Random House Trade Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

excellwnt

Fooled by Randomness made me rethink how much of “success” is really just luck. Taleb uses great real world examples, and the book is eye opening without being too technical. His tone can be a bit smug at times, but overall it’s a smart, engaging read that sticks with you.

The main point of this book is uncertainty and its applications (or lack of it) on day to day life. Taleb explores this concept using finance as a starting point, but soon breaches into philosophy, statistics, psychology and evolutionary biology. A central idea is Hume’s problem of induction: it’s easier to disprove something than to prove it, all you need is a single occurrence where the basic premise is not true. In complex environments such as the modern world, betting on the “stability” of systems, where rules don’t change, can have catastrophic consequences, as the financial crises have shown. This asymmetry in the “burden of proof” will eventually evolve into Taleb’s concept of antifragility, that is, systems that actually thrive, rather than crumble, under uncertainty. When compared to Antifragile, Taleb’s third book, one can see the same ideas in a somewhat raw and less polished version. Fooled By Randomness is much more focused on economics and finance than Antifragile’s, which, in a way, turns it more palpable but provides a less “unified” theory on randomness, its impacts on daily life and how to survive and thrive under it. However, this book benefits from delving deeper than Antifragile’s in the topics that it discusses, which contributes to a better understanding of them. Additionally, by staying closer to the “source” of the discussion, Fooled by Randomness is more focused and has fewer ups and downs, in my view. It’s difficult for me to rank this book in Taleb’s corpus. My only certainty is that I’m much less certain about what I truly know and that my list of books to read and authors to explore has grown considerably.

Great book

This book is an eye-opener, and I don't use this term loosely. Randomness around us is ubiquitous. But we, the humans, have developed elaborate methods to ignore it. We read messages when there are none. We fear unexpected developments when they are just regular randomness, and we fool ourselves with elaborate models and unfounded confidence when we are not more than rather dull and un-introspective species only with modicum of awareness and intelligence. This book is so good that my only regret is that I didn't read it 15 years ago when the book first came out. This book will change my life. It has already affected me on how I view the world around me. I believe every person, whether they are specifically in the risk-taking business, or generally living life (life after all is a risk-taking business), will benefit from the insights Nassim provides in the excellent 262 pages.