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

 Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb - Photo 

Every couple of years, I come across a book that really opens my eyes by either introducing me to new ideas or helps me synthesize known but unintegrated ideas into larger/new paradigms (yes, I agree that is a much abused/overused word but it also happens to be the right word here, imho).

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5 Recommendations

  • gordon

    's recommendation

    Every couple of years, I come across a book that really opens my eyes by either introducing me to new ideas or helps me synthesize known but unintegrated ideas into larger/new paradigms (yes, I agree that is a much abused/overused word but it also happens to be the right word here, imho). Recently, I finished Nassim Nicholas Taleb's 2nd edition of Fooled by Randomness: the Role of Chance in the Markets and Life. Fooled was one of these eye-opening books that proved to be a gateway to a new way of thinking. Taleb is a quant-driven trader who uses his understanding of the foibles inherent in being human to make money. Fooled is Taleb's meditation on evolutionary biology, behavioral finance, philosophy, poetry, statistics, media saturation, and humanity's "epistemic arrogance" boiled down into a very high level overview of Taleb's trading strategy. It is a fascinating, often startling, potentially enraging, but sometimes meandering read. The Big Ideas * People don't learn that they don't learn. In other words, people will insist on using the same mental models/rules or, in behavioral finance parlance, heuristics, regardless of solid evidence to the contrary. Compounding this unwillingness to remap heuristics, Taleb observes most people are very chance-blind, meaning that they do not accurately assess probabilities. Understanding how people tend to skew their estimates of the odds can be, as Taleb points out, a very powerful tool. Taleb goes on to speculate about the evolutionary biological roots of such chance-blindness and other seemingly default heuristics w/which most of operate. * That rare events do happen. When stated this way, most people say, "well, duh!�" But the reality is most people are not prepared for what Taleb calls Black Swans, events that seem so unlikely, based on past experience, as to have never really been considered a real possibility.* But consider: how many of your personal ideas, relationships, businesses/investments, communities, or health/fitness practices make the implicit assumption that conditions will continue to evolve as a more or less linear extrapolation of today's conditions? How well suited are your strategies to the idea of a sudden and unexpected shift? In entrepreneurial circles, a Black Swan might be known as a "disruptive technology". In politics, 9/11 could rightly be considered a Black Swan that caught most people in and out of government by surprise. While neither of these ideas seem so startling at first glance, Taleb forces the reader to take a deeper look at the manifestations, implications, and ramifications of our aforementioned "epistemic arrogance" in light of our overwhelming tendency to over-optimize for inherently ephemeral conditions. For those of you who want your cage rattled a bit, I highly recommend Fooled by Randomness- I promise it will open your eyes. * The term "Black Swan" comes from the historical anecdote that Europeans had considered it axiomatic that all swan were white since they had never seen one any other color. Then they got to Australia and discovered that there were, in fact, black swans there.

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  • cogg

    's recommendation

    I loved this book, but only partially for its message. It is written in a wonderfully cantankerous style that one almost never encounters in books. The author has no problem making outrageous statements as if they are fact, with only his strong passion to clue you in that he might be overstating them to make a point.

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  • Tyson

    's recommendation

    I'll echo the other recommenders here- Fooled by Randomness is superb- big ideas, a unique voice, and an original and important topic. As an engineer who should be trained to understand the role of probability in the world, the most important insight of the book for me is the understanding that humans aren't just imperfect, we are flawed- the way our minds consider and recall probabilistic events evolved in a much different environment from the one we live in today. This result is a consistently flawed set of heuristics that people use to understand the complex world around them. Taleb isn't the first author to cover the idea of heuristics and cognitive biases, but he does a great job of showing how they play out in the world.

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  • dberkowitz

    's recommendation

    Great read on the role of chance and the fallacies we believe in

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  • TasteMaker

    's recommendation

    I'm about half way through this book, and have enjoyed sufficiently to become a fan of the 'europlayboy' mathematician way of life!

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Collections Featuring This Item

  • Favorite books

    gordon

    Curated by gordon

    A Soldier of the Great War by Mark Helprin The Magus by John Fowles Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb Accelerando by Charles Stross Let My People Go Surfing: The Education of a Reluctant Businessman by Yvon Chouinard The First 30 Days: Your Guide to Any Change (and Loving Your Life More) by Ariane De Bonvoisin
  • Consumer Internet Start-up Kit

    gordon

    Curated by gordon

    Brand Hijack : Marketing Without Marketing Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb Spicy Maya Hot Chocolate The Republic of Tea Persimmon White Tea Red Bull Energy Drink Emergen-C The Economist Magazine Let My People Go Surfing: The Education of a Reluctant Businessman by Yvon Chouinard
  • Expand Your Mind

    gordon

    Curated by gordon

    STORM RIDERS GUIDE OF NORTH AMERICA A Soldier of the Great War by Mark Helprin The Magus by John Fowles Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb Sector 7 by David Wiesner Accelerando by Charles Stross Let My People Go Surfing: The Education of a Reluctant Businessman by Yvon Chouinard The Rock Warrior's Way: Mental Training for Climbers by Arno Ilgner Treasure Hunt : Inside the Mind of the New Consumer by Michael J. Silverstein, John Butman
  • Some Books

    Tyson

    Curated by Tyson

    Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb Freedom Evolves by Daniel Dennett Darwin's Dangerous Idea: Evolution and the Meanings of Life by Daniel C. Dennett Smelling Land: The Hydrogen Defense Against Climate Catastrophe Breaking the Spell: Religion as a Natural Phenomenon by Daniel C. Dennett Slash: The Slash autobiography
  • Books

    dberkowitz

    Curated by dberkowitz

    Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb Mysteries of the Middle Ages: And the Beginning of the Modern World (Hinges of History): Thomas Cahill: Books