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"[Taleb is] Wall Street’s principal dissident. . . . [Fooled By Randomness] is to conventional Wall Street wisdom approximately what Martin Luther’s ninety-nine theses were to the Catholic Church.” –Malcolm Gladwell, The New Yorker
“Fascinating . . . Taleb will grab you.” –Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk
“Recalls the best of scientist/essayists like Richard Dawkins . . . and Stephen Jay Gould.” –Michael Schrage, author of Serious Play
“We need a book like this . . . fun to read, refreshingly independent-minded.” –Robert J. Shiller, author of Irrational Exuberance
About the Author
Nassim Nicholas Taleb has devoted his life to problems of uncertainty, probability, and knowledge. He spent nearly two decades as a businessman and quantitative trader before becoming a full-time philosophical essayist and academic researcher in 2006. Although he spends most of his time in the intense seclusion of his study, or as a flâneur meditating in cafés, he is currently Distinguished Professor of Risk Engineering at New York University’s Polytechnic Institute. His main subject matter is “decision making under opacity”—that is, a map and a protocol on how we should live in a world we don’t understand.
Taleb’s books have been published in forty-one languages.
Croesus, King of Lydia, was considered the richest man of his time. To this day Romance languages use the expression “rich as Croesus” to describe a person of excessive wealth. He was said to be visited by Solon, the Greek legislator known for his dignity, reserve, upright morals, humility, frugality, wisdom, intelligence, and courage. Solon did not display the smallest surprise at the wealth and splendor surrounding his host, nor the tiniest admiration for their owner. Croesus was so irked by the manifest lack of impression on the part of this illustrious visitor that he attempted to extract from him some acknowledgment. He asked him if he had known a happier man than him. Solon cited the life of a man who led a noble existence and died while in battle. Prodded for more, he gave similar examples of heroic but terminated lives, until Croesus, irate, asked him point-blank if he was not to be considered the happiest man of all. Solon answered: “The observation of the numerous misfortunes that attend all conditions forbids us to grow insolent upon our present enjoyments, or to admire a man’s happiness that may yet, in course of time, suffer change. For the uncertain future has yet to come, with all variety of future; and him only to whom the divinity has [guaranteed] continued happiness until the end we may call happy.”
The modern equivalent has been no less eloquently voiced by the baseball coach Yogi Berra, who seems to have translated Solon’s outburst from the pure Attic Greek into no less pure Brooklyn English with “it ain’t over until it’s over,” or, in a less dignified manner, with “it ain’t over until the fat lady sings.” In addition, aside from his use of the vernacular, the Yogi Berra quote presents an advantage of being true, while the meeting between Croesus and Solon was one of those historical facts that benefited from the imagination of the chroniclers, as it was chronologically impossible for the two men to have been in the same location.
Part I is concerned with the degree to which a situation may yet, in the course of time, suffer change. For we can be tricked by situations involving mostly the activities of the goddess Fortuna—Jupiter’s firstborn daughter. Solon was wise enough to get the following point; that which came with the help of luck could be taken away by luck (and often rapidly and unexpectedly at that). The flipside, which deserves to be considered as well (in fact it is even more of our concern), is that things that come with little help from luck are more resistant to randomness. Solon also had the intuition of a problem that has obsessed science for the past three centuries. It is called the problem of induction. I call it in this book the black swan or the rare event. Solon even understood another linked problem, which I call the skewness issue; it does not matter how frequently something succeeds if failure is too costly to bear.
Yet the story of Croesus has another twist. Having lost a battle to the redoubtable Persian king Cyrus, he was about to be burned alive when he called Solon’s name and shouted (something like) “Solon, you were right” (again this is legend). Cyrus asked about the nature of such unusual invocations, and he told him about Solon’s warning. This impressed Cyrus so much that he decided to spare Croesus’ life, as he reflected on the possibilities as far as his own fate was concerned. People were thoughtful at that time.
If You’re So Rich, Why Aren’t You So Smart?
An illustration of the effect of randomness on social pecking order and jealousy, through two characters of opposite attitudes. On the concealed rare event. How things in modern life may change rather rapidly, except, perhaps, in dentistry.
Hit by Lightning
Nero Tulip became obsessed with trading after witnessing a strange scene one spring day as he was visiting the Chicago Mercantile Exchange. A red convertible Porsche, driven at several times the city speed limit, abruptly stopped in front of the entrance, its tires emitting the sound of pigs being slaughtered. A visibly demented athletic man in his thirties, his face flushed red, emerged and ran up the steps as if he were chased by a tiger. He left the car double-parked, its engine running, provoking an angry fanfare of horns. After a long minute, a bored young man clad in a yellow jacket (yellow was the color reserved for clerks) came down the steps, visibly untroubled by the traffic commotion. He drove the car into the underground parking garage—perfunctorily, as if it were his daily chore.
That day Nero Tulip was hit with what the French call a coup de foudre, a sudden intense (and obsessive) infatuation that strikes like lightning. “This is for me!” he screamed enthusiastically—he could not help comparing the life of a trader to the alternative lives that could present themselves to him. Academia conjured up the image of a silent university office with rude secretaries; business, the image of a quiet office staffed with slow thinkers and semislow thinkers who express themselves in full sentences.
Unlike a coup de foudre, the infatuation triggered by the Chicago scene has not left him more than a decade and a half after the incident. For Nero swears that no other lawful profession in our times could be as devoid of boredom as that of the trader. Furthermore, although he has not yet practiced the profession of high-sea piracy, he is now convinced that even that occupation would present more dull moments than that of the trader.
Nero could best be described as someone who randomly (and abruptly) swings between the deportment and speech manners of a church historian and the verbally abusive intensity of a Chicago pit trader. He can commit hundreds of millions of dollars in a transaction without a blink or a shadow of a second thought, yet agonize between two appetizers on the menu, changing his mind back and forth and wearing out the most patient of waiters.
Nero holds an undergraduate degree in ancient literature and mathematics from Cambridge University. He enrolled in a Ph.D. program in statistics at the University of Chicago but, after completing the prerequisite coursework, as well as the bulk of his doctoral research, he switched to the philosophy department. He called the switch “a moment of temporary sanity,” adding to the consternation of his thesis director, who warned him against philosophers and predicted his return back to the fold. He finished writing his thesis in philosophy. But not the Derrida continental style of incomprehensible philosophy (that is, incomprehensible to anyone outside of their ranks, like myself). It was quite the opposite; his thesis was on the methodology of statistical inference in its application to the social sciences. In fact, his thesis was indistinguishable from a thesis in mathematical statistics—it was just a bit more thoughtful (and twice as long).
It is often said that philosophy cannot feed its man—but that was not the reason Nero left. He left because philosophy cannot entertain its man. At first, it started looking futile; he recalled his statistics thesis director’s warnings. Then, suddenly, it started to look like work. As he became tired of writing papers on some arcane details of his earlier papers, he gave up the academy. The academic debates bored him to tears, particularly when minute points (invisible to the noninitiated) were at stake. Action was what Nero required. The problem, however, was that he selected the academy in the first place in order to kill what he detected was the flatness and tempered submission of employment life.
After witnessing the scene of the trader chased by a tiger, Nero found a trainee spot on the Chicago Mercantile Exchange, the large exchange where traders transact by shouting and gesticulating frenetically. There he worked for a prestigious (but eccentric) local, who trained him in the Chicago style, in return for Nero solving his mathematical equations. The energy in the air proved motivating to Nero. He rapidly graduated to the rank of self-employed trader. Then, when he got tired of standing on his feet in the crowd, and straining his vocal cords, he decided to seek employment “upstairs,” that is, trading from a desk. He moved to the New York area and took a position with an investment house.
Nero specialized in quantitative financial products, in which he had an early moment of glory, became famous and in demand. Many investment houses in New York and London flashed huge guaranteed bonuses at him. Nero spent a couple of years shuttling between the two cities, attending important “meetings” and wearing expensive suits. But soon Nero went into hiding; he rapidly pulled back to anonymity—the Wall Street stardom track did not quite fit his temperament. To stay a “hot trader” requires some organizational ambitions and a power hunger that he feels lucky not to possess. He was only in it for the fun—and his idea of fun does not include administrative and managerial work. He is susceptible to conference room boredom and is incapable of talking to businessmen, particularly the run-of-the-mill variety. Nero is allergic to the vocabulary of business talk, not just on plain aesthetic grounds. Phrases like “game plan,” “bottom line,” “how to get there from here,” “we provide our clients with solutions,” “our mission,” and other hackneyed expressions that dominate meetings lack both the precision and the coloration that he prefers to hear. Whether people populate silence with hollow sentences, or if such meetings present any true merit, he does not know; at any rate he did not want to be part of it. Indeed Nero’s extensive social life includes almost no businesspeople. But unlike me (I can be extremely humiliating when someone rubs me the wrong way with inelegant pompousness), Nero handles himself with gentle aloofness in these circumstances.
So, Nero switched careers to what is called proprietary trading. Traders are set up as independent entities, internal funds with their own allocation of capital. They are left alone to do as they please, provided of course that their results satisfy the executives. The name proprietary comes from the fact that they trade the company’s own capital. At the end of the year they receive between 7% and 12% of the profits generated. The proprietary trader has all the benefits of self-employment, and none of the burdens of running the mundane details of his own business. He can work any hours he likes, travel at a whim, and engage in all manner of personal pursuits. It is paradise for an intellectual like Nero who dislikes manual work and values unscheduled meditation. He has been doing that for the past ten years, in the employment of two different trading firms.
A word on Nero’s methods. He is as conservative a trader as one can be in such a business. In the past he has had good years and less than good years—but virtually no truly “bad” years. Over these years he has slowly built for himself a stable nest egg, thanks to an income ranging between $300,000 and (at the peak) $2.5 million. On average, he manages to accumulate $500,000 a year in after-tax money (from an average income of about $1 million); this goes straight into his savings account. In 1993, he had a bad year and was made to feel uncomfortable in his company. Other traders made out much better, so the capital at his disposal was severely reduced, and he was made to feel undesirable at the institution. He then went to get an identical job, down to an identically designed workspace, but in a different firm that was friendlier. In the fall of 1994 the traders who had been competing for the great performance award blew up in unison during the worldwide bond market crash that resulted from the random tightening by the Federal Reserve Bank of the United States. They are all currently out of the market, performing a variety of tasks. This business has a high mortality rate.
Why isn’t Nero more affluent? Because of his trading style—or perhaps his personality. His risk aversion is extreme. Nero’s objective is not to maximize his profits, so much as it is to avoid having this entertaining machine called trading taken away from him. Blowing up would mean returning to the tedium of the university or the nontrading life. Every time his risks increase, he conjures up the image of the quiet hallway at the university, the long mornings at his desk spent in revising a paper, kept awake by bad coffee. No, he does not want to have to face the solemn university library where he was bored to tears. “I am shooting for longevity,” he is wont to say.
Nero has seen many traders blow up, and does not want to get into that situation. Blow up in the lingo has a precise meaning; it does not just mean to lose money; it means to lose more money than one ever expected, to the point of being thrown out of the business (the equivalent of a doctor losing his license to practice or a lawyer being disbarred). Nero rapidly exits trades after a predetermined loss. He never sells “naked options” (a strategy that would leave him exposed to large possible losses). He never puts himself in a situation where he can lose more than, say, $1 million—regardless of the probability of such an event. That amount has always been variable; it depends on his accumulated profits for the year. This risk aversion prevented him from making as much money as the other traders on Wall Street who are often called “Masters of the Universe.” The firms he has worked for generally allocate more money to traders with a different style from Nero, like John, whom we will encounter soon.
Nero’s temperament is such that he does not mind losing small change. “I love taking small losses,” he says. “I just need my winners to be large.” In no circumstances does he want to be exposed to those rare events, like panics and sudden crashes, that wipe a trader out in a flash. To the contrary, he wants to benefit from them. When people ask him why he does not hold on to losers, he invariably answers that he was trained by “the most chicken of them all,” the Chicago trader Stevo who taught him the business. This is not true; the real reason is his training in probability and his innate skepticism.
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Compared to the Black Swan and Antifragile, this book comes into third place. I still enjoyed it, but it was not as mesmerizing as the previous two. However, you still gain new insights, a few chuckles, and an overall great read. Keep in mind, a lot of people seem to get annoyed with Nassim Taleb's cocky tone in the book. I didn't find it annoying, considering if you know his background (family lost all their wealth during the Lebanon Civil War, he has an MBA from Wharton, Ph.D. in something etc), you have to respect his journey and how he approaches life. I love all his books and am eagerly waiting for when he completes his next book Skin in the Game (but it will take a while since he hates deadlines and writes whenever he wants).
Check out my YouTube channel @The Philosophical Tyrant
In summer, I sail. It get's me away from trading. And one of life's most looked forward to pleasures is a good book in a quiet anchorage. Alas often about trading but, never mind. Pleasure is pleasure. Having run into Nassim Taleb's later work "The Black Swan", last year (see review), I choose the new edition of his earlier contribution, "Fooled by Randomness" as one summer 2012's special reads. I was not disappointed.
I found the Black Swan more succinct and message even more powerful. "Fooled" at times seems written, well, somewhat randomly! But then Taleb tells us it was written for fun and fun it is. But don't let that fool you, either. This is serious stuff. Taleb has done us a service in adding his own eclectic thoughts to how we human's deal with uncertainty and chance. The fact he has experienced and reflected deeply on MARKET uncertainty and chance makes it, of course, irresistible for the likes of me. For this is no flaccid Random Walk Down anywhere rehash. No these are reflections from a Trader who knows damn well there are imbalances and opportunities aplenty for the astute, careful and the, um, lucky.
If we are not wired (nor financialy modelled) to adequately weigh risk and rare events (black swans) we seem SO evolved to navigate and give meaning to lives beset with uncertainty and chance that we barely notice it's constant role. There-in hides the dangers, some quite surprising. Our own TINY sample sets of unique experience color (blind?) our every perception. A trader faced with a huge windfall exaggerates (typically) his prowess at the expense of what ever role chance played in it. Such illusion of course can cost a lot of money. Rewarded and vindicated you keep emulating your rear mirror moves. Meantime that truck, by unpredictable timing right ahead, just took out your "works for me" bridge. Yet, like Pavlov or Skinner's test subjects we keep chasing after our reinforced if randomly dolled out rewards. In the book Taleb mentions HE struck gold fairly early by being VERY aggressively short on a market suddenly in crisis. Guess what kind of market trading bias he specialized in ever since?
Taleb also makes a profound case on the inseparable roles of emotion and fact based reasoning in decision making. What a departure from the psycho babble of the many trading Guru's who emphasize the need to strip away emotions in making trading decisions. Their points ARE valid for the sense intended (shouts at the TV don't effect which side scores either). Taleb however will take you to a deeper bedrock place where facts without emotional engagement, for human's = paralysis. Like many of the vignettes and angles of this book, it's great food for thought.
In choosing which author to spend my summer anchorages with I of course browsed the ever generous amazon reviews. I chuckled over how Nassim's style and hotty persona grated on some. I take it all in good fun. He'd be a pedantic bore if NOT a character. But I can see in places why some take offence. Indeed, in the interesting add-on material to the new edition, Nassim rails at the writers of these very amazon reviews! We undoctored peons, it would seem, are not worthy of passing negative judgments on the ideas of DOCTOR Taleb. But one is brought to forgive when he reveals he is only demonstrating, at his own expense, how feelings tilt perception and reaction. He confides he is pleased by POSITIVE complements no matter the crowd's credentials. As such the full weight of my 1984 two week sailing certificate (it's here somewhere) stand squarely behind this thumbs up and four grateful stars.
Your understanding of probability will never be the same. Taleb manages to systematically and successfully unpick many strongly held beliefs about the predictability of future events without the use of a single mathematical equation. And while his use of personal anecdotes may seem to contradict his criticism of induction, they make the entire book an absorbing read
I like this book better than The Black Swan. It goes deeper into the issue of probability and techniques to ensure you are not fooled by ignorance or human mental habits and bias. It still has plenty of human stories but the emphasis is more strongly on explaining how we are fooled and how we can avoid being fooled by a faulty understanding of how the world works and markets work.
Amazing and funny to read. I never thought that chance could play such a huge role in everybody's life, mine included. I'm very interested in the stock market and found Mr Taleb's ideas on risk/reward enlightening. Never thought that losing 90 times out of 100 could be a good thing if the 10 times you win are huge and the 90 times you lose are small.
It was a decent read... some original thinking. It felt like the author was trying to hard to seem smart. (I don't doubt that he is, but he comes off as a smug know it all). I won't be reading it again but it wasn't bad at all.
This book should be required reading for engineers in training. We learn next to nothing about uncertainty, and also the cognitive biases discussed in detail in this book, both of which apply deeply to the problems we face.
No one knows this reality better than the author of this quote, Nassim Taleb. Sadly the media overlooked this great work by Mr. Taleb due to their overwhelming focus on "The Black Swan." Highly recommended for any individual who thinks they understand risk or has proclaimed himself/herself an expert in 'risk management.'
Nassim is an intellectual with original ideas, but a bad communicator, so it's not worth your time to wade through the 90% rambling to get to the 10% insight. Which is ironic, because Nassim criticises people who appear on TV as being good at communication but wrong in what they're communicating. He's right, one the opposite is no good either, because there are thousands of other books we could be reading to learn things, and this book is a poor ROI. Nassim should have cut out 90% of the pages, and I'd then rate it 5 stars.
In another instance, Nassim criticises an interviewer for pointing out to an expert that his ideas if followed would have caused a loss. Nassim doesn't explain why this objection is invalid.
On the plus side, there are some interesting ideas here: - We're good at understanding even bets, where there's a 50% chance in your favor, not skewed bets, where the chance is more on one side. - A 20% chance of making 1 crore is not the same as a 10% chance of making 2 crores, though both have the same expected value of 20 lac. Expected value is not the only factor in analysing bets. - The human mind is poor at understanding probabilistic thinking, because it's counter-intuitive. - When Nassim was asked on one instance whether he thinks the market will go up or down, he said that it's likely to go up but he bet that it went down. Why? Because if it goes up, it goes up only a little, but if it goes down, it's expected to go down a lot, so the expected value is negative. - The more often you check your portfolio, the more likely you'll find dips, which will make you feel bad. A negative event isn't counter-balanced by a positive event — it requires roughly two positive events to counter-balance it. So Nassim, aware of his own irrational mind, checks his portfolio rarely. And so should we. - Randomness plays a big part in outcomes, and most people take credit for good luck but blame bad luck on things beyond their control. Plus there's so much ego involved. - A family earning half a million dollars a year and staying in fashionable Park Avenue in New York, where they're the poorest in their apartment building, will be happier if they move to a middle-class area, where people will look up to, not down at, them. - A person who repeatedly takes bets and is proven right for a decade can still be wrong, and gives us the example of a trader who was right for two decades, and then went bankrupt. If you bet that rare things won't happen, it may take a decade or two for luck to catch up with you. - Everyone assumes rare things won't happen, while Nassim bets that they will. Nassim loses money every day for years, and finally earns a lot to make up for all the losses, though it's emotionally draining to see money go out every day. Nassim knows his worst-case scenario, while others don't. - Wall St banks have bad incentives and will never behave properly. Bad behavior is ignored as long as it produces a profit. - "Stochastic" means a process consisting of a sequence of random events. Not one event. - Monte Carlo techniques are computer programs that simulate thousands of scenarios, all random, and give you a conclusion like: 20% of the time, you go bankrupt. 30% of the time, you make a million dollars. The rest of the time, you earn a modest return of 10-20% on your investment. This is a much better way of analysing things than a single number, like: what is the probability that this investment technique produces a 15% profit? - Monte Carlo techniques are the only option when the equations to model things are too complex. Monte Carlo is brute force, and works. - Survivorship bias means that the average fund manager has a high return because the rest are out of business. If you count them, the average return is low. - Nassim is an intellectual and prefers thinking to working.
This book has very little of interest to offer. Moreover, it's very irritating that the author incessantly keeps on advocating his personal opinions, some of which are very quaint to say the least (science/mathematics are bad whole philosophy is good, he knows how stock markets work while everyone else is ignorant or misinformed - by formal education, no less, etc, etc,)
Avoid this empty piece of fluff and go read "thinking fast and slow".
Reviewed in the United Kingdom on February 13, 2019
As an investor I don't usually read the writings of traders, simply prefer long-term investors and find practitioners way more useful. I've only read the book because Howard Marks refers to the author in his memos (more specifically to the idea of "Black Swans").
I find Taleb all over the place.
Somehow he is trying to provoke. Provoke by calling people ugly, or saying that he would rather die than be a janitor. He classifies all sorts of people in all sorts of ways, in other words name-calling. He uses rare words, so you have to consult with the dictionary quite often. I find him funny but the information he conveys not very useful to me, only a few things here and there.
4.0 out of 5 starsIgnore the hate as there is value to be gained by reading this.
Reviewed in the United Kingdom on October 1, 2019
I had my doubts about buying this book initially due to some of the hate Taleb seems to get for his style. Having now finished reading this book, I will admit that if you can get past the author's arrogance in some places and overlook these as mere human flaws, then you will gain value from his insights. As I am both a long term investor & short term trader, I found the real-life explanations of the psychological processes of Nassim's trader colleagues worth the read alone. Hearing what led up to these traders having such an amazing run over many years and then what caused them to blow up their firms accounts enables small time investors like myself to avoid their mindset.
This was my first Nassim Taleb book I've read, so I can't compare to his two main books Anti-fragile & The Black Swan, although I will be reading those next.
I enjoyed this book, something quite different to the type of books I normally read. I particularly liked the model used on chance and randomness. I applied it (theoretically) to the chances of detection across different types of crime (i.e., burglary and murder) when I gave a presentation to some police officers from various forces at UWE in Bristol. I don't think they agreed with my argument. Nevertheless, understanding these things in a different way to their perspective I'm still optimistic that it is a viable theory on non-apprehended offenders.
One of the most thought provoking books I have ever read, maybe the most thought provoking book I have read. It's really about probability, trading financial instruments and psychology. Some profound insights into how these three things interact. And what this means for how you should treat any financial advice or you yourself treat trading assets.
Reviewed in the United Kingdom on November 24, 2019
An interesting book that I bought to replace an earlier copy. It must be good because the old copy was loaned out to a friend but never received back! This book makes you look at apparent randomness in all sorts of areas in a different way. Are things random or is there a pattern to events or a reason for them. Thought provoking. Good seller too. Thank you..
Reviewed in the United Kingdom on November 4, 2017
A delightful book of thought from a gentlemen of considerable reading and contemplation. Mr.Taleb's style is wonderfully relaxed and assured. The subject at the heart of the book is fascinating. The author beautifully explores the subject without recourse to ugly analytics, but instead illuminates his thoughts with colourful stories from the ages that bring life and joy to what could be an exceptionally dry subject. Highly recommended for anyone, especially those who feel in control of their destiny.
In 2007 I had read Taleb's The Black Swan. A black swan event is a highly improbable event which is unpredictable , has massive impact and after it has happened, our desire is to make it appear less random and more predictable than it was. Why are we unable to estimate risk? We simplify, narrate and categorise. With the meltdown in the world financial system I felt drawn to reading Taleb's Fooled by Randomness written before the meltdown but in a way predicting it. His main idea is that probability is not mere computation of the odds - it is the acceptance of the lack of certainty in our knowledge and developing methods for dealing with our ignorance. He attributes far more to luck than is generally credited and considers how we perceive luck. He focuses on how we attribute causes to outcomes - so just because two things happen so we believe that one causes the other. He accepts that skills count, but they count less in highly random environments than they do in dentistry. Nowhere is this more obvious than in the markets where we hear an entrepreneur has vision or a trader is talented. Taleb reckons their performance is often more down to chance rather than skill. They then blindly follow a rising market or a booming trend without covering their downside in the event of a random unpredicted set of circumstances, so that they end up exposed to much greater loss than their accumulated gains. Proven by recent events?? Taleb prides himself on being an awkward iconoclast and spoils the book by his arrogance and sweeping and disdain of whole swathes of people. I dislike people who cannot respect their peers. The book is disjointed and he introduces it as a personal essay primarily discussing the authors thoughts connected to the practice of risk taking. It is not compulsive reading but he does stimulate you to think.
A little long winded in places, but if you stay the course, opens a new dimension to everyday life changing events that seem to be against all the odds or probability. Nothing is what it seems and the crowd and consensus are eventually destroyed.. or proved wrong. as in life it is better to be lucky than smart in all major events and leave your ego at the door. Idea provoking - interesting read.
4.0 out of 5 starsBadly written, but I agree the basic premise.
Reviewed in the United Kingdom on October 13, 2012
This is a badly written book. The author more or less admits this in his intro. It reads like a sloppily assembled unsorted draft. Taleb is very full of himself. And he throws in the name of every philosopher he can think of in support of each point he is making.
But his basic premise - that randomness is far more significant than most analysts care to acknowledge, and that we are wired up to disbelieve randomness while instinctively falling for anything resembling a pattern (thanks to an inherited survival mechanism that we cannot shake off), is one that I've always subscribed to, so I ploughed through it.
I was brought up not to deface books. But I long ago switched to reading with a flourescent yellow highlighter pen in hand, marking key paragraphs along the way. I have yet to reread the sections I marked, but there were many. I wouldn't want to have to read the whole shambolic book again to find them if not marked. He sometimes seems unsure if he's made certain points clearly - so he has another go at some of them from a different angle. He also throws in the odd social or political comment or two whether strictly relevant or not.
As someone who prefers concise, tightly edited writings, I found this book irritating at times. It is arrogant of the author to presume that we might part with money for something he hasn't bothered to properly structure - like a host who dumps the crockery, cutlery and food onto a table in a heap and leaves his guests to find what they need. But I recommend it nevertheless.
Reviewed in the United Kingdom on October 11, 2015
very good review on randomness and how it is concealed by scientific nonsense and statistical inference based on past data. You dont need to agree with the author-just check the point he makes. It is a personal essay, not a mixture of journal articles. It does not have the lingo of traders, financial economist or MBA professors, but it is easily read and understood. Having followed most of the famous traders, investors,economist etc. I was very happy that the author consulted/referred many of my favorites Shiller, Eastrely, Soros, Buffet, Markowitz, The Chicago School of economist and many others. The book promotes scientific curiosity and it will easily make you read 100 other books.
It is also full of scientific jokes and it makes people stop taking science so seriously or reconsider the next "ground breaking model for pricing of financial assets"...
Reviewed in the United Kingdom on October 13, 2011
The basic concepts of this book are not new but still a very good read which makes you more aware about human psychology how we behave under randomness. We all tend to attribute "good outcomes" to our skills and "bad outcomes" to something else. I also liked his depictions of black swan events. Imagine a gun with 1000 chambers and only one bullet. Every time you pull the trigger and survive, you get 1000 USD, otherwise, well...would you play the game? After reading the book, you will also watch and read news in a different way given that you bother listening to them at all.
Reviewed in the United Kingdom on January 18, 2015
First sharpen your mind. Secondly have Google fired up ready. Thirdly have your note-taking medium ready. Then begin to read. Read only a little at a time, unless your mind can chew dense conceptual brain food. Now 're-read it. Think. Make your notes and Google the quoted or referenced authorities. Six months later you will emerge - probably - wiser and able to understand and take daily setbacks is minor variations in life's rich pattern.