“The Blank Swan” – (Elie Ayache) Book Review

Aug. 23, 2011 11:06 AM ET1 Comment
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Contributor Since 2009

Mr. Greig joined Q3 Asset Management in 2015 as the Director of Research, where he is charged with portfolio design, investment model creation, performance analysis and other duties. Previously, Mr. Greig worked at Altin Holdings from 2009 as a Portfolio Manager. His responsibilities include overseeing the firm’s investment process and handling all aspects of portfolio allocation which include continuous portfolio monitoring, performance reporting and investment research. Prior to joining Altin Holdings, Mr. Greig began his investment management career in 1995 with Flexible Plan Investments, Ltd., an Investment Adviser which managed in excess of $1.5 billion for over 10,000 clients nationwide. Mr. Greig was the Associate Investment Officer and Vice President for Flexible Plan Investments, Ltd. From 2004-2008, he served as co-Portfolio Manager on five mutual funds with over 300M in assets. From May of 2008 to July of 2009, Mr. Greig was Co-Founder and Managing Director of Symphony Investment Group, LLC, a Registered Investment Adviser specializing in the management and consulting of retirement plans. Additionally, Mr. Greig has developed and traded models utilizing alternative asset classes (futures, options, Forex, etc.) for his own portfolio since 1991. Mr. Greig is a Chartered Financial Analyst, Chartered Alternative Investment Analyst, and Chartered Market Technician. He has also completed the Principles Level towards the Certificate in Investment Performance. Mr. Greig is a graduate of The University of Michigan with a Bachelors degree in Mathematics and Statistics. In addition, Mr. Greig holds a Masters degree in Business Administration majoring in Finance from the Ross School of Business at the University of Michigan. Mr. Greig is a member of the Financial Analyst Society of Detroit, and a member of the American MENSA Society.

“The Blank Swan” first, and foremost, is not an investment book. Make no mistake; this is a hardcore philosophy book – or more accurately a tome. Ayache writes in almost an incomprehensible manner; not because of the subject matter, but rather the way he approaches the material. “The Blank Swan” is ostensibly a response to Nassim Taleb’s influential book on randomness in the markets “The Black Swan”. However, the similarities start and end with the title. Where Taleb writes with accessibility and practicality, Ayache takes the opposite tact, namely obscurity and ambiguity.

To fully appreciate, or even comprehend “The Blank Swan”, the reader should have a good grasp of 20th century European philosophy, especially the works of Gilles Deleuze and Alain Badiou. These philosophers are not for the faint of heart; their works are quite academic and theoretical. In addition, it is questionable what, if anything, they can offer the investment community. In my opinion, their beliefs are tenuously, at best, connected to finance. Ayache attempts to bridge this gap, but all too often his examples leaves one scratching their head, and rereading paragraph after paragraph hoping that the light bulb will go off, and a logical connection will be found. Alas, for this reader anyway, no such illumination occurred.

 An example from the author from page 256 attempts to relate this book to Taleb’s: “I shall write the Australian book to the Black Swan. ( … the one that succeeds to it, the book that comes from behind it; the book that eternally returns from the market; the book that writes and implements the market…)” Got that?  Neither did I. Attempting to read The Blank Swan straight through is a difficult endeavor, and frankly not recommended. Not only is the writing obtuse, but it also suffers from repetition. Many sections of the book seem to cover the same ground, and tend to refer to other sections of the book. This circuitous approach to writing further confounds the reader.

The final few chapters of the book begin to address actual investment concepts such as debt, equity, and derivatives. These are, of course, very basic concepts, but Ayache presents them in a philosophical wrapper which does cast them in a new light. I found myself actually understanding the material, and appreciating the insights offered. Again, though, the takeaways were mostly abstract and not terrible practical.

“The Blank Swan” is certainly a unique and challenging read. It is difficult to recommend, though, since it is so heavily cloaked in dense philosophical constructs. This is a book to be read over time, and not necessarily even in the order presented. For the reader looking for a discussion on the philosophy of finance, Ayache offers one of the few books in the discipline, but it comes at a price; namely many hours of laborious study and head scratching.

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