#165 – Anti-Predictions

Why You Should Go To More Parties In 2025

Jan 12, 2025

Hi 👋 - Happy New Year 🥳

The future is unknowable, and yet this time of year we’re all still barraged with annual predictions. Nassim Taleb, in his book Antifragile, argues that forecasts are for suckers. Instead of predicting the unknowable, we should focus on building systems that thrive on uncertainty and work in multiple future states. Today, a look at a few of the big ideas from Antifragile that will hopefully serve you well in 2025 and for years to come. As always, thanks for reading.

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Avoiding Bullshit

It’s impossible to predict the future. Yet over the past month, your inbox has probably been bombarded with 2025 forecasts. In Antifragile: Things That Gain from Disorder former derivatives trader Nassim Taleb makes a compelling case for sending those straight to spam.

Central to Taleb’s thinking is the Black Swan – the notion that social, economic, and cultural life is driven by consequential rare events, which are difficult or impossible to predict. The Great Depression, Pearl Harbor, the fall of the Berlin Wall, September 11th, and covid-19 to name a few. How many forecasts for 1941 included a Japanese surprise attack on the US?

Predictions are devilishly hard because complex systems like economies, the stock market, and nuclear power plants are full of interdependencies and nonlinear responses. Chain reactions and cascades obscure causality. It’s like ecology: the impact of removing one species reverberates throughout the entire food chain.

Yet unpredictability isn’t a case for nihilism. As Howard Marks says:

You can’t predict, you can prepare.

Taleb agrees: while rare events are unpredictable, spotting what might harm you isn’t. He lays out a spectrum from the fragile – things that are harmed by volatility – to robust – things that are indifferent to volatility – to antifragile – things that benefit from volatility. Throughout the book, Taleb defines these three states and builds a case for antifragility. For our purposes, the CliffsNotes version will suffice1:

When you are fragile, you depend on things following the exact planned course, with as little deviation as possible – for deviations are more harmful than helpful. This is why the fragile needs to be very predictive in its approach, and, conversely, predictive systems cause fragility…The robust and antifragile don’t have to have as accurate a comprehension of the world as the fragile – and they do not need forecasting.

Since the future is unknowable, success depends on adaptability to multiple outcomes, not on perfect forecasting2.

Time Devours Everything (Focus On What Doesn’t Change)

Time is the mother of all stressors. It exposes fragility and its sharp teeth devour everything. Given enough runway, a steady drip of water can erode a mountain.

As such, time is a good filter. Things that have withstood its gauntlet deserve our attention because they’ve had ample opportunities to go belly up and haven’t. This contrasts with our inherent bias towards focusing on what is new.

Similarly, we’re hardwired to notice change, but Taleb suggests focusing on what stays the same. He’s not alone. Jeff Bezos famously fixates on what doesn’t change. Whether it's 1850, 1950, or 2050, shoppers always crave low prices, fast delivery, and wide selection3:

It's impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon; I just wish the prices were a little higher,” or “I love Amazon; I just wish you'd deliver a little more slowly.” Impossible.

Warren Buffett’s aversion to tech investment follows the same rationale4. While he’s confident that people many years from now will enjoy cold beverages (Coca-Cola), eat ice cream (Dairy Queen), need energy (Berkshire Hathaway Energy), and buy furniture (Nebraska Furniture Mart), he has no edge in knowing what the leading semiconductor or software will be.

Today, AI provides a good thought exercise. Who knows how it will play out? It could be the fourth industrial revolution, the second coming of Betamax, or something in between. You could devote an entire year to studying it and not get any closer to the answer right.

A few practical implications of this are to favor classics5 over new books or information with a short shelf-life. Another is to pay attention to the wisdom of elders. Grandma knows a thing or two. Looking for ideas or practices that span times and cultures is another. For example, many religions practice some form of fasting. There’s likely a beneficial reason for this. Taleb drinks no liquid that isn’t at least 1,000 years old (only wine, water, and coffee). I’m not suggesting you take it that far, but will point out that the Negroni was invented in 1919.

First, Survive (Eliminate The Risk Of Ruin)

To get rich you need to avoid going bust. As Taleb writes:

This fragility that comes from path dependence is often ignored by businessmen who, trained in static thinking, tend to believe that generating profits is their principal mission, with survival and risk control something to perhaps consider – they miss the strong logical precedence of survival over success. To make profits and buy a BMW, it would be a good idea to, first, survive.

Survival comes before success, so the first rule of becoming antifragile is minimizing downside.

Focus on eliminating anything that could spell ruin and prioritize big threats over trivial ones. It’s far easier to spot existential threats – like carrying excessive debt – than it is to predict the future.

Similarly, the notion of efficiency is irrelevant on its own. It must be considered in the context of fragility. Improving an airplane’s fuel economy is meaningless if the plane has a fatal design flaw (see: Boeing).

Outcomes matter less than expected payoffs. When the cost of being wrong is low, mistakes are affordable. But if one mistake can ruin you, there’s no room for error. The logic of compounding makes the case plain: over decades, persistence pays off, but a single zero resets everything. As Charlie Munger said:

The first rule of compounding: never interrupt it unnecessarily.

The Mother Nature School of Risk Management

It’s hard to outsmart Mother Nature. In a world where Black Swans play a disproportionate role, Taleb suggests we take our risk management cues from the natural world:

Nature likes to over-insure itself. Layers of redundancy are the central risk management property of natural systems.

Over the eons, evolution has favored extra insurance, with spare parts (two arms, two kidneys, two eyes, two ears, etc.) and extra capacity (for the lungs or heart, for example). While business schools preach efficiency, Taleb thinks this is dangerous:

Redundancy is ambiguous because it seems like a waste if nothing unusual happens. Except that something unusual happens – usually.

In a world of complex systems, you want redundancy not maximum efficiency. Given enough time, shocks are inevitable. It’s not hard to think of supply chains that were crippled by natural disasters or a ship stuck in the Suez Canal. Redundancy and buffers absorb shocks, aiding survival.

For businesses, this could mean operating with a strong balance sheet (debt increases fragility and is the opposite of redundancy), maintaining ample liquidity, keeping buffers in production processes, not being sole sourced on components (especially critical ones), and considering the geographic concentration of suppliers.

For investors, the equivalent of redundancy is the margin of safety, which Warren Buffett called the three most important words in investing.

Buffers help on a personal level too. It’s a good idea to save up a few months of living expenses as a rainy day fund before you start investing in riskier assets. If Google Maps says it’s going to take 29 minutes to get to your meeting, leave your apartment with time to spare. You never know when the Q train will be delayed. (Actually, you kind of do: often.)

Redundancy also lets you react opportunistically when shit hits the fan. A warehouse full of toilet paper became a goldmine during covid-19. Similarly, a cash reserve lets you take advantage of market selloffs. (Be greedy when others are fearful.)

The Best Option Is The Option With The Most Options

Taleb views options as agents of antifragility due to their asymmetric risk-reward profiles – low costs paired with significant potential payoffs. With optionality, you don’t need to be right often; when you are, the outsized gains make up for the misses.

Explicit options like financial contracts are costly, but life offers many implicit free options. These are characterized by low downsize and uncertain, but potentially meaningful, payoffs. Take parties: for the cost of an Uber ride and a bottle of wine for the host, you might meet a soulmate or best friend. Or collaboration: when ideas copulate, there’s potential for massive upside and it might only cost you a cup of coffee.

Taleb’s perspective on everyday optionality reminds me of George Mack’s luck razor:

If stuck with two equal options, pick the one that feels like it will produce the most luck later down the line.

For example, grabbing a drink with a stranger versus staying in and watching Netflix.

A Taleb-inspired corollary is that the best option is the one that provides the most optionality.

In addition to RSVPing yes to parties, seek out environments that facilitate collaboration. Experiment and tinker. A bird doesn’t learn how to fly by attending lectures. Trial and error gives you valuable information regardless of outcome as unsuccessful trials offer hints for a new hypothesis or next steps.

When I was at Etsy, a senior product manager would always say:

There’s no such thing as a failed A/B test. Either we’re winning or we’re learning.

That’s a free option.

Wishing you and your family a 2025 full of parties, optionality, and a few good classics.