- Series: Incerto
- Paperback: 368 pages
- Publisher: Random House Trade Paperbacks; Updated edition (August 23, 2005)
- Language: English
- ISBN-10: 158799190X
- ISBN-13: 978-1587991905
- ASIN: 0812975219
- Product Dimensions: 5.2 x 0.8 x 8 inches
- Shipping Weight: 9.6 ounces (View shipping rates and policies)
- Average Customer Review: 733 customer reviews
- Amazon Best Sellers Rank: #11,364 in Books (See Top 100 in Books)
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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto) Paperback – August 23, 2005
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"[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
“Fascinating . . . Taleb will grab you.”
–Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk
“Recalls the best of scientist/essayists like Richard Dawkins . . . and Stephen Jay Gould.”
–Michael Schrage, author of Serious Play
“We need a book like this . . . fun to read, refreshingly independent-minded.”
–Robert J. Shiller, author of Irrational Exuberance
About the Author
Nassim Nicholas Taleb has devoted his life to problems of uncertainty, probability, and knowledge. He spent nearly two decades as a businessman and quantitative trader before becoming a full-time philosophical essayist and academic researcher in 2006. Although he spends most of his time in the intense seclusion of his study, or as a flâneur meditating in cafés, 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.
Taleb’s books have been published in thirty-three languages.
From the Hardcover edition.
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I've read all four of Taleb's books and Fooled By Randomness still stands out as my favorite. Although Black Swan is still the most popular, and most controversial, Fooled in many ways is the most practical, as it's the most general and therefore most widely applicable. Everyone should deeply understand the survivorship and hindsight biases, as well as the difference between conditional and unconditional probability.
That being said, it's often hard to determine whether the heart of the book is the ideas (which to someone such as myself who has only a Stats 101 background in probability are almost always revelation-inducing) or the author. I can't stress how much I learned from this book that has nothing to do with probability or statistics, just random asides from an erudite and meandering mind. Regardless of your background (or even your interest in probability) you will probable learn some fascinating and/or useful tidbit from Fooled, and probably a whole lot more.
The author has thought deeply about risk and uncertainty. Before reading this I thought I had too. No longer. Perhaps reading this while young would produce a more positive asessment of its value but in one's later years it is more depressing than enlightening. Yes, most of us are fools so what's new in that? Will any readers be made less foolish by reading this? That is really the question.
Somewhat personal lifestyle story but serious warnings like those of George E P Box that "all models are wrong, but some are useful." But Taleb adds that modern derivatives and options that lose most of the time but win big infrequently are a great strategy for those with means and patience while crashes wipe out the rest of the naked speculators big time. Enjoyed the ideas and stories. Academics will appreciate the well selected references and explanations of why only are a few have "useful models" in the big human-centric gambling casino that is Wall Street. Economics in general is a fuzzy world to model compared to more deterministic factory machines. So don't stop using statistical methods in that latter world. But protect yourself from human factors in the financial world.
To wit: Taleb posits that Einstein proved Newton wrong. Not true. Einstein showed that Newtonian mechanics failed at the extremes - extremely large (cosmologic) and extremely small (atomic distances). Further, he posits that the poor schlep scientist's odds of success continue to increase as he does more mouse experiments. Untrue if the hypothesis under which the scientist is proceeding is ultimately incorrect. And finally, the author accepts global warming as a given and castigates science for not having recognized the truth of it from random weather events. Taleb, stick your knitting. It's one thing to be ignorant, but another to open one's mouth and remove all doubt.