Fooled high quality by Randomness: The Hidden Role of Chance in Life and in popular the Markets (Incerto) online sale

Fooled high quality by Randomness: The Hidden Role of Chance in Life and in popular the Markets (Incerto) online sale

Fooled high quality by Randomness: The Hidden Role of Chance in Life and in popular the Markets (Incerto) online sale
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Fooled by Randomness is the word-of-mouth sensation that will change the way you think about business and the world. Nassim Nicholas Taleb-veteran trader, renowned risk expert, polymathic scholar, erudite raconteur, and New York Times bestselling author of The Black Swan-has written a modern classic that turns on its head what we believe about luck and skill. This book is about luck-or more precisely, about how we perceive and deal with luck in life and business. Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill-the world of trading-Fooled by Randomness provides captivating insight into one of the least understood factors in all our lives. Writing in an entertaining narrative style, the author tackles major intellectual issues related to the underestimation of the influence of happenstance on our lives. The book is populated with an array of characters, some of whom have grasped, in their own way, the significance of chance: the baseball legend Yogi Berra; the philosopher of knowledge Karl Popper; the ancient world''s wisest man, Solon; the modern financier George Soros; and the Greek voyager Odysseus. We also meet the fictional Nero, who seems to understand the role of randomness in his professional life but falls victim to his own superstitious foolishness. However, the most recognizable character of all remains unnamed-the lucky fool who happens to be in the right place at the right time-he embodies 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 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.

Review

"[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 forty-one languages.

Excerpt. © Reprinted by permission. All rights reserved.

Chapter 1

Croesus, King of Lydia, was considered the richest man of his time. To this day Romance languages use the expression “rich as Croesus” to describe a person of excessive wealth. He was said to be visited by Solon, the Greek legislator known for his dignity, reserve, upright morals, humility, frugality, wisdom, intelligence, and courage. Solon did not display the smallest surprise at the wealth and splendor surrounding his host, nor the tiniest admiration for their owner. Croesus was so irked by the manifest lack of impression on the part of this illustrious visitor that he attempted to extract from him some acknowledgment. He asked him if he had known a happier man than him. Solon cited the life of a man who led a noble existence and died while in battle. Prodded for more, he gave similar examples of heroic but terminated lives, until Croesus, irate, asked him point-blank if he was not to be considered the happiest man of all. Solon answered: “The observation of the numerous misfortunes that attend all conditions forbids us to grow insolent upon our present enjoyments, or to admire a man’s happiness that may yet, in course of time, suffer change. For the uncertain future has yet to come, with all variety of future; and him only to whom the divinity has [guaranteed] continued happiness until the end we may call happy.”

The modern equivalent has been no less eloquently voiced by the baseball coach Yogi Berra, who seems to have translated Solon’s outburst from the pure Attic Greek into no less pure Brooklyn English with “it ain’t over until it’s over,” or, in a less dignified manner, with “it ain’t over until the fat lady sings.” In addition, aside from his use of the vernacular, the Yogi Berra quote presents an advantage of being true, while the meeting between Croesus and Solon was one of those historical facts that benefited from the imagination of the chroniclers, as it was chronologically impossible for the two men to have been in the same location.

Part I is concerned with the degree to which a situation may yet, in the course of time, suffer change. For we can be tricked by situations involving mostly the activities of the goddess Fortuna—Jupiter’s firstborn daughter. Solon was wise enough to get the following point; that which came with the help of luck could be taken away by luck (and often rapidly and unexpectedly at that). The flipside, which deserves to be considered as well (in fact it is even more of our concern), is that things that come with little help from luck are more resistant to randomness. Solon also had the intuition of a problem that has obsessed science for the past three centuries. It is called the problem of induction. I call it in this book the black swan or the rare event. Solon even understood another linked problem, which I call the skewness issue; it does not matter how frequently something succeeds if failure is too costly to bear.

Yet the story of Croesus has another twist. Having lost a battle to the redoubtable Persian king Cyrus, he was about to be burned alive when he called Solon’s name and shouted (something like) “Solon, you were right” (again this is legend). Cyrus asked about the nature of such unusual invocations, and he told him about Solon’s warning. This impressed Cyrus so much that he decided to spare Croesus’ life, as he reflected on the possibilities as far as his own fate was concerned. People were thoughtful at that time.

If You’re So Rich, Why Aren’t You So Smart?

An illustration of the effect of randomness on social pecking order and jealousy, through two characters of opposite attitudes. On the concealed rare event. How things in modern life may change rather rapidly, except, perhaps, in dentistry.

Nero Tulip

Hit by Lightning

Nero Tulip became obsessed with trading after witnessing a strange scene one spring day as he was visiting the Chicago Mercantile Exchange. A red convertible Porsche, driven at several times the city speed limit, abruptly stopped in front of the entrance, its tires emitting the sound of pigs being slaughtered. A visibly demented athletic man in his thirties, his face flushed red, emerged and ran up the steps as if he were chased by a tiger. He left the car double-parked, its engine running, provoking an angry fanfare of horns. After a long minute, a bored young man clad in a yellow jacket (yellow was the color reserved for clerks) came down the steps, visibly untroubled by the traffic commotion. He drove the car into the underground parking garage—perfunctorily, as if it were his daily chore.

That day Nero Tulip was hit with what the French call a coup de foudre, a sudden intense (and obsessive) infatuation that strikes like lightning. “This is for me!” he screamed enthusiastically—he could not help comparing the life of a trader to the alternative lives that could present themselves to him. Academia conjured up the image of a silent university office with rude secretaries; business, the image of a quiet office staffed with slow thinkers and semislow thinkers who express themselves in full sentences.

Temporary Sanity

Unlike a coup de foudre, the infatuation triggered by the Chicago scene has not left him more than a decade and a half after the incident. For Nero swears that no other lawful profession in our times could be as devoid of boredom as that of the trader. Furthermore, although he has not yet practiced the profession of high-sea piracy, he is now convinced that even that occupation would present more dull moments than that of the trader.

Nero could best be described as someone who randomly (and abruptly) swings between the deportment and speech manners of a church historian and the verbally abusive intensity of a Chicago pit trader. He can commit hundreds of millions of dollars in a transaction without a blink or a shadow of a second thought, yet agonize between two appetizers on the menu, changing his mind back and forth and wearing out the most patient of waiters.

Nero holds an undergraduate degree in ancient literature and mathematics from Cambridge University. He enrolled in a Ph.D. program in statistics at the University of Chicago but, after completing the prerequisite coursework, as well as the bulk of his doctoral research, he switched to the philosophy department. He called the switch “a moment of temporary sanity,” adding to the consternation of his thesis director, who warned him against philosophers and predicted his return back to the fold. He finished writing his thesis in philosophy. But not the Derrida continental style of incomprehensible philosophy (that is, incomprehensible to anyone outside of their ranks, like myself). It was quite the opposite; his thesis was on the methodology of statistical inference in its application to the social sciences. In fact, his thesis was indistinguishable from a thesis in mathematical statistics—it was just a bit more thoughtful (and twice as long).

It is often said that philosophy cannot feed its man—but that was not the reason Nero left. He left because philosophy cannot entertain its man. At first, it started looking futile; he recalled his statistics thesis director’s warnings. Then, suddenly, it started to look like work. As he became tired of writing papers on some arcane details of his earlier papers, he gave up the academy. The academic debates bored him to tears, particularly when minute points (invisible to the noninitiated) were at stake. Action was what Nero required. The problem, however, was that he selected the academy in the first place in order to kill what he detected was the flatness and tempered submission of employment life.

After witnessing the scene of the trader chased by a tiger, Nero found a trainee spot on the Chicago Mercantile Exchange, the large exchange where traders transact by shouting and gesticulating frenetically. There he worked for a prestigious (but eccentric) local, who trained him in the Chicago style, in return for Nero solving his mathematical equations. The energy in the air proved motivating to Nero. He rapidly graduated to the rank of self-employed trader. Then, when he got tired of standing on his feet in the crowd, and straining his vocal cords, he decided to seek employment “upstairs,” that is, trading from a desk. He moved to the New York area and took a position with an investment house.

Nero specialized in quantitative financial products, in which he had an early moment of glory, became famous and in demand. Many investment houses in New York and London flashed huge guaranteed bonuses at him. Nero spent a couple of years shuttling between the two cities, attending important “meetings” and wearing expensive suits. But soon Nero went into hiding; he rapidly pulled back to anonymity—the Wall Street stardom track did not quite fit his temperament. To stay a “hot trader” requires some organizational ambitions and a power hunger that he feels lucky not to possess. He was only in it for the fun—and his idea of fun does not include administrative and managerial work. He is susceptible to conference room boredom and is incapable of talking to businessmen, particularly the run-of-the-mill variety. Nero is allergic to the vocabulary of business talk, not just on plain aesthetic grounds. Phrases like “game plan,” “bottom line,” “how to get there from here,” “we provide our clients with solutions,” “our mission,” and other hackneyed expressions that dominate meetings lack both the precision and the coloration that he prefers to hear. Whether people populate silence with hollow sentences, or if such meetings present any true merit, he does not know; at any rate he did not want to be part of it. Indeed Nero’s extensive social life includes almost no businesspeople. But unlike me (I can be extremely humiliating when someone rubs me the wrong way with inelegant pompousness), Nero handles himself with gentle aloofness in these circumstances.

So, Nero switched careers to what is called proprietary trading. Traders are set up as independent entities, internal funds with their own allocation of capital. They are left alone to do as they please, provided of course that their results satisfy the executives. The name proprietary comes from the fact that they trade the company’s own capital. At the end of the year they receive between 7% and 12% of the profits generated. The proprietary trader has all the benefits of self-employment, and none of the burdens of running the mundane details of his own business. He can work any hours he likes, travel at a whim, and engage in all manner of personal pursuits. It is paradise for an intellectual like Nero who dislikes manual work and values unscheduled meditation. He has been doing that for the past ten years, in the employment of two different trading firms.

Modus Operandi

A word on Nero’s methods. He is as conservative a trader as one can be in such a business. In the past he has had good years and less than good years—but virtually no truly “bad” years. Over these years he has slowly built for himself a stable nest egg, thanks to an income ranging between $300,000 and (at the peak) $2.5 million. On average, he manages to accumulate $500,000 a year in after-tax money (from an average income of about $1 million); this goes straight into his savings account. In 1993, he had a bad year and was made to feel uncomfortable in his company. Other traders made out much better, so the capital at his disposal was severely reduced, and he was made to feel undesirable at the institution. He then went to get an identical job, down to an identically designed workspace, but in a different firm that was friendlier. In the fall of 1994 the traders who had been competing for the great performance award blew up in unison during the worldwide bond market crash that resulted from the random tightening by the Federal Reserve Bank of the United States. They are all currently out of the market, performing a variety of tasks. This business has a high mortality rate.

Why isn’t Nero more affluent? Because of his trading style—or perhaps his personality. His risk aversion is extreme. Nero’s objective is not to maximize his profits, so much as it is to avoid having this entertaining machine called trading taken away from him. Blowing up would mean returning to the tedium of the university or the nontrading life. Every time his risks increase, he conjures up the image of the quiet hallway at the university, the long mornings at his desk spent in revising a paper, kept awake by bad coffee. No, he does not want to have to face the solemn university library where he was bored to tears. “I am shooting for longevity,” he is wont to say.

Nero has seen many traders blow up, and does not want to get into that situation. Blow up in the lingo has a precise meaning; it does not just mean to lose money; it means to lose more money than one ever expected, to the point of being thrown out of the business (the equivalent of a doctor losing his license to practice or a lawyer being disbarred). Nero rapidly exits trades after a predetermined loss. He never sells “naked options” (a strategy that would leave him exposed to large possible losses). He never puts himself in a situation where he can lose more than, say, $1 million—regardless of the probability of such an event. That amount has always been variable; it depends on his accumulated profits for the year. This risk aversion prevented him from making as much money as the other traders on Wall Street who are often called “Masters of the Universe.” The firms he has worked for generally allocate more money to traders with a different style from Nero, like John, whom we will encounter soon.

Nero’s temperament is such that he does not mind losing small change. “I love taking small losses,” he says. “I just need my winners to be large.” In no circumstances does he want to be exposed to those rare events, like panics and sudden crashes, that wipe a trader out in a flash. To the contrary, he wants to benefit from them. When people ask him why he does not hold on to losers, he invariably answers that he was trained by “the most chicken of them all,” the Chicago trader Stevo who taught him the business. This is not true; the real reason is his training in probability and his innate skepticism.

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4.4 out of 54.4 out of 5
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Top reviews from the United States

bob57
1.0 out of 5 starsVerified Purchase
An act of hubris, committed to paper.
Reviewed in the United States on July 8, 2018
I can tolerate the ego-maniacal writing style, but I cannot abide the enormous errors the author commits when he delves into science. To wit: Taleb posits that Einstein proved Newton wrong. Not true. Einstein showed that Newtonian mechanics failed at the extremes -... See more
I can tolerate the ego-maniacal writing style, but I cannot abide the enormous errors the author commits when he delves into science.
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.
137 people found this helpful
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Ferdinando Cortese
1.0 out of 5 starsVerified Purchase
Nothing burger
Reviewed in the United States on September 18, 2019
I have to confess that I stopped reading this book around page 130. The author says that many successes in investment may just be due to luck, that unexpected events can completely ruin a person, and that prudence in investing is a virtue. Fine. But this should take one... See more
I have to confess that I stopped reading this book around page 130. The author says that many successes in investment may just be due to luck, that unexpected events can completely ruin a person, and that prudence in investing is a virtue. Fine. But this should take one paragraph not 130 pages. Yes, Talib quotes Solon, Descartes, Popper and all kind of philosophers. Yes he can speak 10 languages, he has a huge amount of knowledge. Still in this book, which seems to have been written in a hurry, he does not say anything of importance. Do not read it!
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Roberto Rigolin F Lopes
5.0 out of 5 starsVerified Purchase
Fools by design
Reviewed in the United States on August 31, 2018
Bad news. You are a fool about to be fooled. Again. And again. Just like everybody else. We are a species of fools. What a circus! But Taleb is a special kind of fool, foolish enough to write an essay on how randomness fools us. Interesting fool, nay? The whole thing feels... See more
Bad news. You are a fool about to be fooled. Again. And again. Just like everybody else. We are a species of fools. What a circus! But Taleb is a special kind of fool, foolish enough to write an essay on how randomness fools us. Interesting fool, nay? The whole thing feels like a foolish attempt to make us better fools. Even his methodology writing this book is foolish. Speaking his mind and having fun. Fool, fOOl, FOOL! Outrageous even for a brave fool. If you don''t take yourself too seriously (say a foolish fool), this book is damn entertaining. Otherwise, this book is very insulting for serious fools. Seems that our carbon-based machinery fails us dealing with the abstract tools (say probability theory) we have been developing to understand nature (say since Pythagoras; just to finish with a foolish guess). Enjoy, you fool.
46 people found this helpful
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ArianneTop Contributor: Philosophy
3.0 out of 5 starsVerified Purchase
Saeva Fortuna Imperatrix Mundi
Reviewed in the United States on September 4, 2019
"Fortune, Cruel Empress of the World” - The ancients knew her ever so well. She offers us a ride on the cyclical wheel of annihilation which ends in annihilation by cyclicality. ‘Fooled by Fortuna’ is a viable alternative title for this book which would covey the author’s... See more
"Fortune, Cruel Empress of the World” - The ancients knew her ever so well. She offers us a ride on the cyclical wheel of annihilation which ends in annihilation by cyclicality. ‘Fooled by Fortuna’ is a viable alternative title for this book which would covey the author’s message which is just a reminder of the precarious position we occupy in the world of experience. Luck plays a pivotal role in winning and losing, victory and defeat, we simply choose not to acknowledge it and instead dream up false attributions to skill, leadership and aplomb. This about sums up the thesis of the book. Nothing new here, nothing original, just a description of experience and events, but something of which we need to be reminded of every so often. Examples show that some people are just lucky, others unlucky, how the attribution fallacy, inductive fallacy and the false precision fallacy arise; that success is relative, how coincidence is mistaken for cause, how the mirage of false pattern recognition is mistaken for genuine phenomena; that opinions and selections are full of bias and human knowledge is replete with asymmetries. It is we in the modern, or dare I say it, we of the post-modern world, that need to be reminded that much of our understanding and control over perceived reality is an illusion.

Commentary:

Financial theories and economic paradigms are not a matter of truth about reality, they are fictional narratives we tell ourselves about reality; the narratives are about how we navigate our experience of existence. However, it is from this basis that we proceed as if we understand reality and control events. This result is to be fooled by randomness. Economics is just a created construct to help us navigate the experience of a random existence and retrospectively explain random events. In a way, economic theory is a narrow band response to the conditions of existence, not a description of the underlying reality of existence. Such theories are not much different than religious beliefs, both are placebos; attempts to impose order and determinate explanations upon the indeterminate randomness of existence. Many of our explanatory theories employed to guide our experience of existence reduces to a cacophony of concatenated asymmetrical subjective approximations. We are victimized by Fate, tyrannized by Evolution and cursed by Genetics. Within the pages we read many examples of those subjected to the tyranny of goals and undone by the treachery of plans. Is it not Fate for whom of course we each wait? Yes, for Fortuna to spin once again her great wheel; it is likely she who invented the wheel.

Critical Comments:

The author rightly points out the silliness and fallaciousness of pseudo-scientific thinking and warns the reader against falling for it. He then proceeds to engage in his own form of pseudo-philosophical thinking with an ad hominem attack on Hegel. I wish that he would have chosen not to mar his otherwise interesting book with a low brow diatribe. Taleb understands Hegel as a “The Father of All Pseudo-thinkers”. Clearly, Taleb has not read Hegel in anything more than the most superficial manner. He fails to see the master dialectician and instead employs the advanced philosophical methodologies of taking quotes out of context, engaging in an overly simplistic reductions and from here, drawing false inferences. These are many of the fallacies that he warns the reader to avoid. The flaw in Taleb’s analysis is to consider a single statement, or perhaps even several individual statements by Hegel out of context and fail to consider Hegel as presenting a comprehensive system of thought as well as a challenge to comprehensive systems of thought, with its own unique internal consistency, the sum of which is greater than a single portion considered out of context and subjected to the parlor tricks conjured up with the misapplication of Mote Carlo simulations. In seems that Taleb is being fooled by his own noise. Maybe the title of the book should have been ‘Noise Pollution’.

Amusing, but Not as the Author Intended

Amusingly, Taleb anticipates and preemptively attacks reviews of this book appearing on Amazon, before they are posted by saying that such views say more about the reviewer than the book. That is, the reviews are preemptively dismissed as being self-reflexive This is also a borderline case of the ad hominem fallacy. Add to this the taint of ‘poising the well’ of reviews with his all too easy preemptive dismissal and as well ‘painting with the broad brush’ and putting all reviews in the same category, generating his own type of category error. The gentleman doth protest too much, methinks – how amusing.
28 people found this helpful
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Alex Bush
5.0 out of 5 starsVerified Purchase
Still the Best of Taleb
Reviewed in the United States on November 3, 2015
Fooled by Randomness revolutionized how I view the world. In multiple ways. It''s hard to overstate how rarely a book changes your ideas about how the world works once, let alone multiple times, and that Taleb has managed to weave a fantastically engaging and entertaining... See more
Fooled by Randomness revolutionized how I view the world. In multiple ways. It''s hard to overstate how rarely a book changes your ideas about how the world works once, let alone multiple times, and that Taleb has managed to weave a fantastically engaging and entertaining book out of what could very easily be a dry and technical topic is just icing in the cake.

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.
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Null
5.0 out of 5 starsVerified Purchase
Is it better to know how you''ve been fooled?
Reviewed in the United States on August 18, 2017
I know many I think might profit from reading this book. I know few who''d be likely to agree with my assessment, especially after they had read it. With that in mind, how many stars does it deserve? I like it better than the Black Swan. The author has thought... See more
I know many I think might profit from reading this book. I know few who''d be likely to agree with my assessment, especially after they had read it. With that in mind, how many stars does it deserve? I like it better than the Black Swan.

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.
20 people found this helpful
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Line
5.0 out of 5 starsVerified Purchase
Will Help You Better Understand One of the Most Prevalent and Hard to Fight Cognitive Biases in Humans
Reviewed in the United States on August 7, 2017
NN Taleb will go down as one of the foremost philosophers of our times. I don''t exaggerate. I think he''s that insightful. He combines a cool, rational stoic mind with a deep Continental intellectual with a mouthy New Yorker. "Fooled by... See more
NN Taleb will go down as one of the foremost philosophers of our times.

I don''t exaggerate. I think he''s that insightful.

He combines a cool, rational stoic mind with a deep Continental intellectual with a mouthy New Yorker.

"Fooled by Randomness" is the answer to the question: "Why did that guy make it, but those other guys who are just as good didn''t?"

Why Google, and not Yahoo or some other type of Google we never heard about?

Why Amazon and Bezos, and not one of the 100s of other guys selling books out of their garages who didn''t make it?

We as humans are full of cognitive biases. The Survivorship Bias is one of the most prevalent in our minds. No one is immune, but the more you know about it the easier it will be to catch.

Taleb goes into detail in what is basically a whole book on the Survivorship Bias, in his own unique style.

TL;DR

Pros:
-Basically a cognitive psychology book infused with a memoir
-I really like Taleb''s writing/voice, and his true intellectual tangents that always come full circle
-Nice standalone to his "Incerto"/Black Swan series

Cons:
-You need to not compartmentalize the theme and concept into your mind. You might reach the end of the book and think "Well, everything is all chance and randomness. Why bother pursuing any worthwhile goal?"
-I believe he goes over this at the end, but not in enough of a lengthy manner to help less-read or less-willful readers realize his true intentions: to allow you to see the world for what it really is, and that luck plays a role in success. BUT, one way you succeed is by playing into luck, and then hedging your bets to keep your gains (as his successful friend did in one example).
-I like his writing style, but more sensitive readers may not like his style.

Fortuna Favors the Bold.
14 people found this helpful
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Mike Clayton
4.0 out of 5 starsVerified Purchase
All financial models are wrong where human nature dominates.
Reviewed in the United States on May 6, 2017
Taleb is of course famous for avoiding bull or bear trend naked bets and protecting himself for black swan events like big bank crashes. His revision of this book was needed but is long read for non-academics. Somewhat personal lifestyle story but serious warnings... See more
Taleb is of course famous for avoiding bull or bear trend naked bets and protecting himself for black swan events like big bank crashes. His revision of this book was needed but is long read for non-academics.
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.
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Top reviews from other countries

Vaddadi Kartick
1.0 out of 5 starsVerified Purchase
10% insight, 90% rambling.
Reviewed in India on March 4, 2019
Nassim is an intellectual with original ideas, but a bad communicator, so it''s not worth your time to wade through the 90% rambling to get to the 10% insight. Which is ironic, because Nassim criticises people who appear on TV as being good at communication but wrong in what...See more
Nassim is an intellectual with original ideas, but a bad communicator, so it''s not worth your time to wade through the 90% rambling to get to the 10% insight. Which is ironic, because Nassim criticises people who appear on TV as being good at communication but wrong in what they''re communicating. He''s right, one the opposite is no good either, because there are thousands of other books we could be reading to learn things, and this book is a poor ROI. Nassim should have cut out 90% of the pages, and I''d then rate it 5 stars. In another instance, Nassim criticises an interviewer for pointing out to an expert that his ideas if followed would have caused a loss. Nassim doesn''t explain why this objection is invalid. On the plus side, there are some interesting ideas here: - We''re good at understanding even bets, where there''s a 50% chance in your favor, not skewed bets, where the chance is more on one side. - A 20% chance of making 1 crore is not the same as a 10% chance of making 2 crores, though both have the same expected value of 20 lac. Expected value is not the only factor in analysing bets. - The human mind is poor at understanding probabilistic thinking, because it''s counter-intuitive. - When Nassim was asked on one instance whether he thinks the market will go up or down, he said that it''s likely to go up but he bet that it went down. Why? Because if it goes up, it goes up only a little, but if it goes down, it''s expected to go down a lot, so the expected value is negative. - The more often you check your portfolio, the more likely you''ll find dips, which will make you feel bad. A negative event isn''t counter-balanced by a positive event — it requires roughly two positive events to counter-balance it. So Nassim, aware of his own irrational mind, checks his portfolio rarely. And so should we. - Randomness plays a big part in outcomes, and most people take credit for good luck but blame bad luck on things beyond their control. Plus there''s so much ego involved. - A family earning half a million dollars a year and staying in fashionable Park Avenue in New York, where they''re the poorest in their apartment building, will be happier if they move to a middle-class area, where people will look up to, not down at, them. - A person who repeatedly takes bets and is proven right for a decade can still be wrong, and gives us the example of a trader who was right for two decades, and then went bankrupt. If you bet that rare things won''t happen, it may take a decade or two for luck to catch up with you. - Everyone assumes rare things won''t happen, while Nassim bets that they will. Nassim loses money every day for years, and finally earns a lot to make up for all the losses, though it''s emotionally draining to see money go out every day. Nassim knows his worst-case scenario, while others don''t. - Wall St banks have bad incentives and will never behave properly. Bad behavior is ignored as long as it produces a profit. - "Stochastic" means a process consisting of a sequence of random events. Not one event. - Monte Carlo techniques are computer programs that simulate thousands of scenarios, all random, and give you a conclusion like: 20% of the time, you go bankrupt. 30% of the time, you make a million dollars. The rest of the time, you earn a modest return of 10-20% on your investment. This is a much better way of analysing things than a single number, like: what is the probability that this investment technique produces a 15% profit? - Monte Carlo techniques are the only option when the equations to model things are too complex. Monte Carlo is brute force, and works. - Survivorship bias means that the average fund manager has a high return because the rest are out of business. If you count them, the average return is low. - Nassim is an intellectual and prefers thinking to working.
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Orosius
1.0 out of 5 starsVerified Purchase
Waste of time
Reviewed in the United Kingdom on August 23, 2018
This book has very little of interest to offer. Moreover, it''s very irritating that the author incessantly keeps on advocating his personal opinions, some of which are very quaint to say the least (science/mathematics are bad whole philosophy is good, he knows how stock...See more
This book has very little of interest to offer. Moreover, it''s very irritating that the author incessantly keeps on advocating his personal opinions, some of which are very quaint to say the least (science/mathematics are bad whole philosophy is good, he knows how stock markets work while everyone else is ignorant or misinformed - by formal education, no less, etc, etc,) Avoid this empty piece of fluff and go read "thinking fast and slow".
31 people found this helpful
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T.T
4.0 out of 5 starsVerified Purchase
Ignore the hate as there is value to be gained by reading this.
Reviewed in the United Kingdom on October 1, 2019
I had my doubts about buying this book initially due to some of the hate Taleb seems to get for his style. Having now finished reading this book, I will admit that if you can get past the author''s arrogance in some places and overlook these as mere human flaws, then you...See more
I had my doubts about buying this book initially due to some of the hate Taleb seems to get for his style. Having now finished reading this book, I will admit that if you can get past the author''s arrogance in some places and overlook these as mere human flaws, then you will gain value from his insights. As I am both a long term investor & short term trader, I found the real-life explanations of the psychological processes of Nassim''s trader colleagues worth the read alone. Hearing what led up to these traders having such an amazing run over many years and then what caused them to blow up their firms accounts enables small time investors like myself to avoid their mindset. This was my first Nassim Taleb book I''ve read, so I can''t compare to his two main books Anti-fragile & The Black Swan, although I will be reading those next.
10 people found this helpful
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Harald
4.0 out of 5 starsVerified Purchase
Dry theory explained through exciting stories.
Reviewed in the United Kingdom on June 16, 2020
Taleb comes across as an arrogant writer but if you look beyond it then you discover a brilliant theory, relevant for everyone, who is interested in randomness, statistics, correlation/causation, etc. Is it only for numberphiles? No, it probably is too basic for the...See more
Taleb comes across as an arrogant writer but if you look beyond it then you discover a brilliant theory, relevant for everyone, who is interested in randomness, statistics, correlation/causation, etc. Is it only for numberphiles? No, it probably is too basic for the ‘initiated’; even though they still might enjoy the examples and life stories. Everything is well explained in a simple manner; probably also because Taleb is not as brilliant as he thinks. The outcome is a practical theory, exciting, and filled with anecdotes of an unusual character. Lets put it this way, this book makes a dry theory entertaining and accessible to everyone. That should be applauded.
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Dave
5.0 out of 5 starsVerified Purchase
Simply Brilliant
Reviewed in the United Kingdom on November 22, 2020
I''ve had a couple of samples of Taleb''s books on my Kindle for ages, and I finally got round to reading "The Black Swan" and before I finished it (in fact, before I finished the sample), I bought everything by Taleb I could find. He''s not for everyone (or even many people,...See more
I''ve had a couple of samples of Taleb''s books on my Kindle for ages, and I finally got round to reading "The Black Swan" and before I finished it (in fact, before I finished the sample), I bought everything by Taleb I could find. He''s not for everyone (or even many people, I hope) but I find him a kindred spirit. He may be the first person I''ve ever come across who likes Sir Karl Popper and Paul Feyerabend. He takes Logical Positivism seriously. He actually understands evolution. "The Black Swan" taught me about something I sort of intuitively knew about, but couldn''t quite articulate, and doubted myself when I tried: the importance of very unlikely, but very costly risks ("''black swan'' events"). But this earlier work seems a better place to start. While Taleb writes well, it''s not an easy read. He keeps saying that people misrepresent him for a reason: it''s very easy to do. The digested NN Taleb is that success is *partly* down to luck (and the "*partly*" gets omitted by a lot of people). This isn''t the place to summarise why he thinks that. Read the damn book. Coda: this book covered a lot of material that was in my undergraduate degree and quite a lot that should have been. If you''re an undergraduate in *any* of the sciences, this book will at the least, do you no harm, and may come in useful at some unexpected moment. If you''ve got a degree, you should have read this book, so if you haven''t, make good that omission now. If you have the sense not to have a degree, well, this book is for you too.
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