115 of 120 people found the following review helpful
An antidote to clueless gurus,
This review is from: Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (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. He shows how professionals in finance, the media and even academia repeatedly fail to use these basic tools: ignoring probabilities, drawing bold conclusions from minuscule evidence, or focusing on probabilities but ignoring values of outcomes
Just as research on bias overlaps research on human happiness, the book also discusses how we can be more happy by exposing ourselves to less information. Far from a whimsical speculation, this is backed up by a clever mathematical/psychological argument.
Taleb's writing style will grate with some people (his favourite topic is clearly himself) but others will find it a very personal and engaging voice. It's an intellectual rather than scholarly book (Taleb mentions a great deal of scientific, philosophical and literary influences, but is not very concerned to back up each claim with citations) but this won't be a problem for most readers.
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Initial post: 21 May 2008 21:44:34 BDT
Bravo, I think you've nailed down all the important points and written them up smartly. People should read your review as sufficient statistic for all. I just disagree with the vote. Yes, the writing grates. Moreover, some points get lost in the excessive flak he shoots up and so end up being difficult to fix in memory. That's not a good way to make points, just to show his personality. The reader ends up feeling that he's met a person, obviously intelligent (and too aware of it), but ranting; you don't feel you've read an argument, or I did not anyway. Different people will price that differently, which explains the diversity in star scores despite substantial agreement on the main traits; but I think the right price is not zero. A signal that readers risk anger or rancour is well deserved.
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