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
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Avg. Customer Rating:  377 reviews
Sales Rank: 628
Media: Paperback
Edition: 2 Updated
Number Of Items: 1
Pages: 368
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
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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
Book Description
This book is about luck -- or more precisely how we perceive and deal with luck in business and life. 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 in all our lives. Writing in an entertaining and narrative style, the author succeeds in tackling and explaining three major intellectual issues: the problem of induction, the survivorship biases, and our genetic unfitness to the modern world. The book is populated with an array of characters, some of whom have grasped, in their own way, the significance of chance: Yogi Berra, the baseball legend; Karl Popper, the philosopher of knowledge; Solon, the Ancient World's wisest man; the modern financier George Soros; and the Greek voyager Ulysses. In addition we meet the fictional Nero, who seems to understand the role of randomness in his trading life, but who also falls victim to his own superstitious foolishness. But the most recognizable character of all remains unnamed -- the lucky fool in the right place at the right time. The embodiment of the "Survival of the Least Fit." Such individuals attract devoted followers who believe in their guru's insights and methods. But no one can replicate what is obtained through chance. A monkey banging on a keyboard may eventually produce the Iliad, but would you sign him to write the sequel? Are we capable of distinguishing the fortunate charlatan from the genuine visionary? Must we always try to uncover non-existent 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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| Customer Reviews: Read 372 more reviews...
 Use Your Luck To Your Advantage July 13, 2008
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.
 I'm still a fool after reading this book June 15, 2008
2 out of 3 found this review helpful
PROS:
* The book argues an important message (that we underestimate the role of luck in our results/outcome).
* A few interesting anecdotes.
CONS:
* Although the author is self-deprecating at times, it smells more of false modesty rather than geniune humility (which he argues everyone should have). Most of the time (as other reviewers have noted) his arrogance comes out loud and clear, and that's annoying.
* Disjointed style of writing. He rambles, jumps around, and writes in awkward sentences. The writing doesn't flow easily.
* Disorganized. He proclaims that he doesn't like to use headers that tell the reader much about what is coming up. For non-fiction books, I prefer clarity, rather than cuteness.
CONCLUSION: There are brief moments of brilliance and lucidness, brief moments when you think the book is really going to be worth reading, and then it quickly vanishes. Unfortunately, it's also a hard book to skim. I don't recommend it.
 Great concept but poor writing June 15, 2008
0 out of 1 found this review helpful
Well, what can I say? The concept of "black swamp" function is very original and as a professional investor, I appreciate the author's insight into this critical concept to long term return. However, the whole book is about this concept and I don't learn anything new after finishing the first few chapters. Moreover, the author is a trader rather than a writer which probably explain his less-than-perfect reading style. Readers have to be prepared for his "non-linear" logic and could be very confusing at times.
are you fooled??? June 13, 2008
1 out of 2 found this review helpful
i find it fascinating the diverse reviews this book has received, it seems to have a polarizing effect on readers! for me the book was engrossing, but admittedly i am a fan of taleb's writing and philosophy of life. while he is clearly not concerned with journalistic rules he is able to communicate his point. so what if his sentence structure is not perfect. what i appreciate most about his works, fooled by randomness included is that they caused me to think, and rethink my own beliefs and perceptions about life. i felt challenged by the content and relished the opportunity to ponder paragraphs. this is the strength of his writing (in my humble estimation) to cause the reader to think. a worthy read even if you are prone to focus on the impossibly difficult particulars of writing in the english language...
Randomness fools us all. June 4, 2008
1 out of 2 found this review helpful
This everyman's introduction to randomness should prove interesting to everyone who invests for profit, fun or retirement. The narrative style conveys the author's point that random spikes or troughs can occur in any investment without warning and that the oft used normal curve does not necessarily model the behavior of investments. It's sort of like saying that the normal wind speed is an accurate model for what could happen in tornado alley on a specific day in the summer.
That being said, there's little guidance for the investor about ameliorating the effects of "black swan" events; the best one can do is expect them and try to avoid being over-extended in yesterday's hot investment when the bottom falls out.
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