Ever since I read the two seemingly con-tradictory statements concerning TheBlack Swan, namely, that it was itself aBlack Swan (in the publisher’s wordson the jacket flap) and that it wroteitself (in the author’s in the prolog)1, it

appeared to me in a new light and I set out toreassess it from the point of view that was nei-ther the publisher’s nor the author’s but trulymy own. More specifically, because I wasn’t theaverage reader, completely unprepared for TheBlack Swan, but was largely familiar with itsthemes from numerous, previous exchangeswith Taleb, and because I wasn’t, for all that, lit-erally interchangeable with Taleb (if only for thereason, which will surface later in this article,that I wouldn’t have written The Black Swan orever thought it should be written but wouldhave left it literally to write itself, or in otherwords, I would have left it forever deferred andhighly improbable – for who else than Talebcould have really written it?), I undertook arereading of The Black Swan with only one ques-tion in mind: “In what way, now that it is out,does it surprise me?”

Notice that I am exploring a realm here (therealm of the literary?) where “surprising” is notequated with “unexpected.” When somebodywho knows you well surprises you with a gift,the gift needn’t be the thing that you leastexpect. On the contrary, it may well be the objectof your dreams, the gift that you expect the most.In a sense, the more desired and wanted andexpected the object of the gift, the bigger yoursurprise. (Note that I am very careful not to say:“the greater your surprise,” for the literary dis-tinction that I am making, in the domain ofprobability, between the surprising and the unex-pected, has its correspondent, in metrical space,between big and great.) What I find even moreintriguing is that, to add to the unusual phe-nomenon according to which the most expectedis the most surprising, it takes somebody whoknows you well, perhaps even the person whoknows you best, to best surprise you when itcomes to giving you what you expect the most.

Miracles share with gifts the property of beingthe most expected and, at the same time, themost surprising events. (Not to mention, in thecase of the miracle, the peculiar brand of knowl-edge of the supreme giver.)

What is surprising is the gift, not the objectgiven. “Just how did you know this was the thingI desired most?” asks the recipient in a burst ofjoy and thankfulness.

– Because I know you so well!– Of course you do!

This tells us that no surprise will ever come,in the surprise gift, from collapsing the episte-mological chain that is made up by the giver, therecipient, and the thing given. Since the firstknows the second best and the second knowsand expects the third most, by transitivity youcould only get certainty of outcome and thus thetotal discounting of the surprise. In the literarydomain (where “most surprising” is the otherface of “most expected”), we are not in the busi-ness of fusing and compounding probabilities.On the contrary, the element of surprise lies inthe spacing and the timing of the exchange. Thesurprise lies in the succession of the exclama-tion marks in the little dialog (or exchange)above and precisely in the silences and breaksbetween them. The surprise is not to be surveyedfrom above, by somebody who would conceptu-ally and mechanically run the chain with nobreaks (for that would converge to the one andonly outcome), but it has to be lived through thewritten marks, through the precise words andtheir precise boundaries and their precisebreaks: through their risk, we might say, whichtruly makes us feel, from the inside, that everyword we reached marked the end of the world aswe knew it at the time.

What is surprising is the staging of the gift:the world always relived as finite and the oneand only desired possibility looking almost like aremote happening, perhaps even as an impossi-bility. This is why we organize ceremonies whenwe wish to surprise someone we know. Imagine,

40 Wilmott magazine

Nail in the Coffin

Elie Ayache,Author of the Black SwanThe best way to predict the

Black Swan is to write it,claims Elie Ayache. In other

words, to replicate it, totrade it, to exchange it. Thisis why his Black Swan is set

against Taleb's, and in a way,written all over (against) it.

^

instead, what I would call the infinite ceremony:that the giver and the recipient should be at alltimes telepathically wired to each other as wellas to their bank account and to the Internetsuperstore and that the gift be made availableand be given “the minute it wishes and it isknown” (I am using the impersonal “it” here, asin: “it rains,” to emphasize the conflation of thechain of persons and things). To summarize, wemay say that in the literary domain the surprisedoes not lie in knowledge and even less so in dis-counted expectation, but in the risk of writing.

My private “Black Swan”In a way, Taleb has surprised me by giving me TheBlack Swan I expected most. For there to be a giftand a surprise, there must be a difference and anexchange. I couldn’t have given myself The BlackSwan that I expected most (even though The BlackSwan was, in a sense, already given to me, as I wasacquainted with it and none of its themes cameas a real surprise to me), for the reason that ittakes two to make a gift and a giving, let alone anexchange. Not mentioning that I couldn’t havepersonally written The Black Swan or even imag-ined that something like it could ever be written:What could there be to record, indeed, on thesubject of the extremely improbable and of itsimpact, beyond the fact that the event goes downin history and records itself by itself when itoccurs, all the deeper and the more indeliblythat it was precisely improbable and that it had agreat impact?

I should thank Taleb for allowing this book –The Black Swan – to write itself; and it is onlybecause The Black Swan is out now and because itis written that there could be material at all formy surprise. Recall that The Black Swan that Iknow best and am most acquainted with – theprivate The Black Swan I know so well that I couldhave written it myself – couldn’t have possiblysurprised me in thought (not forgetting my inti-mate belief that it shouldn’t be written). In orderto surprise me, it had to leave me and to differfrom me; it had to leave my mind and assume thespaced and very different (almost strange) shapeof the written material. In a way, our biggest sur-prise is when we come upon our own thoughts ina text that is not our own.

Like I said, the literary reverses the categoryof probability. True, a totally unexpected textmay be thrilling, but what is more thrilling (andperhaps most thrilling) is that the material weare reading should fulfil us and correspond per-fectly to what we want and what we expect –almost to the point of total coincidence – yet thatthe writing, this finite thread we are followingword after word and spacing after spacing,should make it totally improbable and almost

unimaginable, at every juncture, that such athing should be written. This is why the greatestthinkers can make us the gift of the thoughts weexpect most and understand best – our ownthoughts – literally by writing them, by surpris-ing us with the improbability, not of thethought, but of the written text. This is whyWittgenstein is able to write, in the preface of the Tractatus, that only the reader who has hadsimilar thoughts can understand his book. This is why he is able to write an impossible book, sur-prising us all the more that what was once impossible for thought becomes possible in writing, even necessary.2 This is why PierreMenard is able to progress towards the only and,for this reason, most expected outcome of hiswriting process, Cervantes’ Quixote, without giv-ing up the element of surprise and improbabilityat any point or any juncture.3

Pierre Menard’s trading roomMenard did not rewrite the Quixote; for then,there would have been no risk in his enterprise.He truly wrote it. This tells us that there couldbe risk, in writing, without there being proba-bility, or even possibility. From the point of view of possibilities, there is none facingMenard except to end up writing the Quixote,which is another way of saying that he faces nopossibility at all.

I express this by saying that writing is a capaci-ty, not a possibility. What Menard has done, in theprocess of his writing, is probe a space of varia-tion of a new kind; he has hollowed out a tradingroom, strictly independent of the space of possi-ble alternatives to the Quixote. Only in the writingof future, unknown texts is capacity confusedwith possibility, for the thought is then that thewriter could have equally written “another” text.The tradability and the element of improbability

in writing (what I have called the risk of writing)are then confused with the variability of the out-come within the space of alternative outcomes. In hisendeavour of writing an existing text, Menardhas managed, by contrast, to bring risk and prob-ability apart again. Or rather, this is what Borgeshas managed to do, for Menard’s whole work andwhole existence are, of course, totally incredible.

There is more to the space of trading/writing(I’ve called it a “room”) than just the collection of“preconceived” alternative texts. Consider thatMenard was absolutely equipped with the algo-rithm of perfect replication of the Quixote (sincethe Quixote already existed), yet that he managedto trade it (I won’t say: “to change it,” for he didn’t,or: “to lose it then earn it back,” for he didn’teither – like I said, he just wrote it). The risk in trad-ing/writing extends beyond probability. We caneven define risk as that which sways and trades,after probability is done with and saturated. Themarket takes place – it starts – after the end ofprobability. It is the end that can start (the “can” ofcapacity, not of possibility).4

Probability, replication, contextand beyondProbability is always defined relatively to a givencontext, or collection of states of the world.5 Byreplicating the derivative in all possible states ofthe world, the derivative pricing model exhausts

Wilmott magazine 41

The greatest thinkers can make us the giftof the thoughts we expect most and understand best – our own thoughts

NAIL IN THE COFFIN

I propose that risk, or the market, is alwaysposterior to context, possibility and probability. Italways comes after probability, which is also away of saying that context and probability areneeded in the first place. Indeed, the market-makerwouldn’t be pricing the derivatives and tradingthem were it not for the derivative valuationmodel and the dynamic replication algorithmwhich implicate him in the price process of thederivative.6 Some have proposed that risk is allmodel risk. This is certainly compatible with myproposition, even derivative on it. However, Ithink this attitude is reductive of risk, in the lastinstance. It tends to put the model at centre stageand to depict risk only negatively and derivativelyrelative to the model. By contrast, my propositionof risk exceeds the model and goes beyond it. Itdoesn’t counter the model but requires it. Risktakes place after the model (and the context andthe probability), and for this reason it cannotlimit itself to the model, or be called “model risk.”

CapacityRisk is the writing/trading thread that we keeppursuing despite the fact that the context hasbeen saturated by replication. Or rather, thethread of derivative writing and trading (these twointerchangeable sides of the destination of deriv-atives) is what the market is all about: the marketas a writing process that is irreducible to a sto-chastic process; the market as a writing capacitythat is irreducible to a writing possibility.

This is something I state of the market atlarge and not just of the derivatives market: whatthe market means in its essence. When you thinkof it, the story of the derivatives (or equivalently,the story of dynamic replication in Pierre Menard)has only helped us separate the context fromwhat exceeds it and helped us distinguishbetween possibility and capacity. It put this dis-tinction in all the greater relief that it was neces-sary both to have the context and to tradethrough it (i.e. to change it) in order to ascertainthe writing and the risk of writing, both of whichare alternative definitions of the market. If, insome fancy world, the destination of the deriva-tives (i.e. their writing and its risk) hadn’t beenbound up with the future and if it hadn’t beenaltogether meaningless to speak of the market

except for the future, we could indeed have con-ceived of an extreme situation, like PierreMenard’s, where the risk of writing had reallynothing to do with possibility and everything todo with capacity.

The distinction between possibility, as alwaysdefined relative to a fixed context, and capacity,as the capacity of changing the context and oftrading the text beyond its perfect replication,can be made more accurate, in Pierre Menard, bysaying that this extraordinary writer wasn’t fac-ing a single context or range of possibilities, oneamong which turned out to be the Quixote. Adescription like that would rather fit Cervantes,and this, by our lights, would imply thatCervantes did not in fact write the Quixote but cre-ated something which turned out to be theQuixote. It is interpreters, an extreme instance ofwhom is Pierre Menard, who face texts, notauthors. Original authors face something else.For this reason, Borges’ novel can be consideredan extreme meditation on interpretation.7 WhatMenard was really facing is the Quixote as the oneand only possibility (which is tantamount to say-ing he was facing a necessity), only his writingprocess was open to many, many different contexts.

The process of change of contextsIf we define “context” as range of possibilities andallow that different contexts may have some oftheir elements in common, then Borges has infact described a strange individual who hap-pened to worm his way inside a process without pos-sibilities but with many contexts. This “worm-process” is, if you will, the set-theoretical inter-section of all the contexts which admit theQuixote as one of their elements.

Now try to think what probability notion, ifany, can be applied to a process like this. Later Iwill argue, as you might have guessed, that themarket price process of derivatives, which is ani-mated by “writers” the like of Menard who cantrade and advance only insofar as they replicatethe derivative that was once sealed and written,is such a process. It is a process of change of contexts(a.k.a. recalibration) not of possibilities. No probabili-ty can be applied to this process of changebecause probability can only choose among pos-sibilities that fall within a single context.

42 Wilmott magazine

probability and saturates the context. However,this is not yet trading. Trading the derivative isprecisely what happens next. It is the putting inplay of the parameter (or parameters) whose fixi-ty was the guarantee of fixity of the context andof the corresponding dynamic replication. Forinstance, option trading is a volatility play andvolatility is assumed to be fixed by the replica-tion algorithm of Black-Scholes-Merton.

Note that derivatives were written in order totrade (not in order to conceal payoffs in a sealedenvelope that would be opened only at expiry).Derivatives are the natural offspring of the mar-ket and they are the stuff the market is made of.(So, in a way, the market is also their produce: infact, derivatives and the market are identical and not just hierarchically, or genetically, relat-ed.) Thus we see that trading (this process supposed to record a value, as of today and dayafter day, for the derivative that was once writtenand sentenced to have no value until a futuredate and unless a fraction of space) will never bethe reiteration and the replication of the valuesthat were initially planned for the derivative bythe theoretical stochastic process and its prescribed dynamics.

The derivative valuation model is supposedto prescribe a value today, and everyday, fromthe values the derivative is supposed to receive inthe intervening states of the world, and in this itmay seem indeed that the model is giving backto the derivative the present value it was oncedenied on account of its derivative nature and ofthe instruction to pay off in a future that maynever be present and in a state of the world thatmay never be realized. The irony, however, is thatthis making-present of the deferred value of thederivative has no other present to be imprintedagainst but the present of the market and theactuality of trading. Derivate valuation modelsare intended for derivative trading and pricing,despite what all the academics working and the-orizing in the field may have to say about that.Yet we saw that the trading of the derivative, orin other words, its market, will by necessity takeplace and extend in this “improbable” space wehave called the trading room, and which is by defi-nition absent from the replication plan andfrom probability.

^

Probability cannot be applied to PierreMenard because the probability is one, in eachone of the contexts his writing process has tra-versed, to yield the Quixote exactly. For this rea-son, Menard cannot be said to pre-dict the Quixote.An adaptation of the word is needed to describehis forward-advancing enterprise, worming itsway in a future without possibilities (for there isno doubt that Menard faces his task as a futuretask and that it is risky). It is probably more suit-able to say that Menard pre-scribes the Quixote.

Given the one and only possibility to whichMenard has committed himself, what he is infact trading is simply his own existence. This isalways the case with writers who dedicate them-selves to writing; however, Borges’ novel is specif-ically revealing in this respect in that it doesn’teven offer the writer the possibility of writing hisown original text, for, otherwise, the choices andthe sacrifices the writer would have to makewould be confused with deliberations over theconception of the work and the future possibleoutcomes. What the fiction of Pierre Menard hasachieved is isolate the risk in writing that is inexcess of the risk of thinking, or simply, of the riskof living the life of an original writer.

The necessity of writingWhat I have called “Menard’s risk” is not the pos-sibility of not writing the Quixote. His space of vari-ation (his “trading room”) is something else thanchancing not to replicate the Quixote exactly.Again, think that derivative trading (the finan-cial equivalent of Menard’s business) is not thesame as the possibility of not replicating thederivative, because dynamic replication is thehistorical trigger of derivative markets and is stilltheir basic trading tool. That the derivative“may” end up not perfectly replicated (which iscertainly the case, in reality) is strictly greaterthan a possibility or an eventuality, even greaterthan an empirical fact or the fact of blindness tothe Black Swan (as Taleb would put it). It is some-thing else. It is a necessity which is not bound upwith possibilities offered to the derivatives mar-ket (as there would be no derivatives market alto-gether if derivatives were perfectly replicable).

It is not very easy to grasp the peculiar natureof this necessity because our vision of the future

is the hostage of epistemology and because thisnecessity, for all its directedness towards the mar-ket and towards the future, falls beyond episte-mology. Even Taleb remains blocked in episte-mology and talks of our inability to predict theBlack Swan, and more generally, history, whenMenard’s analogy should make us suspect, on thecontrary, that the market, or more generally, his-tory, is not a matter of predicting or not predict-ing the Black Swan, but of prescribing it.

I called this “necessary possibility” (of tradingaway from their replication plan) the destinationof the derivatives.8 To further single out thispeculiar possibility, we can call it a “non-impossi-bility.” For this is, indeed, what writing hasoffered Menard: the non-impossibility of livingthe life he lived and of producing the work hedid, a non-impossibility that was irreducible to,and greater than, a plain possibility picked froma range of possibilities. It even offeredWittgenstein the most effective kind of counter-impossibility: that of ending up writing an impossi-ble book. As for derivatives, they are at one withwriting. They are written in order to trade, andtrading is written all over them (they are fated totrade).

In all three cases, this possibility – or rather,capacity – lay in the excess that performativewriting had over representation. Derivative writ-ing/trading exceeds representation because rep-resentational thought hinges on fixed states ofthe world and derivatives markets can only growat variance with the replication plan and itsfixed underlying states of the world; they do soby the trader’s performative stepping-in-and-then-out of the given context. Menard’s enter-prise exceeds representation because its repre-sentational content is plainly void (writing anexisting text) and it totally revolves aroundMenard’s performative commitment in writing(not its trivial result). Wittgenstein’s Tractatusexceeds representation because it declares itselflogically impossible (so it is even less than anexisting text), and hence its true theme is thetransformative experience that it impresses onits reader through his actual reading perform-ance (not its subsequent narration, or recollec-tion). As a result of the transformation, the read-er ends up having the thoughts he must have in

Wilmott magazine 43

NAIL IN THE COFFIN

order to understand the book, and this meansthat he can only write it (for why would he botherto read a book whose thoughts he already has?).

Writing the Black SwanIn my attempt at writing The Black Swan (or per-haps, as in Pierre Menard, at writing only the twochapters of the book which I desire most andwhich surprise me most), and for all the reasonsthat make its writing a necessity to me (for onething, the fact that I already have its thoughtsand cannot read it anymore, and for another,that I really want to take the risk of writing itbeyond possibility and probability; and thismeans, by the same token, that I shall also betaking up the writing of risk – since it is the bookof risk – and that I shall take that risk beyondprobability), I shall, then, write it along the lineof the contexts, not along the lines of probability,and following capacity, not possibility.

I shall take advantage of the identity, alreadynoted by the publisher, between what the bookis about, the Black Swan, and what the bookitself is, a Black Swan, to propose that the risk inmy writing The Black Swan (the risk I shall be pur-suing by changing and chaining together, inMenard-like writing style, the different contextsthat lead exactly to The Black Swan – or, shall I say,to the Black Swan?) will be identical with therisk in The Black Swan (and by this I mean the topicof risk making up the content of Taleb’s book)and also, to some extent, with the risk inherentin the Black Swan.

I shall also propose, as you might havealready sensed, that the process of writing theBlack Swan, that is to say, the thread ofwriting/trading that takes place after the end ofprobability and the saturation of the contextand qualifies, as such, as the risk of writing, isthe best way of predicting the Black Swan, orrather (given that the category of knowledge andprobability are altogether dismissed at thisstage), of prescribing it, and in this I would bestrictly following the author when he declares,from inside the writing process of The Black Swan(and not from the outside point of view of some-body who expects probability in matters of riskand still thinks of the Black Swan in probabilis-tic terms), that the Black Swan wrote itself.

NAIL IN THE COFFIN

44 Wilmott magazine

Only through the writing/trading performanceand not through the realizations of a theoreticalstochastic process that is framed in representa-tional thought, can the derivative writer/traderexceed the saturated context and move to thenext – that is, he can trade – and for this reason,my unoriginal and derivative writing/trading ofThe Black Swan will exactly consist in removingfrom the book all remnants of representation andprobability and in arguing that the Black Swan isnot a highly improbable event, as Taleb claims,but simply a case of change of context. It is a revisionof the whole range of possibilities, not just of theprobability distribution overlying them.

It is no wonder, then, that writing/tradingshould be adapted to the Black Swan, since writ-ing/trading is precisely the process of contextchange. And it is no wonder that the Black Swanshould write itself and that we shouldn’t needsomebody like Taleb to write about it, since risk isanother name for context change (or anothername for the Black Swan) and writing is anothername for the risk of writing (or another name forthe process of context change).

Crossing again my meta-textual bridge, I shallthus attempt a writing of The Black Swan (or a pre-scribing of the Black Swan) where probability hasnot only been removed from the process of writ-ing and of context change (as I will be convergingtowards the one and only possibility ... of TheBlack Swan) but from the content of the bookitself. The real Black Swan, the Black Swan that isworth writing (not writing about) because it isworth the risk of writing (and is even equal to it),the Black Swan that is truly risky (and not com-pletely expected as Taleb’s book), is The Black Swanwhere the term “probability” has been complete-ly eliminated, starting with its subtitle.

Finding the context in the Black SwanI shall remove the term “highly improbable”from Taleb’s subtitle (and keep the indisputable“impact”) not only because his book is a certainty,even now a necessity, for my writing and nolonger a remote possibility, but because thisterm, “highly improbable,” has had me puzzledfrom the start, in the light of what Taleb has tosay about its impact. (And Taleb has everything to

say about the impact – note that the subtitle ofthe book, supposed to unpack the Black Swan forus, is: The Impact of the Highly Improbable, not: TheHighly Improbable. Also, Taleb makes it very clear,in the first of his series of endnotes on page 311,that his problem is not about the possibility of aBlack Swan but about the impact.)

I feel puzzled because I can’t help wondering:Does the event carry impact because it is highlyimprobable (and this would be fair enough) ordoes the impact lie in the event being lessimprobable than we had thought (hence Taleb’swarning, and whole message)?

From the start and as early as the subtitle,there is this unsettlement about the context inwhich Taleb wishes to frame the impact of theBlack Swan. Which is why, in my writing theBlack Swan, I shall quickly move past, and dis-miss, the two first attributes listed by Taleb: 1)that the Black Swan is an outlier and 2) that itcarries an extreme impact, and find my true sur-prise in the last (where Taleb’s gift to me trulylies), namely, 3) that what characterizes theBlack Swan (and, to my mind, characterizes italone) is that we “concoct explanations for itsoccurrence after the fact, making it explainableand predictable” (xviii).9 (So it is an outlier: fairenough; we should indeed expect highly improbable events to take place from time totime and I am not surprised that Taleb, or some-one else, should write about them. So it carries anextreme impact: again, no surprise, here; the larg-er the impact, the smaller the probability. This isin fact not even contradictory with a Gaussiandistribution over the variable measuring themagnitude of the impact. To be relevant at all,what Taleb must have in mind is actually theconverse, namely, that the more inconceivablethe event – and I add: relative to the context prior toits occurrence -- the more extreme the impact –and I add: the major component, if not theentirety, of which resides precisely in the unfore-seeable, unprobabilizable, change of context and in thejump of history into a whole new universe ofpossibilities. All of which brings me back to theone and only point I was trying to make all alongand to which I have come again now, and that isthat the Black Swan is the non probability-bearingevent of change of context.)

In my interpretation of the Black Swan, orrather, in my writing of The Black Swan which isworth the risk of writing and even equal to it – andby this I mean that my writing shall proceedbeyond probability to join the thread of change ofcontexts -- I shall, therefore, change the context onTaleb and, instead of writing it from the point of viewof probability, I shall write it from the point of view ofcontext and argue that what is perceived by Taleb asa negative effect deserving only his irony, namely,that the Black Swan should only be predicted – andthe fitting narrative only produced -- after the fact,will appear, from my point of view, as a plain, evena positive, effect of the Black Swan, for the merereason that the Black Swan is a change of context andthat it is only relatively to a given context that wecan make causal predictions at all.

To be fair, let me stress here that there is a con-tinuous invitation, in The Black Swan, to look forthe Black Swan outside the given context. Talebtalks of the domain-specificity of our reactions andwhole mode of thinking and of their dependenceon the “context in which the matter is presented”(53). He talks of “external uncertainty,” of the“possibility of events straying from our mentalprojections”: the now well-known “unknownunknown” (157). He specifically insists that “foran event to be a Black Swan, it does not just haveto be rare, or just wild” (improbability and impactare not enough) but that “it has to be unexpected,has to lie outside our tunnel of possibilities” (213,my emphasis). As a matter of fact, he calls “GraySwan” the extreme event that lacks this last prop-erty; and consequently, he recognizes that a revi-sion of our probability distributions or even ofour whole framework of randomness, such asMandelbrot’s fractals, if it makes the extremeevent less improbable, “does nothing to solve theBlack Swan problem, but only mitigates it” (262).What it manages to catch are just the Gray Swans,because something conceivable cannot be a BlackSwan. (Here, finally, the hint that the Black Swanis, above all, an inconceivable event.)

Writing backwardsIn the light of all this, my writing over againstTaleb can be seen as just an attempt at complet-ing what he says, or rather, at breaking with itcompletely by looking beyond probability and,

Wilmott magazine 45

More importantly, Polt says that “reinterpre-tive events can happen only for being-there – anentity whose own being is a ‘at issue’ for it andwho works out its being by existing as someonewithin a world, thus interpreting itself and its sur-roundings” (my emphasis).12 This tells us thatBlack Swans should be addressed from inside thethread of history and the process of writing/trad-ing, not from Taleb’s infinite and indefinitepoint of view.

I will, thus, leave for later my main objectionagainst Taleb’s “narrative fallacy” and that is thatthe narrative that we concoct after the event is notmeant to explain the event or to make it more pre-dictable, like Taleb says. Since the event hasalready occurred and is of the singular kind, thisposterior narrative can by no means help us pre-dict it again or predict similar events. Rather, the

narrative is our interpretation of the event. And weneed this interpretation, not for the sake of thepast event itself, or the sake of “similar” futureevents, but simply for the sake of our future, thatis to say, of our time and our existence.

Again, the grounds of all this are found inHeidegger. According to Heidegger’s Being andTime, being is hermeneutical because its questioncan only be posed by the “entity” which can under-stand being, and understand it from out of its situ-ated finitude and being-in-the-world: from out ofits being-there. This being-there, or Da-sein,Heidegger does not equate with the human being(although the two will turn out to be coincident after time-space itself emerges as a con-sequence of the “happening of being in the site ofbeing-there”), nor does he equate this fundamen-tal ontology with anthropology. Being-there is justthe “there” of being, the site of its happening, andin his later work, Contributions to Philosophy,Heidegger moves beyond the question of theunderstanding of being to the question of its hap-pening.13 Being is no longer hermeneutical, in the

NAIL IN THE COFFIN

as you will see later, beyond representationalknowledge altogether. Perhaps it aims at solv-ing the Black Swan problem or at least at estab-lishing the framework, both philosophical andtechnological, where it can be addressed. As thereal Black Swan does not lie in the first two“conceivable” or tractable attributes on Taleb’s list (the high improbability, the extreme impact – see Taleb’s discussion onhasard vs. fortuit on page 272), this singles out the third, the backward narrative, as thedecisive feature; hence my writing can alternatively be seen as the attempt to establishthe meaning, and the significance, of the back-ward narrative. This meaning is structurallylinked to the context-breaching nature of theBlack Swan.

Since the context “of” the Black Swan is only available after it (and by “after it” I mean“following it in chronological order” and “fol-lowing its style”), it is only normal that weshould predict it after the fact. Once knowledgeand probability have been dismissed as totallyirrelevant to the process of writing/trading thatI claim the market (as a species of history) andeven history (as a whole) are made of, it won’t in the least bother us that backward-lookingnarratives should be worth a try, even worththe risk, and even carry risk. (It remains to besaid, of course, why we need them.) RecallMenard’s enterprise of predicting, or prescrib-ing, an existing and totally past text. Recall that there was risk and surprise (and in thissense, potentiality and room for trading) inMenard’s enterprise, and that this specialbrand of “future” had nothing to do withknowledge or representation and everything to do with writing and performativity.

In Pierre Menard, I have argued, the inser-tion in history and the event of appropriation(for Pierre Menard must have experimented,in his writing process, a series of appropriat-ing events which really made the writing behis own, and what’s even better, the writing of the Quixote!) were shown to be independentof the future (in the sense of ordinary, infi-nite, metaphysical time), for they just followed the thread of the writing of an existing text.

Reinterpretive events and the narrative imperativeI will leave for later the fundamental issues weseem to have reached here, indicating that Talebmay not have found the right level of critique toaddress 1) the impact, both probabilistic and met-ric, of the Black Swan: he should address this con-text-changing event with a meta-contextual predic-tive tool, not just with the term “unpredictable”and certainly not “highly improbable,” or 2) thephilosophy of time and temporality: he shouldaddress it from the finitude of the situated being-in-the-world, what Heidegger calls Da-sein orbeing-there, whereby “Time originates in thefuture, but the future necessarily draws on thepast, and together, the future and past open thepresent”10, not from the infinite point of view ofmetaphysical time where history is just a succes-

sion of unconnected “nows,” some of which begetunexpected events and make history and some ofwhich fade out in a whisper, or 3) the philosophyof the event: he should address the eventhermeneutically, not empirically, especially if it isof the extreme, context-changing kind, becauseevents that matter enough to redefine history arewhat Richard Polt calls reinterpretive events.

These are events, writes Polt, which “affecthow beings are revealed to the actor ... They openand close our ways of being-in-the-world, andhence our ways of access to beings as a whole ...They cannot be understood in terms of other levels of event, because such understanding iscarried out by beings like us, whose interpreta-tions bear the marks of many reinterpretiveevents ... They are turning points in the develop-ment of the hermeneutic ‘as’ ... They are crises,moments that decide the course of a life and itsmeaning ... They are emergencies in which mean-ing emerges. For this reason, they are unpre-dictable; the former order of meanings cannotaccount for them.”11

^

Taleb may not have found the right level ofcritique to address 1) the impact, bothprobabilistic and metric, of the Black Swan

46 Wilmott magazine

later Heidegger, but becomes an appropriatingevent. No longer to be retrieved by hermeneuticalphenomenology but by a philosophy of the event,what Polt calls a philosophy of possibility.

And what is appropriation? “Appropriation is the event in which the being

of beings is given,” answers Polt. “Every gift affectsthe future, in that it begins a new relationship orperpetuates an old one.14 But the gift of beingopens a whole realm of possibilities.”15

Understanding is also a projection of possibilities,writes Polt.16 And this is why, whether it hinges onthe understanding of being-there or on the eventof appropriation which occurs in the site of being-there, this philosophy of possibility, this “leap intothe unknown” (Polt calls it a “risk”17, in which thetruth of being ultimately lies, cannot be independentfrom the past. “Being-there and appropriation arefutural,” writes Polt, “because every way of under-standing must be.” However, this understandingmust retrieve the past. “What makes a possibilityoriginal is not its independence from the past, buthow deeply it retrieves the past.”18

Because of the reinterpretive nature of theappropriating event and of the gift of being as aprojection of possibilities, and because of the fini-tude of primordial time (of which infinite, meta-physical time is only derivative), it is, therefore, arequirement that the interpretation of a past, his-tory-changing event should be a constitutive partof our present, even of our future: not of our meta-physical future, but of what I have called the risk ofwriting/trading. Such an inaugural event, Polt callsan inception. “Inception is unique, a one-timeevent. It does not reproduce anything, nor can itbe reproduced. But it does not stand alone, a soli-tary monument in the past that bears no relationto us; instead, it reaches forward and seizes us,calling on us to seize it in return.”19

Poetry and “The Black Swan”So what Pierre Menard is doing is basically inter-preting the Quixote (like a musical score) and thiswhy his task and his outlook are truly futural,even though, in his highly unusual case,Menard’s metaphysical future is reduced to theQuixote as only possibility and his “narrative” pre-dicts only the past. Pierre Menard is not so muchafter the Quixote as he is after his own thread of

appropriating events, in other words, his ownbeing. His existence and his whole work takeplace in a different ontological domain than theone in which the Quixote already exists or Taleb’sBlack Swan readily takes place. A different sort ofexistential quantification (and qualification)should, therefore, apply to them.

Menard’s work is truly poetic. Its value doesn’t reside in its propositional content (forthis is hopelessly equal to the Quixote) but in itspoïetic drive. Poïesis means “to make” in ancientGreek. The Wikipedia defines it as a word that“was first a verb, an action that transforms andcontinues the world. Neither technical produc-tion nor creation in the romantic sense, poïeticwork reconciles thought with matter and time,and man with the world.” “Whereas proposition-al language always addresses beings about whichit speaks, poïetic saying brings being forth in the say-ing,” writes Daniela Vallega-Neu.20 So it is notwhat Menard writes that matters, but how hewrites it: the performativity of the writing, notits result. “Poetic moments are singular, nonreproducible,” writes Polt. “But this should notbe confused with ‘creativity’ or ‘originality’ inthe sense of mere novelty.” To illustrate the point,Polt then proceeds to cite exactly the case ofPierre Menard! “Each genuine appropriation is aunique event,” he concludes, “even if it follows anestablished pattern, such as a musical score.”21

Similarly, the trader’s work is poetic. Since itis essentially of the future, it will always bringabout novel possibilities, unlike Pierre Menard.But what it brings forth -- the trading room – is aperformative capacity that is singular and nonreproducible to the extent that the trading indi-vidual is so himself and that he has to be-there inorder that the market may be. Consider, by con-trast, Taleb’s world, which seems to be given onceand for all in its randomness and where thealphabet is just a device “to store informationand reproduce it” (30), where a narrative servesthe only purpose of reducing dimensionality,and where a novel, a story, a myth, or a tale, allhave the same function: to “spare us from thecomplexity of the world and shield us from itsrandomness” (69-70)! Now consider againMenard’s work, in which the narrative doesn’treduce anything at all, quite the contrary!

I am not sure that we write poems in order toreduce the dimensionality of the world, or thatwe even set them against the “random back-ground” that Taleb wishes to recognize as onlybackground and reality. But then, Taleb has notmentioned poetry in his list of narratives: intu-ition of an altogether different ontology, per-haps? (Poetry, especially by Hölderlin, was essen-tial in Heidegger’s later thought of being as anevent of appropriation.)

Saying: “The king died, and then the queendied of grief,” instead of: “The king died, andthen the queen died,” is, to Taleb, an effectiveway of making us remember the two deaths. Byadding information, it in fact reduces the dimen-sion of history. Narrative is a human device andhas no bearing on the real world, he says. I say:What world? In mine, the narrative has in factopened many dimensions. For, I want to be thatbeloved king!

Postponing historyI will postpone until later the philosophical riftseparating me from Taleb, namely, that the ques-tion of our insertion in history (or in the market– for those among us who are absorbed in thispeculiar sub-species of history) and of our deal-ing with its Black Swans is, to me, primarily amatter of ontology, even of the fundamental kind,whereas it is all epistemology to him, perhapseven naturalized. In a typical moment, Talebwrites: “I know that history is going to be domi-nated by an improbable event, I just don’t knowwhat that event will be” (154). I wonder: Is thistypical Taleb or typical Yogi Berra? The way toinsufflate substance in this statement is to saythat this is simply how history happens and whathistory is. Simply define history as the series ofBlack Swans and drop the “I know” and the “Idon’t know.” Ontology, instead of epistemology.What’s more, the “is” of your “history is” will notbe empty. In fundamental ontology and its rein-terpretive events, history is to the extent that Da-sein is-in-the-world and is-in-history.

I will postpone until later my major disagree-ment with Taleb, namely, that the question ofhistory (or of the market) is too great and toooverwhelming a phenomenon not to claim uscompletely and require our being-there as the

NAIL IN THE COFFIN

^

Wilmott magazine 47

only site out of which it can be posed. It is toogreat, in any case, to fall under Taleb’s hastymetaphysical reductionism and to be identifiedwith a mere output that would be available to hisinspection, as if from outside. (Taleb speaks of“the script that produces events” or of “the gener-ator of history” (8). He speaks of the “generator ofthe world” (268), of the “generator of reality”(270), of the “model which runs the world” (267)and, in other places, of “that big machine thatgenerates events” (12). Even truths are “generatedby mechanisms,” according to him (20). “The trueexplanation is unique,” he writes, “whether ornot it is within our reach” (72).)

For now, I will content myself with what is, tomy eyes, the biggest surprise of The Black Swan(Taleb’s true gift to me) and that is the realizationthat, if the Black Swan is indeed understood as acontext-changing event, then it is truly mine: Ihave already covered it; I have already written it!22

Incompatible contextsIt is in Taleb’s chapter on the ludic fallacy that I wasstruck by the illumination that the Black Swan is,in fact, a non probability-bearing event of change of con-text. Of the three different sources of Black Swansthat Taleb describes in his book: 1) the Black Swanthat is inherent in our genes and in our evolution-ary blindness to extreme events (I have always dis-liked naturalized epistemology), 2) the BlackSwan, or rather, Gray Swan that is the result ofmistaking the Gaussian probability distribution ofMediocristan for what should be, “in reality,” thescalable laws of Extremistan (I will come to that inmy next column) and 3) the Black Swan that can-not possibly be predicted because it falls beyondknowledge and probability (that is to say, it fallsbeyond the given context), I thus retain the thirdas the philosophical one (therefore worthy of myattention). The other two are either merely anthro-pological or disappointingly metaphysical.

Taleb cites the example of a casino in LasVegas whose real risks turned out to be incom-mensurate with what could be anticipated,knowing that the business was a casino (129).“The four largest losses incurred or narrowlyavoided by the casino,” he notes, “fell completelyoutside their sophisticated models.” They weretriggered by 1) the loss of an irreplaceable per-

former in their main show after he was maimedby a tiger he considered to be his partner, 2) theattempt to dynamite the casino by a disgruntledcontractor, 3) a tax violation, almost causing thecasino to lose its gambling license, and 4) the kid-napping of the casino owner’s daughter, causinghim to dip into the casino coffers to secure theransom. These Black Swans, Taleb observes,“swamp the on-model risks by a factor of close to1,000 to 1.”

In my opinion, these Black Swans are not,technically speaking, outliers. They simply arenot part of the universe of possibilities initiallyenvisioned by the casino. Each belongs to a differ-ent context, utterly foreign to gambling. Talebhimself recognizes they initially belonged outsidethe casino’s building.

Surely enough, the casino’s management willfrom now on provision for losses that might betriggered by kidnapping, by tax negligence, bydynamite or by a tiger’s appetite, and by this Imean that the corresponding state of the world,exotic as it may be, will be added to the existinglist of states of the world. However, the key notionhere is the incompatibility of contexts prior to theexperiment, not the enumeration of utterly hetero-geneous objects and items, which is always a pos-sibility after the fact or may be, at best, the projec-tion of a playful and erudite imagination.

Borges (yes, him again) is known for his capac-ity (yes, capacity) of producing improbable enu-merations, the most famous of which occur inThe Aleph. His “Chinese encyclopaedia” has fasci-nated many a thinker and Michel Foucault opensThe Order of Things with a dip into it.23 Taleb musthave had in mind incommensurable enumera-tions of this sort when he spoke of the narrative

as a means of reducing their dimensionality (71),and he typically cites Borges at this juncture(“Funes, the Memorious”). As a matter of fact,Borges’ style must have altogether interpenetrat-ed Taleb’s as his short novel “Yevgenia’s BlackSwan” definitely resonates with Borgesian tonesto my ear.

Two contexts are said to be incompatiblewhen they cannot be fused together and are notcommutative. What this means is that theresults of an experiment involving them canmassively differ depending on the order inwhich you bring the two contexts to bear. Hadthe casino “experimented” with the context ofdynamite or tigers (and I mean the whole context, not the isolated fact that was just theiroutcome) before experimenting with the con-

text of casinos, chances are it would have takenup the business of demolition contracting orwild animal breeding instead of gambling, possibly with a jackpot machine inserted in onecorner of the cafeteria for the entertainment ofemployees and visitors.

Compare the turkey example, also cited byTaleb (40). The story goes like this: After a thou-sand days of feeding, confidence in a brightfuture is at its highest in the turkey’s mind, untilsomething unexpected happens on theWednesday before Thanksgiving. My observationis that the context of feeding the turkey and thatof wringing its neck are not so incompatible. It isall a matter of food, after all! Taleb can rightly talkof a sudden revision of belief, in the turkey’s case,instead of a complete change of context, becausethe wringing of the neck definitely belongs to theturkey’s context, only the turkey stupidly assignsto it zero probability. For all practical (and episte-

After a thousand days of feeding, confidence in a bright future is at its highest in the turkey’s mind, until something unexpected happens on theWednesday before Thanksgiving

48 Wilmott magazine

mological) purposes, it is indeed as if it wasn’tthere. But the turkey could have believed other-wise and, as a matter of fact, Taleb examines thealternative shrewd turkey which would considerthe feeding as a confirmation of the danger ofbeing turned into supper (188).

Incompatibility of contexts, by contrast,invalidates such counterfactual reasoning. It is amuch more severe predicament, because it isimpossible to even begin to group the possibilitiesbelonging to the two contexts in the same uni-verse of possibilities, and this is irrespective ofthe probabilities they would get. For instance,Taleb need not lament our ingratitude towardsthe invisible hero of 9/11 who manages to avoidthe disaster by imposing continuously lockedbullet-proof doors in every cockpit on September10, 2001 (xxiii) because this thought experimentis counterfactually invalid. States of the worldafter 9/11 are incompatible with states of theworld before, and the zero probability that thedisaster gets in Taleb’s heroic scenario is simplynot defined because it cannot exist before its own context, which is 9/11. “Hero,” like all the names history dispenses, seems to be a contextual notion.

When contexts are commutative they can besubsumed under a larger context which is sim-ply their set-theoretical union, and both theexperiment and the language reporting it can beset against this global context. Or rather, lan-guage can forget about the context and how itmay affect the facts of the experiment or itsobjects and speak of the objects and theirrevealed properties as if they were independent of thecontext and thus intrinsically determined.Commutative contexts are more routinelyencountered than non-commutative ones and,as a matter of fact, the different languages thatwe human beings speak (even French) are non-contextual. This means that the context drops outof our ordinary speech and that we tend toattach different attributes to the same givenobject as if they were specific to it.

Knowledge as predictionThis is a very deep observation.

In the last resort, language is but a “hierarchyof anticipations concerning the unity of the range

of possibilities.”24 Words are intimately linkedwith predictions because when we utter a word,we expect something to hold or to appear to us inthe same shape as before, not mentioning that weexpect to be understood by others. (Note howdeeper than the problem of induction this is.)Embedded in this shared logico-linguistic frame-work are, at a deeper level still, invariants that areextracted from the Heraclitean flux by the opera-tion of what Michel Bitbol calls “schemes of reci-procity.”25 These schemes “enable anticipation ofwhat will occur and rely on methods for reproduc-ing situations, such as: moving an object and thenputting it back at its original place, rotating anobject until is initial profile is recovered, etc.”This capacity of “freeing ourselves as much as pos-sible from the irreversible aspects of any concretesituation” is what we call knowledge. Objects ofknowledge are the formerly extracted invariantswhich we then organize in such a way as to beable to refer to them and to ascribe properties tothem. They are presupposed in speech, and usedto suggest predictions.26

Knowledge itself, therefore, is but one big pre-diction or anticipation. Not just that part of ourknowledge which specifically regards the futureand contemplates predictions about future out-comes, but our entire, present knowledge, togeth-er with its presuppositions and all that it has tosay about the entities in the world and theirproperties. Our everyday non-contextual lan-guage is not, therefore, a safe dwelling but a per-manent-betting house. We keep “making thebet,” everyday, that the different “experimental”contexts and their corresponding languages willcome out unified over again.27 This, of course,opens the possibility of losing the bet one day:the Black Swan of all Black Swans.

True empiricismUntil this happens, this gives us a glimpse ofwhat true empiricism should be. Empiricismshould be the way to generalize knowledge, not todefeat it and dismiss it altogether. True empiri-cism does not occur when we dismiss our theo-ries and categories and objects and properties(what Taleb calls the “Platonic forms”), but whenwe recognize that those reified entities are, as amatter of fact, only specific to a special variety of

knowledge pervading our non-contextual way ofspeech: representational knowledge. What abroader, relational view of knowledge wouldteach us reciprocally is that the objects of knowl-edge are, as a matter of fact, always relative to con-text and are not permanent, autonomousobjects. When we abstract our knowledge (as theevolved species we eventually are) beyond its rep-resentational variety, the two characteristics thatremain are invariance and predictability. (Causalitydrops out, for instance.)

Taleb too defines knowledge as our ingrainedtendency to ascribe patterns to the Heracliteanflux. “Perception of causation,” he writes, “has abiological foundation” (68). “We need context,”he writes a little bit further (132). But, wait a sec-ond! His use of the term “context” is differentfrom mine. To him, “context” just means “con-crete and tangible context.” The complete sen-tence reads: “Alas, we are not manufactured [...] tounderstand abstract matters – we need context.”As uncertainty and randomness are intangiblenotions (the logical empiricists would havecalled them “metaphysical”), their classificationfollows suit in Taleb’s metaphysics. “They areabstractions,” he writes. Hence, the “context”that we humans need in Taleb’s theory of knowl-edge is different from the one we need in mine.In my view of knowledge, context is needed (orrather, re-called, summoned back) when weabstract knowledge beyond the autonomous andpermanent objects of everyday language. This iswhen we understand that our everyday, repre-sentational knowledge is in fact a continuous beton the success of de-contextualization and thatanticipation and prediction are constitutive ofknowledge (of all our knowledge, and not justthe section concerned with the future).

Accordingly, Taleb’s “prediction” is differentfrom mine. His “prediction” is solely concernedwith the future. (“Prediction ... is the real test of ourunderstanding of the world,” he writes (133).) His“probability” is an object for knowledge, not theother face of knowledge.28 (This is why he is so wor-ried about our knowledge of the right probabilitydistributions.) He fails to see that the objectivity ofknowledge (or the dynamics of objectification),without which there would be no language, notruth, and no world, can carry over and be

NAIL IN THE COFFIN

Wilmott magazine 49

generalized to the meta-contextual level (whereobjects and properties are no longer independentof their contexts of manifestation) provided theessential ingredients of objectivity, invariance andpredictability, are appropriately generalized.

Prediction (or even, in the case of QuantumMechanics to be discussed in my next column, essen-tial indeterminism) will then prevail over descriptionas the only kind of epistemological intercourse withthose generalized, context-dependent objects.

In Taleb’s view, putting things into (concrete)context, or the narrative, is only a device forreducing the dimensionality of (our memory of)

the past, hence for inducing false beliefs aboutthe dimensionality of the future. While context,in my view, is the step we require in our ascenttowards the predominance of prediction as theonly name of (generalized) knowledge, it is some-thing that should be withdrawn, in Taleb’s, lestwe infer the wrong predictions. Accordingly,Taleb’s empiricism consists in withdrawing thepatterns and the contexts altogether. His “abstrac-tion” consists in falling head down into “random-ness”: what he calls “reality” and even the “truth.”Underlying Taleb’s Black Swan is, like I said, astaunch commitment to metaphysical realism.

ENDNOTES 1. Or maybe the two statements aren’t contradictory but per-fectly consistent with each other: If The Black Swan is itself aBlack Swan then it doesn't need anybody and it is only fair thatit should speak for itself, even write itself. But then, we couldequally argue that it doesn’t need to introduce itself to us anymore or any better than by just striking us, when its timecomes, as the Black Swan that it is. Even less so does it need towrite itself ahead of time and commit itself to the written form.2. Cf. Eli Friedlander, Signs of Sense: Reading Wittgenstein’sTractatus (Cambridge, Massachusetts and London, England:Harvard University Press, 2001) and Elie Ayache, L’Ecriturepostérieure (Paris: Editions Complicités, 2006).3.Pierre Menard is a fictional character created by Jorge LuisBorges in the novel “Pierre Menard, Author of the Quixote“(Fictions 1944). Menard is a twentieth-century Frenchmanwho has dedicated his life to writing two chapters of DonQuixote – not a modern adaptation, but the Quixote itself,using exactly the same (Spanish) words Cervantes has used.Menard’s book has a completely different meaning than theoriginal Quixote and, according to Borges, is in fact far moreprofound.4. For the distinction between capacity and possibility, see ElieAyache, “Why 13 Can Only Succeed to 11, or, the End ofProbability,” Wilmott July 2006: 30-38.5. An illuminating account of probability being always condi-tional on the context of its definition and of our tendency toforget to check this “hidden condition” can be found in EspenHaug, “Hidden Conditions and Coin Flip Blow Ups,” WilmottMarch 2005: 74-766. Cf. Elie Ayache, “The Next Question ConcerningTechnology: Part I: The Significance of Dynamic Replication,”Wilmott March 2007: 32-38.7. See my book-length treatment of interpretation and poste-rior writing, L’Ecriture postérieure (Paris: Editions Complicités,2006).8. Cf. Elie Ayache, “The Next Question Concerning Technology:

Part II: A World Inverted,” Wilmott May 2007: 42-48.9. Numerals, either roman or Arabic, inside brackets refer tothe pagination of The Black Swan in its first edition byRandom House, New York, 2007. Note that Taleb retains onlythe two first attributes, the highly improbable and the impact,for the book cover. Does that imply that he reserves the third,the retro-narrative, for the book itself? As a matter of fact, isThe Black Swan itself anything else than a narrative Taleb hasconcocted after the fact of the Black Swan? Only it says “no”when the other narratives say “yes”: a sort of set-theoreticalcomplement of the positive narratives and, for this reason, nomore penetrant of the heart of the Black Swan than they are?To be fair, let us note, however, that the author himself recog-nizes that his book is just a story (xxvii). I sometimes wonderwhether the Black Swan itself (even non-italicized) is not infact just a narrative: Try to think of a Black Swan event withoutnarrating the story that goes more or less like this: “Somebody,somewhere, was living peacefully (and perhaps, unknowingly)when, suddenly, ...”10. Cf. Richard Polt, The Emergency of Being: On Heidegger’sContributions to Philosophy, (Ithaca and London: CornellUniversity Press, 2006): 223, cf. Martin Heidegger, Being andTime, Joan Stambaugh (trans.), (New York: State University ofNew York Press, 1996): 302-303.11. Cf. Richard Polt, op. cit., pp. 78-79.12. Cf. Richard Polt, op. cit., p. 79, and Martin Heidegger, op.cit. pp., 2-3, 7-8.13. Cf. Richard Polt, op. cit., p. 50 and Martin Heidegger,Contributions to Philosophy (From Enowning), Parvis Emadand Kenneth Maly (trans.), (Bloomington: Indiana UniversityPress, 1999).14. And so, Taleb’s gift affects my future and perpetuates anold relationship with the author of The Black Swan. (By far, themost gratifying surprise The Black Swan has in store for me iswhat Taleb writes about our friendship in the“Acknowledgments” section.)15. Richard Polt, op. cit., p. 116.

16. Richard Polt, op. cit., p. 223.17. Richard Polt, op. cit., p. 216.18. Richard Polt, op. cit., p. 223.19. Richard Polt, op. cit., p. 117.20. Daniela Vallega-Neu, “Poietic Saying,” in: Companion toHeidegger’s Contributions to Philosophy (Bloomington &Indianapolis: Indiana University Press, 2001): 67.21. Richard Polt, op. cit., p. 118.22. Cf. Elie Ayache, “Probability as the Other Face ofKnowledge,” Wilmott March 2005: 28-32.23. This is the encyclopaedia in which it is written that animalsare divided into: (a) belonging to the Emperor, (b) embalmed,(c) tame, (d) sucking pigs, (e) sirens, (f) fabulous, (g) straydogs, (h) included in the present classification, (i) frenzied, (j)innumerable, (k) drawn with a very fine camelhair brush, (l) etcetera, (m) having just broken the water pitcher, (n) that froma long way off look like flies. "In the wonderment of this taxon-omy," writes Foucault, "the thing we apprehend in one greatleap, the thing that, by means of the fable, is demonstrated asthe exotic charm of another system of thought, is the limita-tion of our own, the stark impossibility of thinking that."24. Cf. Michel Bitbol, “Non-Representationalist Theories ofKnowledge and Quantum Mechanics,” op. cit.25. Cf. Michel Bitbol, Ibid.26. This already hints that prediction is what we really need, not“knowledge” which is only a special means. “Prediction is thereal test of our understanding of the world,” writes Taleb (133).From there, two possibilities suggest themselves: either knowl-edge is generalized into a general theory of prediction (see theopening of my next column) or an all-out alternative to knowl-edge is pursued (see the conclusion of my next column).27. Cf. Michel Bitbol, Mécanique quantique: Une introductionphilosophique, (Paris: Flammarion, 1996): 46.28. Cf. Elie Ayache, “Probability as the Other Face ofKnowledge,” op. cit.

W

I was right to say that context was the BlackSwan awaiting all of Taleb’s Black Swan business.My Black Swan (the book with no probability andonly context) is his Black Swan. Wait until I showyou that the way to write, and to ride, my BlackSwan lies in the derivatives markets: literally inTaleb’s own past and debut, in the place heexpects the least!

In the next issue, Elie Ayache will argue that the writ-ing/trading of derivatives, or the derivatives market, isthe way to write the Black Swan and not to just writeabout it.