Interesting but somehow not satisfying. I kept talking about it while I was reading it - this or that would remind me of something Taleb said - but by the time I was finished I was tired of it. Partly, I think, because he determinedly is not 'explaining' anything or giving any reasons or paths to follow; partly because my empirical experiences conflict with his; and partly because of the style of his writing and choice of illustrative incidents. A lot of the book is about how we, humans in general, are ill-equipped to properly consider probabilities - things like, we tend to be more worried about things we hear a lot about than less-publicized matters. So people are afraid of flying and not of driving, though in terms of miles traveled per death driving is several hundred times as dangerous (that's not one of Taleb's illustrations, it's one I've seen elsewhere). Taleb tends to use the stock market for his illustrations, which is another reason I found his book unsatisfying - I know very little about the stock market, and especially about the fancy variations of the stock market (selling short, selling and buying options, etc) that make up his life and to which he refers easily and with (apparent) full understanding. He does explain, a little, but few of his explanations conveyed much to me. Interesting book, and I want to read the Black Swan one too, but less fun to read than Stephen Jay Gould (who I started out thinking his style resembled). ( )

Really a unique and mind-opening book. The writing style is unique, and the author is witty and fun. After reading this book, I finally feel like I roughly "get" the concept of the markets. ( )

Pretty good. Too long. The insights about survivor bias and statistical distributions are important ones. Your life would be improved by reading about that. I even like the unhinged crazy-man writing style in some places. His discussion of evo-psych and Karl Popper make him sound a little like an internet crank--and I like Karl Popper and evolutionary explanations of human psychology!!

A skewed, bonkers and enjoyable look at the role of randomness in success. This brought out some neat key points, such as that performance should be determined not (just) by outcome, but on the basis by which the decision was made in the first place, and the long-run performance of a strategy. Coming more from the psychology side of things I know very little about trading and economics, and struggled a bit with the lingo, but nonetheless found this readable. One of the books I've recently read to make me shout out loud "Yes! That is *exactly* spot on!" ( )

A most enlightening and entertaining reading experience. The author provides a collection of mini-essays (musings if you will) that collectively expanded my world view. Mr. Taleb is now a favorite author. ( )

Taleb isn't afraid to diss the pretenders in this field and hang them out to dry. I find his darkest black humour to be adorable though he does ramble rather. couldn't help chuckling at the various anecdotes: one memorable one, 'Now Yuri will have a word with you' when interviewing those MBA-ers who put chess skills on their resume - priceless! he's really too cynical though in the area of personal growth, so he'll never realise the detachment he seems to want ;-) ( )

Taleb tells as is in the markets and life in general. You can tell he has absolutely no tolerance for pretenders. I like the fact that he looks at things at a deeper level, at least he tries to but his style can be very blunt and sound arrogant at times. ( )

Events don't occur in a linear fashion.
Differentiating between noise and signal is an important skill. Signals contain information. ( )

Just getting into this. Will tell ya' later. So far so good, and very validating. ( )

How to gamble successfully, thanks to Karl Popper.

read this and feel better about your job, whatever it is. people are not as clever as they think they are - luck plays a big part in success. ( )

A rare example where the second book (Black Swans) is more interesting than the first (this one). Some good ideas buried in there, but the thread is sometimes hard to follow. ( )

Taleb's principal thesis is that humans in general, and financial journalists in particular, are remarkably blind to the random element in most events. They overemphasize results over process. They attribute great ability to great success. Taleb argues that success tends to be very non-linear: large successes often flow from slight differences, some of which are merely random.

Many human activities, particularly market-oriented businesses, are subject to much random fluctuation. Because of this, much success in such activities can be attributed only to luck. Taleb contrasts such businesses with dentistry, which has little or no random element to its successful practice.

People overemphasize frequency at the expense of total outcome. They prefer being right often, for small gain, than being occasionally very right about rare events ["black swans," in Taleb's shorthand] that allow very large gains. Maximizing the probability of winning [a little] does not maximizing the expectation from the game when one's strategy may include skewedness.

One of the greatest barriers to valid or even effective inference is survivorship bias. We tend to infer properties of an entire distribution of events [who made money; who didn't] from those left over after a shakeout process has eliminated some of the members of the distribution. The shape of our inferences can thereby be markedly different from that warranted by the original distribution.

Taleb's intellectual heroes include: 1. Solon--beware, King Croesus, your good fortune may not last; 2. Robert Shiller--financial markets overreact to late news; 3. Charles Pierce--infallibility is impossible; 4. George Soros--be aware of your own fallibility; 5. Karl Popper--real science consists in formulating principals that are inherently falsifiable: thus, it is invalid to infer the truth of any proposition from the fact it was correct any limited number of times; we can only infer its falsity [from one occurence]; history can not be not real science; 6. Daniel Kahneman and Amos Tversky--peoples' perceptions are distorted by immediate facts that inhibit them from making rational generalizations; and 7. David Hume--great rigor in drawing inferences from data.

His bete noires include (1) journalists in general and George Will in particular, who infer much too general ideas from much too small samples and (2) mathematical economists, who believe their models genuinely mirror reality.

A trader's mental construction should direct him to do what other people do not do. He is acutely aware of egodicity, i.e., that very long random sample paths wind up resembling each other. Thus even though some high risk strategies prove radically successful in the short run, they may eventually "blow up" in the long run. Taleb himself has made a good living as a commodities option trader by being aware of the randomness of market moves, and trading to protect his positions in regard to that randomness. He does not say explicitly what kinds of trades or techniques he uses; he only talks about his general philosophy.

A very interesting debunking of some commonly held business lore.

(JAB) ( )

http://www.longtail.com/the_long_tail...
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb (2001)

Taleb, a math professor and onetime manager of a hedge fund, argues that the world is far more random than we think.

Why it's a must-read: "The book says that you can't predict anything—that when things happen, you try to construct a narrative around what happened, and that narrative is almost always wrong. Why is the market up today? Because home sales did such and such. It's almost never why, but we need to have an explanation. If managers can check themselves from making those all-too-tempting efforts to construct narratives, fundamentally they will have an advantage over the rest of us."

http://malaysianatheist.blogspot.com ( )

Very insightful book. Condenses a lot of philosophical and mathematical knowledge into an easily readable book. It goes against modern financial conventions, yet is aimed at a broader audience and is not intended as a book on finance or the markets (and is not a book on either, although they play a prominent role.) ( )

http://jwikert.typepad.com/the_averag... ( )

By no means a well written book and a definately a poorly organized one - "Fooled by Randomness" presents a necessary thesis - that much of what is promoted in the business world as genius is actually random and, hence, irreproducible. Finally - an honest book in the busniess section. ( )

Chance and markets

I got hold of this book (at a great deal of effort and expense) because of an interview with Taleb in New Scientist. I found reference to the concept of "Black Swans" fascinating. However, I couldn't find anything on the web explaining exactly what he meant by the term, or even whether he knew that black swans (as in melanistic forms of the swan) existed.

From the book, he does point out the existence of actual black swans, but I think this doesn't quite fit in his usage of the term to mean statistical outliers.

The black swan issue is by no means the only content of the book, there are some interesting ideas relating to risk management, that are applicable beyond trading. Still, there is something in his approach that doesn't quite sit right with me. ( )

Sometimes fascinating and sometimes annoying, as one gets the feeling the famous author is a bit too full of himself. ( )