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

Nassim Nicholas Taleb
3.9 out of 5 stars  See all reviews (627 customer reviews)

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Sold by: Random House LLC

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Book Description

Fooled by Randomness is a standalone book in Nassim Nicholas Taleb’s landmark Incerto series, an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world we don’t understand. The other books in the series are The Black Swan, Antifragile, and The Bed of Procrustes.

“[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

Finally in paperback, the word-of-mouth sensation that will change the way you think about the markets and the world.This book is about luck: more precisely how we perceive luck in our personal and professional experiences.

Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill–the world of business–Fooled by Randomness is an irreverent, iconoclastic, eye-opening, and endlessly entertaining exploration of one of the least understood forces in all of our lives.


From the Trade Paperback edition.


Editorial Reviews

Amazon.com Review

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. 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. --Harry C. Edwards

From Publishers Weekly

In this look at financial luck, hedge fund manager Taleb (Dynamic Hedging) addresses the apparently irrational movement of money markets around the world. Using his own investing experience and examples of others' successes and disappointments, he discusses theories like Monte Carlo math (easy; considered cheating by purists) and the concept of Russian roulette. Taleb tells interesting, well-wrought stories about individual behavior: "While Nero has succeeded beyond his wildest dreams, both personally and intellectually, he is starting to consider himself as having missed a chance somewhere." While serious investors and mathematics enthusiasts will be intrigued, readers looking for practical investment strategies will be disappointed by this rambling intellectual discourse. Tables. 40,000-copy first printing; $150,000 marketing budget.

Copyright 2001 Cahners Business Information, Inc.


Product Details

  • File Size: 642 KB
  • Print Length: 369 pages
  • Page Numbers Source ISBN: 1400067936
  • Publisher: Random House; 2 Updated edition (October 14, 2008)
  • Sold by: Random House LLC
  • Language: English
  • ASIN: B001FA0W5W
  • Text-to-Speech: Not enabled
  • X-Ray:
  • Word Wise: Enabled
  • Lending: Not Enabled
  • Amazon Best Sellers Rank: #11,122 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
280 of 294 people found the following review helpful
3.0 out of 5 stars Good, But A Personal Memoir, Not a Treatise September 13, 2005
Format:Hardcover
REVIEW: This book tends to elicit very strong opinions about its quality (both very good and very bad) so it is important to know which camp you are in before you purchase it or you may be very disappointed. I found that both the very bullish and the very bearish reviews have significant merit. On the plus side Taleb aggressively addresses a topic that many readers will be interested in - randomness in our daily lives. He discusses many important concepts that are not known or at least not very well understood by the general public and experts alike. These include: 1) that uncertainty and luck play a large role in the outcomes of human activities (much more than most people think); 2) that a correlation between two types of events does not necessarily mean that one causes the other; 3) that statistics and the rare random event are poorly understood by almost everyone; 4) that small differences in performance and ability can cause very large differences in the rewards or difficulties that people obtain in life; and 5) that humans are very irrational beings and are not very good at thinking probabilistically and understanding the probabilities of even everyday events rationally. All of these are important points that I commend Taleb for bringing to our attention.

However, there are significant drawbacks to this book, which to some readers will make the book significantly unenjoyable or even impossible to read. While it did not significantly bother me, Taleb does have an attitude or style which at times tends to the snobbish. The author repeatedly reminds readers that he is well traveled, is a "voracious" reader, pursues his exercise routines "assiduously", and is from upper class Mediterranean roots.
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225 of 244 people found the following review helpful
By A Customer
Format:Hardcover
Anyone who holds any doubts in regards to the validity of this book must read Edward Chancellor's 'Devil Take the Hindmost,' which provides a history of financial markets from the dawn of the Roman Empire up to now. After reading such a sweeping historical account, one sees the financial markets for exactly what they have always been: one vast bubble machine where people have even invested in, according to Chancellor, a company that refused to explain anything about what it did but simply assured the investors that it had a great idea for making money. Sounds rather similar to some of the dot coms in recent years. Through a compliation of both antecdotes and thoughts, Taleb provides an explanation as to why the markets work in this way, why so many fail to realize this, and how these issues are mirrored in our everyday lives. He addresses many issues that everyone should understand in order to view the world in a realistic manner. Evolution is not a one way road to nirvana but rather the process through which those adapted to the current situation fare better, and they may not be best adopted when things change. When judging the validity of any strategy in business or in life one must consider that the winners write the history books; you can only talk to survivors of war but that certainly doesn't mean that everyone survives it. When deducing anything from viewing a sample you must consider the forces that created that sample: should you consider yourself unintelligent because you're behind your classmates at a top law school? Are a good outcome and a good decision the same thing, and likewise for a bad outcome and a bad decision? And the list goes on. Read more ›
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47 of 48 people found the following review helpful
3.0 out of 5 stars Solid assessment - poor presentation September 18, 2002
By A Customer
Format:Hardcover
This is an tough book to review. I give it 3 stars because the points he makes are valid and should be more widely understood. Unfortunately you must wade through much rambling to find them. He seems more interested in proving that he's as arrogant as people expect him to be than in discussing the key points at any length. With a fairly strong background in probablility assessment and risk evaluation I was able to follow his arguments reasonably well but I suspect anyone who does not already understand probabilities and Monte Carlo modeling will not understand the points he is trying to make. This is because the explanatory points are almost always one sentence buried in a rambling paragraph. Our society would be better off if every citizen understood his points but I don't think this book will enlighten many people. On a side note - I don't know what book several of the other reviewers read but it wasn't this one. Nowhere does this book discuss specific trading strategies or approaches or taxes. Several reviewers also clearly didn't follow the discussion. The point of survivorship bias is not that it proves LUCK is responsible for a given individuals success in any of the many areas where it holds. The point is that you don't KNOW the source (luck or skill) and you can't PREDICT future results.
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178 of 197 people found the following review helpful
3.0 out of 5 stars Intiguing but ultimately unsatisfying April 30, 2002
Format:Hardcover|Verified Purchase
I bought FOOLED BY RANDOMNESS after reading the Malcolm Gladwell profile on Nassim Nicholas Taleb in the April issue of the New Yorker. Like others who have reviewed this book, I found that Gladwell captured the most important details of Taleb's thoughts in a shorter, more entertaining way. However, I thought that this book can be a worthwhile read for those with a passion for this type of book.
FOOLED BY RANDOMNESS is an introduction to the difficulties human beings have at reasoning around probability. Taleb argues that human beings are genetically hardwired to misattribute the results of human endeavors to skill and knowledge that are, in fact, just coincidental, random events. Taleb discusses the results of this embedded flaw in human reasoning in three areas.
In part 1, Taleb discusses impacts of `rare events' on both financial markets and on human history. Taleb argues we should beware seemingly successful strategies if they are not proven by the test of history. In particular, we should examine human history in the long term for general trends and treat skeptically claims that humanity has reached `the end of history' or `a new economic model' where the old, proven rules do not apply.
In part 2, Taleb discusses the `survivor effect', or mistaking success based on luck for success based on skill. In particular, Taleb warns against judging a strategy by its actual results. Instead, we should judge strategies based upon a sum of all possible outcomes.
In part 3, Taleb briefly discusses `tricks' he has developed to try and derail his flawed, ingrained, statistical reasoning and live a rational and, to a great degree, classical life based upon a good understanding of the effect of randomness on our lives.
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Most Recent Customer Reviews
4.0 out of 5 stars great reading!
In short, it taught me some humbleness... Chancee is present in every moment of our lives!
But I expected some more depth in the underlying concepts.
Published 3 hours ago by Newton de Souza
5.0 out of 5 stars Five Stars
Genius.
Published 8 days ago by John A Dole IV
5.0 out of 5 stars Very Good Read
This book like the others by Taleb is an excellent read. If you are a thinking person, especially a non-conforming one, you will find a great deal to like in this book. Read more
Published 14 days ago by Book Fanatic
5.0 out of 5 stars Life really is what you make it.
I love this book but I am sure that for a lot of people emotions and reasoning will find it unsatisfying. Read more
Published 16 days ago by Junglies
3.0 out of 5 stars good but...
This is definitely worth a read for anyone in finance. However, I caution the reader that the author has limited understanding of the Efficient Market Hypothesis as evidenced by... Read more
Published 17 days ago by Maurio Fiore
4.0 out of 5 stars Four Stars
I was a little concerned that this may be a little technical but it was really entertaining and readable.
Published 1 month ago by Zman
5.0 out of 5 stars A truly enriching adventure.
With a book on a topic as evasive as risk and probability, it is no surprise that the reviews span a broad range. For me, it has been one of the most defining books I have read. Read more
Published 1 month ago by Reiner Sailer
1.0 out of 5 stars Not that interesting
I've read other books from this author and thought I'd enjoy this one. I recommend you read any four consecutive pages before buying the book.
Published 1 month ago by J. Estrada
5.0 out of 5 stars Just finished my 2nd read of Fooled by Randomness
I am not an expert in randomness, therefore my review here should not be taken with much significance. Read more
Published 1 month ago by M. Tanner
5.0 out of 5 stars YES, great book
YES, great book
Published 2 months ago by Paul
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More About the Author

Nassim Nicholas Taleb spent two decades as a trader and risk taker before becoming a full-time essayist and scholar focusing on practical, philosophical and mathematical problems with chance, luck, and probability. His focus in on how different systems handle disorder.

Taleb is currently Distinguished Professor of Risk Engineering at New York University's School of Engineering, but he spends most of his time in the intense seclusion of his study, or as a flâneur meditating in cafés.

He is the author of the Incerto (latin for uncertainty), accessible in any order (Antifragile, The Black Swan, The Bed of Procrustes, and Fooled by Randomness) plus a freely available technical version, Silent Risk. Taleb has also published close to 40 academic and scholarly papers as a backup, technical footnotes to the Incerto. Taleb's books have more than 100 translations in 35 languages.

Taleb believes that prizes, honorary degrees, awards, and ceremonialism debase knowledge by turning it into a spectator sport.

""Imagine someone with the erudition of Pico de la Mirandola, the skepticism of Montaigne, solid mathematical training, a restless globetrotter, polyglot, enjoyer of fine wines, specialist of financial derivatives, irrepressible reader, and irascible to the point of readily slapping a disciple." La Tribune (Paris)

A giant of Mediterranean thought ... Now the hottest thinker in the world", London Times

"The most prophetic voice of all" GQ

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Welcome to the Fooled by Randomness forum
FBR in a nutshell: Don't confuse luck for skill (5 words)
Mar 28, 2008 by Michael F. Murphy |  See all 11 posts
Kindle Edition
Somehow that seems to be consistent with the author's personality :)
Mar 11, 2013 by Doug J. |  See all 2 posts
Awesome book! Be the first to reply
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