caretakers, medical, financial, or otherwise. Iatrogeneics is typically used in the medical field and this complicated word means harm done by doctors. All humans, not just doctors tend to want to intervene. We all feel that we need to add value for our profession, so we have to do something. In many cases that intervention can actually be harmful. So consider the asymmetric risk-reward for medical treatment. If you are in a car crash, then yet you are far more likely to suffer more harm by not undergoing surgery. The reward from surgery far outweighs the risk of not having it done.

On the other side, surgery comes with a huge list of risks. When compared to a less grave issue like too much fat on my thighs, really examine what the downside is for not having the surgery or taking the drug. Doctors have an incentive to prescribe drugs and do surgeries. Many times they are very necessary. However, I do think it is fair to ask yourself if the upside really outweighs the downside. I would argue that many patients are not doing this and undergoing many unnecessary surgeries and taking medications that may end up doing more hard than good.

Humans are notoriously bad at not thinking linearly. It is those non linear systems and events that bring us the most gain and cause us the most harm. They make our linear models obsolete instantly, so relying on them without considering black swan events is dangerous. After this book you may be just a little better at detecting them and perhaps even benefit from being able to identify when these non linear systems are at play.