Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto)

Taleb is one of a kind and has ascended to becoming one of my very favorite thinker-writers. This is partly because I've myself been interested in this subject matter (uncertainty, probability, risk, judgement, decision making, etc.) for more than two decades, but also because Taleb makes original and valuable contributions to the subject, and does it with an immensely entertaining writing style. The book is too wide ranging to summarize its content in a review, but perhaps the main lesson is that we humans are inherently prone to being irrational in various ways (usually without realizing it), particularly when it comes to adequately judging risks (and opportunities) and thereby making appropriate decisions in the face of uncertainty. We're especially prone to underestimating how often outliers ("black swans") can occur and how severe their consequences can be ("blowing up" in the case of traders). A corollary is that we often underestimate the role of luck (good and bad) in shaping outcomes, and instead overestimate the role of our decisions. Though we can't eliminate our tendency toward irrationality, we can at least be aware of it, and thereby deploy some "tricks" to help control it or compensate for it. My thoughts on this book largely echo my review of Taleb's The Black Swan: The Impact of the Highly Improbable , and both books are similar in content and style, though The Black Swan: The Impact of the Highly Improbable is perhaps a bit more flamboyant (in a good way). To be more specific: - Taleb is confident and may sometimes seem condescending, but his erudition is undeniable, and a strong case can be made for his iconoclastic brilliance as well. In a book like this, perhaps the usual modesty and humility don't make sense. - He's dismissive of those he disagrees with (even Nobel prize winners), and could be accused of oversimplifying their positions, but his criticisms actually seem to have a lot of validity, and recent financial events seem to have significantly (and unfortunately) vindicated him. - He often circles around his points, but his refusal to get right to the point pushes you to think more deeply about the implications of his ideas, rather than just quickly saying "yes, that's obvious, so what?" - His frequent digressions make it harder for the reader to follow the thread of his narrative, but the digressions are fun and many are quite insightful. For an open-minded person with an intellectual inclination, this can be a very gripping book. - I do think the more technical discussions should have been more clear and precise. I guess Taleb tried to "dumb down" the book to reach a broad audience. - Many of the ideas in the book aren't original to Taleb, but the way he's woven them together and presented them with flourish certainly is, resulting in the ideas having lasting impact on the reader. - His suggestions on investing aren't very specific, but this is a book about being fooled by randomness in general, not investing in particular. And Taleb's general advice to arrange safeguards against financial disaster, and also get exposure to potentially huge opportunities, certainly seems sensible. As with The Black Swan: The Impact of the Highly Improbable , the bottom line is that this book is truly unique in its ability to intellectually entertain while conveying some deep insight and wisdom. Few people in the world have the right intersection of ingredients to produce a book like this, so we should cherish the fact that the book exists. Even if you don't fully agree with him, Taleb is worth engaging with. For readers who like this book and also have a strong interest in science, I also suggest Chance and Chaos by David Ruelle. Very highly recommended. In fact, ignore this book at your peril.

As stated by the author in the prologue, the main premise of the book is: "More generally, we underestimate the share of randomness in about everything, a point that may not merit a book - except when it is the specialist who is the fool of all fools...In my experience (and in the scientific literature), economic "risk takers" are rather the victims of delusions (leading to overoptimism and overconfidence with their underestimation of possible adverse outcomes) than the opposite. Their "risk taking" is frequently randomness foolishness." Below are key excerpts from the book that I found particularly insightful: 1- "I start with the platitude that one cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e., if history played out in a different way). Such substitute courses of events are called alternative histories. Clearly, the quality of a decision cannot be solely judged based on its outcome, but such a point seems to be voice only by people who fail (those who succeed attribute their success to the quality of their decision...And like many platitudes, this one, while being too obvious, is not easy to carry out in practice." 2- "It is a fact that our brain tends to go for superficial clues when it comes to risk and probability, these clues being largely determined by what emotions they elicit or the ease with which they come to mind. In addition to such problems with the perception of risk, it is also a scientific fact, and a shocking one, that both risk detection and risk avoidance are not mediated in the "thinking" part of the brain but largely in the emotional one (the "risk as feelings" theory). The consequences are not trivial: It means that rational thinking has little, very little, to do with risk avoidance. Much of what rational thinking seems to do is rationalize one's actions by fitting some logic to them." 3- "There is an important and nontrivial aspect of historical thinking, perhaps more applicable to the markets than anything else: Unlike many "hard" sciences, history cannot lend itself to experimentation. But somehow, overall, history is potent enough to deliver, on time, in the medium to long run, most of the possible scenarios, and to eventually bury the bad guy...Mathematicians of probability give that a fancy name: ergodicity. It means, roughly, that (under certain conditions) very long sample paths would end up resembling each other." 4- "1) Over a short time increment, one observes the variability of the portfolio, not the returns. In other words, one sees the variance, little else...2) Our emotions are not designed to understand the point...3) When I see an investor monitoring his portfolio with live prices on his cellular telephone or his handheld, I smile and smile." 5- "...It is not how likely an event is to happen that matters, it is how much is made when it happens that should be the consideration. How frequent the profit is irrelevant, it is the magnitude of the outcome that counts." 6- "...Brian Arthur, an economist concerned with nonlinearities at the Santa Fe Institute, wrote that chance events coupled with positive feedback rather than technological superiority will determine economic superiority - not some abstrusely defined edge in a given area of expertise." 7- "Causality can be very complex. It is very difficult to isolate a single cause when there are plenty around. This is called multi-variate analysis...People might ask me: Why do I want everybody to learn some statistics? The answer is that too many people read explanations. We cannot instinctively understand the nonlinear aspect of probability." 8- "I am just intelligent enough to understand that I have a predisposition to be fooled by randomness - and to accept the fact that I am rather emotional. I am dominated by my emotions - but as an aesthete, I am happy about the fact. I am just like every single character who I ridiculed in this book...The difference between me and those I ridicule is that I try to be aware of it." 9- "People confuse science and scientists. Science is great, but individual scientists are dangerous. They are human; they are marred by the biases human have. Perhaps even more. For most scientists are hard-headed, otherwise they would not derive the patience and energy to perform the Herculean tasks asked of them...It was said that science evolves from funeral to funeral. After the LTCM collapse, a new financial economist will emerge, who will integrate each knowledge into his science. He will be resisted by the older ones, but, again, they will be must closer to their funeral date than he." 10- "It took me an entire lifetime to find out what my generator is. It is: We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong (Fooled by Randomness) with us seems to flow from it."

Using his trademark aphoristic bent, Friedrich Nietzsche wrote: "Arrogance in persons of merit affronts us more than arrogance in those without merit: merit itself is an affront". I've come to realize that some people find Nassim Taleb's arrogance quite repugnant, but, personally, I find it rather charming. I suspect that the same people who find Taleb's arrogance off-putting are the people who wish they possessed a shred of his erudition. Nietzsche was certainly on to something; it's hard to avoid being offended by your betters. I think I first read "Fooled By Randomness" circa 2006. Recently, I felt a longing to reread Taleb's first non-technical book again. Wow, what a wise decision that was! I actually digested more from the rereading than I did from the initial reading (and I digested quite a bit from the first reading). Both times, I focused on reading the book very, very slowly. Obviously, the fact that I spent the time to reread this book is indicative of how valuable I think it is. Known for his great wit, the baseball pitcher Vernon Louis "Lefty" Gomez was fond of saying that, "I'd rather be lucky than good." This phrase, in essence, is one of the central themes of the book. Although it sounds like a hackneyed platitude, Gomez, understood the role of randomness in our lives. However, due to myriad biases, we humans often tend to attribute our successes to our skill and blame bad luck for our failures. Is your rich neighbor or your boss really as skilled as she thinks she is? Parts of the book are also about the hindsight bias and the narrative fallacy. We humans are great at fabricating post hoc narratives about our world. It's how we understand (and misunderstand) the world, but we must remember not to take our stories too seriously. "A mistake is not something to be determined after the fact," writes Taleb, "but in the light of the information until that point." One of Taleb's favorite philosophers is Karl Popper. However, Taleb wasn't always enthralled with the man who espoused the beauty of empirical falsification. Prior to rediscovering the great philosopher, Taleb went through a self identified anti-intellectual phase early in his career as a trader. He feared becoming a corporate slave with "work ethics" (a term which he interprets to mean inefficient mediocrity). "Philosophy, to me," Taleb writes, "became something rhetorical people did when they had plenty of time on their hands; it was an activity reserved for those who were not well versed in quantitative methods and other productive things. It was a pastime that should be limited to late hours, in bars around the campuses, when one had a few drinks and a light schedule -- provided one forgot the garrulous episode as early as the next day. Too much of it can get a man in trouble, perhaps turn one into a Marxist ideologue." As they say, the dose determines the poison. Speaking of poison, another interesting idea that Taleb espouses is that being too attached your beliefs is poisonous. As he puts it: "Loyality to ideas is not a good thing for traders, scientists, -- or anyone". I like to think about it this way, there are times we shouldn't trust experts precisely because they are experts. This is because they are no incentives to be brutally critical of your own ideas. A scientist or a preacher who has built their career on a certain idea obviously has a lot invested in that idea. How likely are they to be critical of their own position when their livelihood depends on it being accepted? What if they are putting out pseudo-scientific nutritional guidelines that cause harm, but help them keep their job? According to Popper there are only two types of theories: 1) Theories that are known to be wrong, as they were tested and adequately rejected (he calls them falsified). 2) Theories that have not yet been known to be wrong, not falsified yet, but are exposed to be proved wrong. If you accept Popper's epistemology, like I also do, you can never claim that you know a theory to be true. In other words, we can only gain knowledge through proving that things are false. For instance, when I accidentally find myself in a theistic debate, people often challenge me to tell them how the universe came into existence. When I say `I don't know', they become infuriated. How dare I have the gall to dismiss some of their religion's claims as not true without projecting my own claim to reality? Yet, that's exactly the point. I gain knowledge through knowing what's wrong, not through making claims about what I think is right. So what should we make of Taleb's extreme and obsessive Popperism in a more practical sense? How does he recommend we apply to it our lives? I think it can be summarized in the following passage: I speculate in all of my activities on theories that represent some vision of the world, but with the following stipulation: No rare event should harm me. In fact, I would like all conceivable rare events to help me. My idea of science diverges with that of the people around me walking around calling themselves scientists. Science is mere speculation, mere formulation of conjecture. The following thought experiment really helped me internalize this message. Assume you participate in a gambling game that has 999/1000 chance of winning $1 [Event A] and a 1/1000 chance of winning $10,000 [Event B]. Using some straightforward calculations the expectation of a loss is roughly $9 (multiply the probabilities by the outcome for each event and then sum them) Which event would you bet on? I suspect that most people consider the frequency or probability in their decision, but this is totally irrelevant. According to Taleb, even people like MBAs and economists with some statistical training fail to understand this point. The magnitude of the outcome should be the only relevant factor in the decision. Think of a trader who focuses on event B, sure, he is likely to bleed slowly for long periods of time, but when the rare event happens the payoff is astronomical compared to the losses. Most of us, however, are schooled in environments that focus on games with symmetrical outcomes (e.g., a coin toss). The great psychologist and father of behavioral economics, Daniel Kahneman, also reminds us that we are loss averse and psychologically struggle with idea of bleeding out small losses for extended periods of time, even if there is eventually the opportunity for a huge payday. Once you realize that life is full of scenarios with asymmetrical payoffs, you're thinking (if you're anything like me anyway) will be permanently altered. In fields like, say, writing, the outcomes are asymmetrical. In other words, there is not a linear relationship with the number of hours spent writing and the amount of income one makes. One may spend a long time writing for free and then finally catch a huge book deal. For me, this is somewhat of a moot point because I'd write for free without any other justification other than the fact that it's fun and makes me happy. However, if all other things were equal, and I could also make money doing something I love, I would be very happy. Here's another piece of practical wisdom that I really enjoyed: "stay away from people of a competitive nature, as they have a tendency to commoditize and reduce the world to categories, like how many papers they publish in a given year, or how they rank in the league tables." These are the same kinds of people who think that their GPA reflects their intelligence. Or that the number of hours they spend running on a treadmill reflects their fitness. Or that their inherited wealth says something about their genetic fitness. Or that their expensive clothes make them beautiful. I could continue on and on, but I think you get the point. I often hear those around me complaining about how life will be better when they achieve "X". Alas, I'm human and guilty of making claims like this on occasion too. The trouble is that, for most of us anyway, we won't really experience long-term improvements in our happiness when we achieve "X". Throughout the book, Taleb devotes a fair amount of time alerting readers of what the literature in behavioral economics tells us about our irrational tendencies and biases. For example, there's the social treadmill effect: you get rich, move to rich neighborhoods, then become poor again once you compare yourself to your new peers. Then, you may work your ass off and get rich again, only to repeat the cycle. If you want to feel worse about yourself, then the best piece of positive advice I know of is to hang around people who are wealthier than you. I often try to remind myself that I'm living a life that is materially better than 99.9% of all humans that have ever existed and yet I still have the audacity to claim that I don't have enough sometimes. Pathetic. At one point in the book, Taleb writes: "I see no special heroism in accumulating money, particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from wealth (aside from the pleasure of regularly counting the beans)". In other words, money is only valuable if you use it as a tool to extract enjoyment from life. If it isn't clear, I think he is making reference to the likes of Warren Buffett, whom people tend to see as being virtuous simply for the fact that he has been able to accumulate hordes of money. What I think many people fail to understand is that there is nothing virtuous about having money just for the sake of having it. How someone earned what they have tells you a lot more about them than how much they have. We generally tend to think that having money signals other traits about a person, but I'll remind you that there is a lot of noise in those signals (think inheritance). Having money doesn't necessarily signal any superior traits. Those who want to make a lot of money are greedy and shouldn't try to deny that motivation. Greed, however, is not necessarily a bad thing. As Adam Smith taught us, another mans' greed can create more wealth for society as a whole (provided the individual's wealth is ethically obtained). Do cigarette smokers understand probabilities? If so, how can they rationally understand the ills of cigarettes and yet be foolish enough to smoke them anyway? When I go for walks near hospitals I'm always surprised by the number of people in scrubs (perhaps some of whom are doctors and nurses) who I assume are well aware of how harmful cigarettes are, but smoke them anyway. Apparently, intellectually understanding something and being able to put it into practice are two different things. One thing Taleb also writes about is the selection bias in blogging and book reviewing. The cover of my edition of Fooled By Randomness has an excerpt praising Taleb as one of the "hottest thinkers" in the world. While I certainly agree, I couldn't help but smirk after reading that line -- can you say selection bias? Any book that is worth reading twice is worth reading more than twice. When you love a writer, you want to hear his opinion on just about everything. - See more at: [...]

It's not intuitive that life is laced with as much luck as Taleb claims, especially not while we're surrounded by so many experts providing an endless flow of narratives. Then again, if you took this book, held it up to his current expert musings on Twitter, you'd find yourself looking the other way at his behavior. His journey through the work of Kahneman and Tversky was great. We are hardwired to be biased in so many ways when it comes to data and its interpretation. We're not made for a world with so much randomness. People do suck at probability. You have to go out of your way to activate system 2 to truly understand something. My favorite bias, if that's something you can have a favorite of, was the survivorship bias. It had never occurred to me how much of the story we're missing simply by acknowledging the small sample of winners and survivors at the expense of the set that isn't in the winner's circle. I like to use the term mind blowing when I read a book I really enjoy, but this book is more mind melting, in that you end up questioning your own frameworks and paradigms. As a parent, after reading this book it's easy to view your kids' shenanigans as 'noise' and not necessarily as the 'true signal.' In fact, it's probably healthy to do that. I would say this translates to the work place as well. How often do coworkers annoy us? Well how much of that is noise surrounding a true signal? It's too easy to base so much on the noise while not actually searching for the signal. How much of human events are noise? The news? (Most of it really). But if you can discern the noise from the signal then odds are you're more perceptive than the average bear, or you're just lucky.

Taleb's 'Fooled By Randomness' is nothing short of an awareness-raising collection of anecdotes, cautioning the dangers of overlooked randomness. Every chapter provides ample details to inform the reader of unforeseeable events - both good and bad. Before I delve too deep into the review of this book, I feel it's important to know who the reader is. For instance, financial structures and markets are far from my comfort zone. I am not an overly-active reader with an obnoxiously expansive vocabulary. I am an engineering student (mediocre at best...) who decided to read this book in order to gain an understanding of how randomness intertwines with the market. If you are someone of great intelligence in regards to stocks and the markets, this review is probably going to be irrelevant to you. Otherwise, this review is written from the standpoint of an average guy. The first thing to know before reading this novel is the structure of the book itself. There are fourteen chapters in which Taleb does a good job hammering the point home - borderline beating a dead horse. The chapters themselves are well-written but seem to have no particular order to the book as a whole. For instance, if you were to read the book backwards (chapter 14 on down), I don't think you would ever noticed you were reading it in reverse - though the overall point and theme would have been received just as well. I'm not sure if that's a sign of an incredibly well-written book or a unorganized collection of thoughts and stories. Also, Taleb has a tendency to use 13 words to describe a 2 word event. Albeit very descriptive, every sentence could probably be reduced by half. Taleb is clearly the intellectually superior between he and I, for I have to look up every third word he writes. Initially, this book grabbed my attention. All of the facts were interesting and really got me thinking about the role randomness not only in the markets, but in our everyday lives. The opening chapters compared two brokers with two different personal as well as professional approaches towards life. One being high-risk and high-reward while the other was conservative and consistent. My emotional side liked the high-risk trader, while my logical side related to the conservative trader. After all, Hollywood has done such a good job painting such a skewed perception of high-risk traders. We often see the rewards people (actors) reap after risking almost everything - high stakes, high adrenaline, last minute decisions - but it all pays off in the end, right? Wrong. Hollywood doesn't show the aftermath of the 99.5% of those people who lose. Thus, my logical side relating to the conservative trader. Taleb creates some of the best analogies I have ever read. As a matter of fact, if it weren't for his analogies, I probably wouldn't understand the book. Once again, I'm not sure if that is a good or bad thing... The most important concept that I took from this book was the notion of Survivorship Bias. We all have it (most to a large extent), yet we hardly ever acknowledge it. In a nutshell (and without spoiling any of his original details/theories), survivor bias is the thought process of `oh that will never happen to me'. It's the notion that we are exempt from certain undesirable outcomes. When buying a lottery ticket, we all envision the most rewarding although lease likely outcome - winning big. In reality, it's quite the opposite. Taleb references this often unaccounted-for bias quite often - each time making the stakes a little more interesting. Second behind survivorship bias, I thought his perception of induction was also informative. We, as humans, tend to induce information that can't be induced. Some systems would rather have wrong data than no data at all - this is a very dangerous method. Some information is just not meant to be induced. Taleb spends a good amount of time (about two and a half chapters) criticizing other wealthy people. He likes to use his Monte Carlo simulator analogy a lot, and with that, he starts to pick apart other people's wealth. If we were to run the course of the people's lives one million times, what are the chances they would still be millionaires? For most of them, the number would be minute. Although I understand his point, I can't help but to notice an undertone of envy and/or anger towards these `lucky' few. All of these stories convey one message: randomness can - and will (more often than not) - appear when it is least convenience. It is always important try to acknowledge obscure events, or at least leave room for error in their cause. In one section of the book, Taleb informs us everything is subject to randomness - including evolution. According to Taleb, there are 6 characteristics that make a person a fool to randomness: 1. An overestimation of the accuracy of their beliefs 2. A tendency to get married to positions 3. The tendency to change their story 4. No precise game plan ahead of time as to what to do in negative events 5. Absence of critical thinking 6. Denial In chapter 5, he explains his reasoning for each of these traits and why they make one a fool to randomness. I agree with his reasoning and in my opinion, most of these traits make a person a fool in general... In conclusion, Taleb does a great job informing the reader on just how much randomness is actually in our lives. We should always try to recognize that randomness attributes mostly to success. Most people spend a lifetime trying to be successful, when in reality, we need to spend that time trying to minimize the variability of the outcomes of our situations. We should also try to analyze most important decision logically as opposed to emotionally. We need to set goals and not pay attention to the surrounding `noise'. As Taleb says, remember that your personal behavior is the only thing randomness can't control.

The spotlighted reviews are unfair and irritating. I enjoyed the hell out of this book, not because the author's thesis is necessarily correct, but because it is extremely entertaining and well-written. This is a brief literary essay about epistemology, not a textbook. It tells the story of a philosopher who unintentionally stumbles into options trading, and presses his neuroses to his advantage. It does not purport to be a handbook for success in the stock market. Nor COULD it resolve the perennial debate between empiricism and rationalism. Taleb does not "ignore" the possibility of deductive reasoning from a priori truth, he discounts it. He's a empiricist, and this is an polemic for empiricism. He's a partisan, not an ignoramus. I also disagree with the contention that Taleb spreads his "cultural comfiture" thin, though I am not at all surprised to learn that that is a French idiom. As a TRUE sophisticate, I can vouch for the fact that this a culturally-sophisticated book, even if he gets the details of signal/noise filtration wrong on page 167. Or whatever. (Not caring much, I'll have to take his word on it.) I can understand why this book has hurt feelings, since the author adopts a cavalier and often snide tone toward those who have experienced success in the market. But, come on here, it isn't as though he's picking on crippled children; his targets are high-risk traders - they should have thicker skins. In any event, the streak of self-deprecation that runs through this book is obvious. The author humorously portrays HIMSELF as a petty, jealous, greedy snob. It's an ironic pose and -if your ego's not wrapped up in these things- it's pretty damn funny. There is a growing market for the philosophical business book. Rather than panning Taleb's book, the critics above should write their own. If anyone can explain "praxeological analysis" with the same style and grace that Taleb has brought to black swans, heuristics and biases, then I will eagerly buy their book, too.

This is one the first books I ever read on markets and trading. However compared to its reviews it turned out to something completely different. It definitely was not a kind of a book where you can just read and move on but a kind that actually makes you stop and think. I always had the impression that books about the market or the economy come with a baggage of understanding the material and concepts beforehand. Fooled by Randomness threw me back by the way Nassim the author, portrayed the various facets in which randomness and probability not only rule markets or trading but everyone's life in general. It was fascinating to see that such a world even exists and that people who are driven by profit do not always take a straightforward path. Overall the book was interesting for a novice reader but definitely not an easy to follow book. There were many parts of the book where I had to stop and read twice or thrice to understand what the author is trying to say. It definitely shows you a different mindset of the Type A personality investment bankers and traders. The book walks through various phases of how randomness and probability affect people from all walks of life. It is well divided into three major parts, each explaining different angles in which people view probability and randomness in their lives and how they deal with it on an individual level. The author explains well how perception and biases are responsible for people making wrong decisions. He talks about the fact that even though we cannot completely ignore emotions, we cannot as well completely remove probability and randomness while evaluating decisions and risks. The author also explains about the Monte Carlos simulators and how they should always be used to predict outcomes in the future rather than just relying on data from the past. The author also has strong views about denigrate history suggesting that people feel that things that happen to others might not happen to them. Nassim has given a lot of examples to show the reader the various angles in which randomness and probability is perceived, used and interpreted by people. The author also draws light upon the fact that too much information might end up doing more harm than good as it blurs your decision and your ability to choose the right information. Nassim also strongly emphasizes on the fact that any individual should never get completely loyal to his position as it hinders him from looking at different points of views. This in turns affects his decision making and ability to adapt to the changes that come with the position. The author has given examples of people from his life, famous people throughout history as well as people from various field of work to prove his point in several occasions. The author finally suggests that it is inevitable to be affected by randomness as he himself has been affected by it. However whatever the effects of randomness in anyone's life, they never should blame anyone or get angry but just learn to deal with and change is always inevitable. The book has been written in a very personal format where it feels as if the author is trying to convey a message through a personal talk. Talking about experiences in his life and sharing his emotions definitely helps build that connection with the author. The author's style seems very straight and blunt as well. It feels like he has no qualms about how he has experienced life or what he has thought about some people who he has met in life. This is clearly seen in way he expresses feelings about some of his neighbors, coworkers or even people he has heard about. It gives a sort of raw understanding into the mind of the author. In doing so he has been able to sort of organize his book in to the various aspects of randomness, its effects and biases that come with it and finally how several people deal with it. This sort of structure helps in understanding the complex message that the author is trying to convey. There are quite a few quotes that got me thinking, some of which are: "Mild success can be explainable by skills and labor. Wild success is attributable to variance.", "Heroes are heroes because they are heroic in behavior, not because they won or lost.", "A mistake is not something to be determined after the fact, but in the light of the information until that point.", "The only article Lady Fortuna has no control over is your behavior.". However my most favorite line from the book is "No amount of observations of white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion." I love it because it made me think and realize that this applies to so many things in life. Your reputation that you build upon for so many years can all come crashing down with a major mistake. Nassim explains this with an example of a successful banker who earned millions for a bank however a single mistake that cost him millions got him fired and forgotten of the things he had done in the past. After reading through the entire book you have a sense of confusion mainly due to the fact that it does stay close to its name that there is a lot of talk about randomness that exists in the world and the market. However Nassims ability to convince the author is promising. He himself believes that he was fooled by randomness and consciously tries to make certain decision that help him in making the sound decision. Overall this book has great things to offer from head scratching content to knowledge to even humor at times and is definitely worth a read. It helped me step out of my comfort reading zone and challenge me in my thoughts and opinions that I had about various aspects in life.

In this book Nassim Nicholas Taleb shows us how a person can appear the picture of success but their life path came about from pure randomness not a skill set or great choices. He does not deny that there are people who dramatically increase their odds of success through intelligent decisions and social skills but also points out that much of success is just random. Based on probabilities of 50% if there was a coin flipping contest of 100 people then 50 would be right, of those 50, 25 would then be right twice in a row, then 12 or 13 followed by 6 coin flippers right 4 times in a row, then 3 that were right 5 times and finally maybe 1 right 6 times in a row. This exercise is pure randomness, no skill is involved. Journalists would then write about how this coin flipper used his method to be right 6 times in a row, his thought process and skill set on coin flipping, and they would all be wrong it was just luck the coin flipper has no edge or advantage in future coin flips. The author explains how jobs like a dentist are not as vulnerable to randomness due to the skills that must be resent to perform dentistry while a stock trader's or CEO's success rate is primarily based on random events outside of their own control. Trader's that are naturally bullish and like to buy growth stocks may look like geniuses in a bull market but then have no idea what to do in a plunging bear market taking back all their gains and falling day after day. A CEO may just be at the right company at the right time with his decisions making little impact on the business environment he is in. The closer the person is to the ground level of accomplishing specific tasks the more skill required the farther away form customers and tasks the more levels of protection from actually having to show real skills as others take care of the details while the CEO just makes the big decisions insulated from much of the battleground reality. This is a great book I highly recommend.

The language is dense — unmistakably that of a true scientist — but it's rich with insight. Gems are scattered throughout the text, waiting to be discovered. I recommend reading it slowly, pausing often to reflect or highlight the subtle points you might otherwise miss. I’m already on a second pass, marking ideas I overlooked the first time. I’m especially glad the author didn’t simplify the language at an editor’s suggestion — that would’ve stripped the book of its distinctive voice and the unique pleasure of slow, thoughtful reading.

excellwnt

Fooled by Randomness made me rethink how much of “success” is really just luck. Taleb uses great real world examples, and the book is eye opening without being too technical. His tone can be a bit smug at times, but overall it’s a smart, engaging read that sticks with you.

Articolo perfetto, libro splendido. Dalla prima superiore gli studenti dovrebbero leggere e capire un libro di Nassim Taleb all'anno.

The main point of this book is uncertainty and its applications (or lack of it) on day to day life. Taleb explores this concept using finance as a starting point, but soon breaches into philosophy, statistics, psychology and evolutionary biology. A central idea is Hume’s problem of induction: it’s easier to disprove something than to prove it, all you need is a single occurrence where the basic premise is not true. In complex environments such as the modern world, betting on the “stability” of systems, where rules don’t change, can have catastrophic consequences, as the financial crises have shown. This asymmetry in the “burden of proof” will eventually evolve into Taleb’s concept of antifragility, that is, systems that actually thrive, rather than crumble, under uncertainty. When compared to Antifragile, Taleb’s third book, one can see the same ideas in a somewhat raw and less polished version. Fooled By Randomness is much more focused on economics and finance than Antifragile’s, which, in a way, turns it more palpable but provides a less “unified” theory on randomness, its impacts on daily life and how to survive and thrive under it. However, this book benefits from delving deeper than Antifragile’s in the topics that it discusses, which contributes to a better understanding of them. Additionally, by staying closer to the “source” of the discussion, Fooled by Randomness is more focused and has fewer ups and downs, in my view. It’s difficult for me to rank this book in Taleb’s corpus. My only certainty is that I’m much less certain about what I truly know and that my list of books to read and authors to explore has grown considerably.