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If you were to relive a set of events times, what would the range of outcomes be? If there is very little variance in your alternative histories i. You chose to become a dentist and you will probably make more or less the same amount of money and live a similar lifestyle all times , then you are in a relatively non- random situation.

Meanwhile, if there is a very wide range of normal results when considering 1, variations entrepreneurs, traders, etc. The quality of a choice cannot be judged just by the result.

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

I first learned this in baseball. Just because a pitch you call or play you call doesn't work out doesn't make it a poor choice. It could have been the right call, but bad luck. Or vice versa. Uncertainty concerns events that should take place in the lowest number of them. You essentially want to insulate yourself from terrible random accidents. We have a tendency to see risks against specific things as more likely than general risks dying in a terrorist attack while traveling vs. We seem to overvalue the things that trigger an emotional response and undervalue the things that aren't as emotional.

Fooled by Randomness by Nassim Nicholas Taleb

That is, old ideas have had to stand the test of time. New ideas have not. Some new ideas will end up lasting, but most will not. The ratio of undistilled information to distilled is rising. Let's call information that has never had to prove its truth more than once or twice, undistilled. And information that has been filtered through many years, counter arguments, and situations is distilled. There is nothing wrong with losing. The problem is losing more than you plan to lose. You need clear rules that limit your downside.

The best strategy for a given time period is often not the best strategy overall. In any given cycle, certain places will be dangerous, certain trading strategies will be fruitful, etc. If you find yourself doing something extraordinarily well in a random situation, then keep doing what's working but limit your downside. There is nothing wrong with benefitting from randomness so long as you protect yourself from negative random events.

Randomness means there are some strategies that work well for any given cycle an extreme fad diet , but these cycles are often short to medium term successes. More importantly, the strategies that work for a given cycle in the short term may not be the best for long run. They are sub optimal strategies winning over a randomly beneficial short term cycle. The same can said for setting huge goals, following a fad diet, chasing an extreme training protocol, and so on.

Unsustainable and suboptimal for the long term. In this way, evolutionary traits that are undesirable can survive for a period of time in any given population. I think I picked this up from our building's swap shelves.


  • ISBN 13: 9780812975215.
  • The Acoustic Bubble.
  • Fooled by Randomness.

It's an advance uncorrected proof, and wow does it need corrections. The author discusses his observations about how we are fooled by random events into make false causal links. Many of his examples are from his financial trading experience. Well worth the reading Nassim Nicholas Taleb was born in in Amioun, Lebanon.

The Book in Three Sentences

He is a researcher, essayist, trader, epistemologist, and former practitioner of mathematical finance. Taleb received his bachelors and masters degree in science from the University of Paris. Taleb began his financial mathematics career in several of New York City's Wall Street firms before becoming a scholar in the epistemology of chance events, randomness, and the unknown.

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

It is already a landmark work and its title has entered our vocabulary. In its second edition, Fooled by Randomness is now a cornerstone for anyone interested in random outcomes. Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill?

Fooled by Randomness is a captivating insight into one of the least understood factors of all our lives. Writting in an entertaining and narrative style, the author succeeds in tackling three major intellectual issues: the problem of induction, the survivorship biases, and our genetic unfitness to the modern word. In this second edition, Taleb manages to use stories and anecdotes to illustrate our overestimation of causality and the heuristics that make us view the world as far more explainable than it actually is.

But no one can replicate what is obtained by chance. Are we capable of distinguishing the fortunate charlatan from the genuine visionary?

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Must we always try to uncover nonexistent messages in random events? It may be impossible to guard ourselves against the vagaries of the Goddess Fortuna, but after reading Fooled by Randomness we can be a little better prepared. If the prescriptions for getting rich that are outlined in books such as The Millionaire Next Door and Rich Dad Poor Dad are successful enough to make the books bestsellers, then one must ask, Why aren't there more millionaires?

In Fooled by Randomness , Nassim Nicholas Taleb, a professional trader and mathematics professor, examines what randomness means in business and in life and why human beings are so prone to mistake dumb luck for consummate skill. This eccentric and highly personal exploration of the nature of randomness meanders from the court of Croesus and trading rooms in New York and London to Russian roulette, Monte Carlo engines, and the philosophy of Karl Popper. Part of what makes this book so good is Taleb's ability to make seemingly arcane mathematical concepts at least to this reviewer entirely relevant in evaluating and understanding everything from the stock market to the success of those millionaires cited in the aforementioned bestsellers.

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Book Summary: Fooled by Randomness by Taleb

Here's an articulate, wise, and humorous meditation on the nature of success and failure that anyone who wants a little more of the former would do well to consider. Highly recommended. Nassim Nicholas Taleb is an essayist principally concerned with the problems of uncertainty and knowledge.


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Specializing in the risks of unpredicted rare events? Taleb is a fellow at the Courant Institute of Mathematical Sciences of New York University where he has been teaching a class on the failure of models since The author? Since childhood, Taleb has been obsessed with the defects of his own thinking. In addition to his scientific and literary interests, Taleb enjoys cafe lounging and museum hopping. Convert currency.