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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets Paperback – 3 May 2007


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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets + The Black Swan: The Impact of the Highly Improbable + Antifragile: Things that Gain from Disorder
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Product details

  • Paperback: 368 pages
  • Publisher: Penguin; Re-issue edition (3 May 2007)
  • Language: English
  • ISBN-10: 0141031484
  • ISBN-13: 978-0141031484
  • Product Dimensions: 12.9 x 2.1 x 19.8 cm
  • Average Customer Review: 3.5 out of 5 stars  See all reviews (91 customer reviews)
  • Amazon Bestsellers Rank: 5,869 in Books (See Top 100 in Books)

More About the Author

Nassim Nicholas Taleb has devoted his life to problems of uncertainty, probability, and knowledge. He spent two decades as a trader before becoming a philosophical essayist and academic researcher. Although he now spends most of his time either working in intense seclusion in his study, or as a flâneur meditating in cafés across the planet, he is currently Distinguished Professor of Risk Engineering at New York University's Polytechnic Institute. His main subject matter is "decision making under opacity", that is, a map and a protocol on how we should live in a world we don't understand.

His works are grouped under the general title Incerto (latin for uncertainty), composed of a trilogy accessible in any order (Antifragile, The Black Swan, and Fooled by Randomness) plus two addenda: a book of philosophical aphorisms (The Bed of Procrustes) and a freely available Technical Companion. Taleb's books have been published in thirty-three 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

Product Description

Review

'An iconoclastic tour de force ... nothing escapes his Exocets' -- Evening Standard

'Brilliant'
-- John Kay

'Excellent and thought-provoking ... an entertaining book' -- Financial Times

'One of the smartest books of all time' -- Fortune

'Wall Street's principal dissident' -- Malcolm Gladwell

About the Author

Nassim Nicholas Taleb spends most of his time as a flâneur, meditating in cafés across the planet. A former trader, he is currently Distinguished Professor of Risk Engineering at New York University. His

books Fooled by Randomness and The Black Swan have been published in thirty-one languages.


Inside This Book (Learn More)
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Croesus, King of Lydia, was considered the richest man of his time. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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Customer Reviews

3.5 out of 5 stars

Most Helpful Customer Reviews

121 of 127 people found the following review helpful By Dr. M. L. Poulter on 4 Sep 2007
Format: Paperback
I was ambivalent about this book when I picked it up, but was quickly gripped and had to read to the end.

This book is about the Illusion of Control on a massive scale: a refusal to acknowledge blind luck's contribution to our success. Taleb is a trader as well as a scholar, and mixes his logical points with many tales about the "Masters of the Universe": traders who, with a run of successful investment, become rich, promoted and profiled in Fortune magazine. Given the huge numbers of people who become traders, the number of these high-flyers is pretty much what you would expect by chance. The logical conclusion is that there is no evidence that any of these traders have any real skill, or that any of the investment advice given by gurus and journalists has any value. This contrasts with other walks of life where skill and practice are necessary: you couldn't become a concert pianist by blind luck, for example.

Yet the finance industry refuses to acknowledge this. Noise (the natural volatility of the market) is mistaken for signal (understandable and predictable responses to events), and hence pure luck is mistaken for skill. When the hot-shot trader loses all his money, and is escorted from the building by security, it comes as a total surprise to him.

Embarrassingly for his targets, Taleb is not advancing some daring new theory. He just uses probability theory, basic statistics and a knowledge of the psychological research on biases: the toolbox of an informed critical thinker.
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62 of 65 people found the following review helpful By A Customer on 10 Feb 2002
Format: Hardcover
If you have ever listened to economists, analysts, or other supposedly intelligent commentators and wondered is it just you or are they really talking complete rubbish, then this book is for you. Taleb has produced a witty, informed, and entertaining book that debunks much of what passes for analysis and success in financial markets.
Taleb has a clear admiration for Physics and adopts a physics approach. He dives right into the heart of the problem, finds the essential truth - that markets are random, the path we observe is only one of many, and that we cannot make proper assessments on trading strategies until a sufficient time-period has elapsed to give a significant sample which includes those rare but headline-making events that occur from time-to-time. He picks out several consequences of this phenomenon. The main one is Survivorship Bias (that those experiencing good fortune at picking the right investments will be elevated to guru status, until one of those rare but extreme events removes them from their pedestals). There are many other useful insights here; how the shorter the time-scale we use to study performance the more noise we see; how journalists comment on the one random outcome we observe and interpret it as significant news; how pseudo-science has spread to all sorts of unsuitable areas; and how groups of traders form collective opinions which defy rational analysis (the so-called "fire-station" effect); how lucky traders become all puffed-up with their own success, and the link to Seretonin levles and evolutionary benefits of being able to identify winners in competitions. This entertaining section gives compelling reasons for sharing Taleb's scepticism about much of the modern financial world.
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7 of 7 people found the following review helpful By Mr X on 26 May 2009
Format: Paperback
This book is a book of contrasts. I find myself agreeing with many of the views both positive and negative of the other reviewers of this book.

On the plus side, the book's main argument is very interesting and is fairly compelling. The essential idea is that the role of randomness in events, especially in financial endeavours is largely random and has very little if anything to do with skill. The effect of this idea is far reaching, and affects many areas not the least of which is executive pay; if the fortune of companies is due in large part to luck (rather than the CEO's skills) then how can their pay levels be justified. Likewise with stockbrokers etc.

On the minus side the writing style is very difficult. I don't mean the vocabularly and grammar but rather the strcuture of the book. Often at the end of a chapter the reader is left struggling to remember how (apart from in a very indirect sense) a chapter relates to the central argument and why it has been placed at that point in the book. The whole book is largely unstructured and hard to remember in any detail reading more like a series of unconnected anecdotes.

This is a great pity as the author is clearly onto something here and were it not for the above problem I would add it as a lifechanging book. Maybe Mr Taleb will write us a new, shorter, conciser and consequently much more persuasive book!
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6 of 6 people found the following review helpful By Aron Palmer on 2 Oct 2002
Format: Hardcover
As someone who agrees with the Amazon reviews of Nassim's "Dynamic Hedging" that if there's a better book on options trading I haven't read it, I was immensely looking forward to reading "Fooled by randomness". It is however a very different book. Rather than the technical detail of the earlier book, this is more the personal musings of a trader. A collection of anecdotes, quotes and personal thoughts tied together with a few ideas from statistics. It did remind me of his quote in the previous book "I hear you are giving a 4-day seminar on hedging exotic options. Can you give it to me during lunch time tomorrow? All I need is the beef. You see I don't have patience for the details". The book also has agendas, it seems Nassim wants to show that rich traders / successful companies etc. may be just lucky without the converse that poor traders etc may be just unlucky. It also forgets one of the themes of his earlier book about the optionality of being a trader. As a trader other peoples money five years of big profits followed by blowing it all and some more in the sixth year is not a disastrous strategy (the disaster is losing your own money, or being a bank with a trader like this). The "Black Swan" or exceptional event that runs through his book (and which he bases his trading on apparently) could be that there are no "Black Swans" (though I doubt it, particularly at the minute!) The anecdotes and quotes are enjoyable, though I felt there weren't really enough of them to feel quite sated.
All in all an enjoyable read (I read it in a day) but a bit lacking in beef. Not in the same league as "Dynamic Hedging".
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