Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
by Nassim Nicholas Taleb
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List Price: $27.95
Our Price: $76.88
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Manufacturer: Texere
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Average Customer Rating:  
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Binding: Hardcover
Dewey Decimal Number: 123.3
EAN: 9781587991905
ISBN: 158799190X
Label: Texere
Number Of Items: 1
Number Of Pages: 312
Publication Date: 2004-04-16
Publisher: Texere
Studio: Texere
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Spotlight customer reviews:
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Customer Rating:
Summary: Does not deliver
Comment: The book sounds like it will give you some insight into the markets or the ramdomness of it. It builds on that expectation but does not deliver it slowly turns into a boring mumbuling of anecdotes. I did not finish the book and left it half way.
Customer Rating:
Summary: Good ideas, weak style
Comment: Interesting. Annoying. Self-referential. Insulting. Exasperating. Ultimately, intriguing. Taleb is smart, but an autodidact and quite full of himself. (After he lobs his tenth purely gratuitous insult, he is no longer cute -- he is merely sociopathic.) He gets a lot right, but he also plays fast and loose with schools of thought in which his understanding is strictly superficial. (And as with many autodidacts, he has trouble identifying which areas these might be -- making humility the mark of the really smart ones.) Like Descartes, whom he loathes, he is a rich guy who has the time and the means to ruminate with a wide swath of other intellectuals. This breadth offers bridges from ideas with which the reader is familiar into new and intriguing places. And on the pragmatic side, the reader can ask himself just what this guy does that might have saved us from loosing our collective shirts in the market.
Customer Rating:
Summary: Book for our times
Comment: This book is great and should be a compulsory reading for everyone at college. Lots of people do not realize how much chances and coincidences play roles in our lives. This book is about learning to appreciate the vast number of variables in common life which are not controlled by anyone.
Customer Rating:
Summary: Fooled by Probabilities
Comment: The ideas in this book have created more controversy than they deserve, and it might have something to do with the title of the book. Given the number of people who equate "random" with "equiprobable", "Fooled by Probabilities" would have been a more appropriate title for the book, though not as provocative as "Fooled by Randomness". There is a finite chance that there is a black cat in every dark room, but when you switch the light on, there is no black cat in the room. Both are correct statements - mathematically and practically. This book must be read in the same light.
It seems to me that the transition from an average to good investor (probabilistically speaking) happens as soon as you internalize the concept of expected values and invest by it. My favorite story from the book is where Taleb is asked which way the market is expected to go next week, and he says slightly up with a high probability (70%). Then someone intervened that Taleb had just made a big bet on the S&P going down next week, and he said that indeed he did. The one lesson this book teaches is that the two statements are not inconsistent with each other. 70% chance of a +1% change and 30% chance of a -10% change sums upto -2.3, a strongly negative expected value. Good investors always shadow the expected value (trend and magnitude), although market sentiments are always driven by either the expected trend of upward or downward movement, or expected magnitude of upward and downward movement.
Four key insights that I received from the book about how we all get fooled by probabilities in our everyday lives are the firehouse effect, survivorship bias, endowment effect and Wittgenstein's ruler. Firehouse effect is characterized by a clique of people with much downtime (firemen) who end up strongly agreeing with each other about things that would seem incorrect to any rational observer - something that many investors suffer from. The survivorship bias talks about exclusion of failures from "objective" after-the-fact performance studies - something that many business books suffer from. Endowment effect suggests that people value something more after they own it or get familiar with it - something that many businesses suffer from. Wittgenstein's ruler says that when an unreliable ruler is used to measure a table, the table is measuring the ruler and not the other way around. Reliability of the ruler determines what is being measured - something that consumer reviews and stock recommendations suffer from. For these and many such, read Fooled by Randomness.
Customer Rating:
Summary: Wow
Comment: This is by far the smartest book I have ever read. As a PhD statistician I thought I was pretty sophisticated about randomness. Wrong, this book made me think about it in ways that I had not before. Every student of life or mathematics must read this book before they can consider themselves educated.
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Editorial Reviews:
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Customer Rating:
Summary: Does not deliver
Comment: The book sounds like it will give you some insight into the markets or the ramdomness of it. It builds on that expectation but does not deliver it slowly turns into a boring mumbuling of anecdotes. I did not finish the book and left it half way.
Customer Rating:
Summary: Good ideas, weak style
Comment: Interesting. Annoying. Self-referential. Insulting. Exasperating. Ultimately, intriguing. Taleb is smart, but an autodidact and quite full of himself. (After he lobs his tenth purely gratuitous insult, he is no longer cute -- he is merely sociopathic.) He gets a lot right, but he also plays fast and loose with schools of thought in which his understanding is strictly superficial. (And as with many autodidacts, he has trouble identifying which areas these might be -- making humility the mark of the really smart ones.) Like Descartes, whom he loathes, he is a rich guy who has the time and the means to ruminate with a wide swath of other intellectuals. This breadth offers bridges from ideas with which the reader is familiar into new and intriguing places. And on the pragmatic side, the reader can ask himself just what this guy does that might have saved us from loosing our collective shirts in the market.
Customer Rating:
Summary: Book for our times
Comment: This book is great and should be a compulsory reading for everyone at college. Lots of people do not realize how much chances and coincidences play roles in our lives. This book is about learning to appreciate the vast number of variables in common life which are not controlled by anyone.
Customer Rating:
Summary: Fooled by Probabilities
Comment: The ideas in this book have created more controversy than they deserve, and it might have something to do with the title of the book. Given the number of people who equate "random" with "equiprobable", "Fooled by Probabilities" would have been a more appropriate title for the book, though not as provocative as "Fooled by Randomness". There is a finite chance that there is a black cat in every dark room, but when you switch the light on, there is no black cat in the room. Both are correct statements - mathematically and practically. This book must be read in the same light.
It seems to me that the transition from an average to good investor (probabilistically speaking) happens as soon as you internalize the concept of expected values and invest by it. My favorite story from the book is where Taleb is asked which way the market is expected to go next week, and he says slightly up with a high probability (70%). Then someone intervened that Taleb had just made a big bet on the S&P going down next week, and he said that indeed he did. The one lesson this book teaches is that the two statements are not inconsistent with each other. 70% chance of a +1% change and 30% chance of a -10% change sums upto -2.3, a strongly negative expected value. Good investors always shadow the expected value (trend and magnitude), although market sentiments are always driven by either the expected trend of upward or downward movement, or expected magnitude of upward and downward movement.
Four key insights that I received from the book about how we all get fooled by probabilities in our everyday lives are the firehouse effect, survivorship bias, endowment effect and Wittgenstein's ruler. Firehouse effect is characterized by a clique of people with much downtime (firemen) who end up strongly agreeing with each other about things that would seem incorrect to any rational observer - something that many investors suffer from. The survivorship bias talks about exclusion of failures from "objective" after-the-fact performance studies - something that many business books suffer from. Endowment effect suggests that people value something more after they own it or get familiar with it - something that many businesses suffer from. Wittgenstein's ruler says that when an unreliable ruler is used to measure a table, the table is measuring the ruler and not the other way around. Reliability of the ruler determines what is being measured - something that consumer reviews and stock recommendations suffer from. For these and many such, read Fooled by Randomness.
Customer Rating:
Summary: Wow
Comment: This is by far the smartest book I have ever read. As a PhD statistician I thought I was pretty sophisticated about randomness. Wrong, this book made me think about it in ways that I had not before. Every student of life or mathematics must read this book before they can consider themselves educated.
Selected by Amazon.com and the Financial Times as one of the best business books of the year, Fooled by Randomness is an instant classic. It's uniqueness has drawn to it a wide following - from the New Yorker to the Pentagon. Already published in 14 languages, this new edition, expanded by over 80 pages, includes up-to-date advances from behavioral finance and cognitive science This book is about luck ? or more precisely how we perceive and deal with luck in life and business. It is already a landmark work and its title has entered our vocabulary. In its second edition, Fooled by Randomness is now a cornerstone for anyone interested in random outcomes. Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill ? the world of trading ? Fooled by Randomness is a captivating insight into one of the least understood factors of all our lives. Writting in an entertaining and narrative style, the author succeeds in tackling three major intellectual issues: the problem of induction, the survivorship biases, and our genetic unfitness to the modern word. In this second edition, Taleb manages to use stories and anecdotes to illustrate our overestimation of causality and the heuristics that make us view the world as far more explainable than it actually is. But no one can replicate what is obtained by chance. Are we capable of distinguishing the fortunate charlatan from the genuine visionary? Must we always try to uncover nonexistent messages in random events? It may be impossible to guard ourselves against the vagaries of the Goddess Fortuna, but after reading Fooled by Randomness we can be a little better prepared.
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