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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets | 
| Author: Nassim Nicholas Taleb
Publisher: Random House Trade Paperbacks
Category: Book
List Price: $16.00
Buy Used: $5.97
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Rating:  380 reviews
Sales Rank: 1715
Media: Paperback
Edition: 2 Updated
Pages: 368
Number Of Items: 1
Shipping Weight (lbs): 0.6
Dimensions (in): 8 x 5.2 x 0.9
ISBN: 0812975219
Dewey Decimal Number: 123.3
EAN: 9780812975215
ASIN: 0812975219
Publication Date: August 23, 2005
Availability: Usually ships in 1-2 business days
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Shipping: International shipping available
Condition: acceptable paperback copy with some water damage and a few underlined pages. random house, 2005. !
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Amazon.com
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
Product Description
“[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.
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| Customer Reviews: Read 45 more reviews...
 Methods of thinking and mental models worth learning September 3, 2008
D. J Najarian (Buffalo, NY)
Every once in a while, someone really intelligent focuses his thoughts on the most valuable skill a human can have--how to think. Nassim Taleb has done an admirable job at just that: not telling us what to think--but showing us how to think in ways we can apply to innumerable life situations. I'm talking about what Charlie Munger refers to as "multiple mental models."
The most important ideas explored are those of Popper--the idea of the open society--one in which no theory is known with certainty--only with probability, and theories continually replace one another as more information comes in. Interestingly Taleb continually cites Soros as a famous investor who utilized Popper's ideas, but Warren Buffett, the ultimate realist, if queried, would no doubt acknowledge Popper in influencing his thinking. In contrast to Soros and Buffett would be Bill Miller, an intensely philosophic investor, who recently has classified himself as an optimist--but not a realist. In any case, the methods of thinking propounded by Taleb fit nicely into what Charlie Munger classifies as "mental models"--doubtlessly useful stuff for the introspective, philosophical investor.
An Insightful Rant August 24, 2008
Josh P S (USA)
This book reads a lot like a self-absorbed blogger's rant, but it is a rant that is highly satisfying to read. Almost all of us have a distant relative or friend who is allegedly a "stock market genius". Taleb argues that it is usually hard to know whether that person is truly skilled or just lucky. Those of us who tend toward schadenfreude (enjoyment taken from the misfortune of someone else) can take solace in the fact that this person might just be a dolt who is likely to blow up one day. He argues that most often trading success is either the result of ones arbitrary trading style happening to jibe with market conditions or a product of exposure to volatility in a way that allows for small regular gains followed eventually by a spectacular blowup.
 An exercise in self-justification August 19, 2008
M. Ratcliffe (Tacoma, WA USA)
0 out of 1 found this review helpful
One of the most self-congratulatory, didactic books I've ever read. Taleb is a convinced ideologue whose expertise in stock trading has created the conviction that he sees the invisible hand at work.
He constantly reminds the reader that he is writing, restating and recasting sections with a reference to his earlier statements (never trust a writer that quotes himself) while dismissing whole schools of thought by selectively quoting from philosophers to make them look silly and misguided--if you read any philosopher, they will eventually prove themselves silly and misguided. It happens when they take themselves too seriously, which Taleb certainly does.
Overall, his ode to skepticism is well conceived, but very thin. Unfortunately, it seems to be the only idea he ever tested. He makes the frequent mistake of confusing the success of a rigorous analysis for the justification of a philosophy as a guiding system to thought for others.
Ultimately, philosophy is what Taleb suggests science is, taking the ideas of Karl Popper over the top and placing them on an alter, "science is mere speculation, mere formulation of conjecture." Popper was a solid skeptic, while Taleb is a convinced acolyte.
A Must Read August 17, 2008
L. Runkle (Pittsburgh, PA)
0 out of 1 found this review helpful
My husband has been struggling in the market for a good 5 or 6 years. Its really opened his eyes though. Of course its all common senses but when you've lived in denial for so long its a real eye opener. He was able to put himself into many of the positions and has stopped living on the if's and could've or should've been position. There's no more hoping for him he's looking for the signs now.
Use Your Luck To Your Advantage July 13, 2008
K. Johnson (US/Asia)
0 out of 1 found this review helpful
Many concepts in "Fooled by Randomness" can be mentally applied to many areas and circumstances of our lives. This book has a lot of variety both past and present that can help us in the future in how we *think* about things, our environment, and more importantly, ourselves. This review will take a different path because there have been so many written about this book already.
Author Nassim Taleb believes that Randomness and luck is more of a factor regarding people's positions and successes than most folks realize. In politics, business, economics, and a other fields and areas.
We often too quickly make the assumption that because of someone's superb and/or superior circumstances that these superior results are exclusively because of his/her smart mind, brilliant decisions, actions, and skills. Surely they must know something we don't? This isn't always the case. Sometimes it is, but not always. More often than we might think, it isn't. I see the author's repeated points that we as humans, underestimate the odds and occurrences of Randomness. But I do think diligence, planning, and acumen are also highly prevalent in many successful things we do, in life. It you're good, you'll do better than someone who isn't, in anything. Common sense is a critical factor, too. Our choices also obviously affect what happens to us, in what we passively receive.
All of us can recall times when we were given credit for something that was in all honestly, more the result of fortuity than our own doing. Do we often openly admit it? :) I do believe, that most of one's achievements is because of hard work, skill, planning, and yes luck. But for some of us, in certain situations, luck is the key reason, and there's nothing wrong with this. Those of us that have been the beneficiaries of luck should enjoy it, use it to our advantage, and perhaps most importantly, realize that we've received it.
Within the first couple of pages a detailed description lures the reader: the quick-topping Ferrari, screeching to a halt. Underlings immediately jump, scramble, and run to park the car as its owner vacates and bolts to the Trading Floor. Being a former trader, there attention paid to the trading world in FBR (Fooled by Randomness).
One of the many real-life examples and anecdotes Nassim Taleb noted was the topsy-turvy rise and crash of individuals in the world of Bond Trading: A Bond Trader named "Nemo" was envious of his 'more successful' Chicago neighbor "John the high-Yield trader," who lived right across the street. Nemo had a 14 year track record of solid returns based on careful assessments of risk. Nemo was a long-term survivor of the Bond World and had a solid personal financial base he'd built up for him and his family. Across the street, John was boorish, loud, show-offy. He loved to flaunt his toys. His wife was arrogant, and pseudo-high society. John's luck - his stint with randomness eventually ended, and he crashed. Karma....
Over the years as we get older we observe our circumstances, our environment, our peers, and our peers' circumstances in relation to *ourselves.* In the chapter, "If you're so rich why aren't you so smart?" we see the randomness of the social pecking order.
The world has many one hit wonders in politics, business, music, film, etc. And when the Random opportunity or luck of the one-hit wonder appears, people should take advantage of it. (If, they can recognize it.) Because if it's luck or randomness, it won't last forever.
Only a few times (not often) throughout this book, I had to re-read or re-scan a sentence or group of sentences to get the point Taleb was making. But the writing is good enough, to the point, and succinct. Readers should note the author is not a native English speaker and being a Mathematician, the author is likely left-brained. So readers, go easy. I do believe however, this book is decently written.
Taleb lists some of the common traits listed of people who are the beneficiaries of Randomness but don't realize it. Instead, they think their situation is the result of mostly themselves, their decision-making, and actions.
The Confusion Index:
The Confusion Index has several terms for people who assume results are because of "vision," "excellent strategy," and "brilliance." This is often the interpretation of past results. It's pretty easy to interpret past results, isn't it? It's easy to be a Monday Morning Quarterback. This is called "Hindsight Bias." Have you ever heard "It was so obvious" after the fact? Things appear more predictable after the fact. Some concepts below in the index:
Luck vs. Skills
Randomness vs. Determinism
Probability vs. Certainly
Belief, Conjecture vs. Knowledge, Certitude
Theory vs. Reality
Anecdote, Coincidence vs. Causality, Law
Forecast vs. Prophecy
My Favorite Chapter: If you're so smart why aren't you rich?
Some of the many great chapters and sub-chapters:
Gamblers' ticks & pigeons in a Box
You should be dead by now
Placebo Investors
The rare-eve fallacy: the mother of all deceptions
Survivorship Bias (one of my favorite sub-chapters)
Don't be fooled. This is....a great book.
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