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Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life Hardcover – October, 2001
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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.
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I don't exaggerate. I think he's that insightful.
He combines a cool, rational stoic mind with a deep Continental intellectual with a mouthy New Yorker.
"Fooled by Randomness" is the answer to the question: "Why did that guy make it, but those other guys who are just as good didn't?"
Why Google, and not Yahoo or some other type of Google we never heard about?
Why Amazon and Bezos, and not one of the 100s of other guys selling books out of their garages who didn't make it?
We as humans are full of cognitive biases. The Survivorship Bias is one of the most prevalent in our minds. No one is immune, but the more you know about it the easier it will be to catch.
Taleb goes into detail in what is basically a whole book on the Survivorship Bias, in his own unique style.
-Basically a cognitive psychology book infused with a memoir
-I really like Taleb's writing/voice, and his true intellectual tangents that always come full circle
-Nice standalone to his "Incerto"/Black Swan series
-You need to not compartmentalize the theme and concept into your mind. You might reach the end of the book and think "Well, everything is all chance and randomness. Why bother pursuing any worthwhile goal?"
-I believe he goes over this at the end, but not in enough of a lengthy manner to help less-read or less-willful readers realize his true intentions: to allow you to see the world for what it really is, and that luck plays a role in success. BUT, one way you succeed is by playing into luck, and then hedging your bets to keep your gains (as his successful friend did in one example).
-I like his writing style, but more sensitive readers may not like his style.
Fortuna Favors the Bold.
The author has thought deeply about risk and uncertainty. Before reading this I thought I had too. No longer. Perhaps reading this while young would produce a more positive asessment of its value but in one's later years it is more depressing than enlightening. Yes, most of us are fools so what's new in that? Will any readers be made less foolish by reading this? That is really the question.
In our society we look at people like Bill Gates and Warren Buffet as having some secret to success and never consider the fact that with millions of investors someone will rise to the top regardless if they are smarter. Men like Buffet are seen as successful because they took risks and therefore you are told to take risks and you will be successful. You are never shown all those who risked in business and investing who failed.
My favorite part of the book was the analogy of Russian Roulette and also the end about living with randomness. The analysis about the book The Millionaire Next Door was excellent as well. The author also explains how you can set yourself up to succeed through randomness although I wish this were a larger part of the book.
The author himself has a very high opinion of himself and can come across as bragging (especially about his extensive education) and that can turn off some readers. Also remember that he was relatively unknown until he predicted the crash in 2008 but he also could have just been lucky as out of millions of investors someone will always get it right. The author would agree I'm sure.
I enjoyed this book and will be reading other books by Nassim Nicholas Taleb soon.
Yes, as many of the other reviewers note, Taleb is excessively critical of journalists, economists and MBAs, however I didn't find it off putting. Rather, it gives his writing personality and makes it more interesting.