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Fooled by
Randomness: Published by Texere - October 2001
Reviewed by Dr. Jonathan Dolhenty Chance, luck, randomness, and probability are all topics which incite debate among everyone, from the scientist to the philosopher, from the economist to the market trader, from the erudite intellectual to the ordinary thinking person. Nassim Nicholas Taleb's new book Fooled by Randomness deals extensively with those topics for this is a book about how, in both business and in life in general, we perceive and deal with luck or, as the author says, it is a book "about luck disguised and perceived as non-luck...and, more generally, randomness disguised and perceived as non-randomness." Moreover, "It manifests itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributes his success to some other, generally very precise, reason." Taleb, a professional trader and mathematics professor with an M.B.A. from the Wharton School and a Ph.D. from the University of Paris, extensively examines what randomness means in business and in life and why human beings are so prone to mistake dumb luck for consummate skill. His book is an unconventional and highly personal exploration of the nature of randomness that wanders from the court of Croesus and a visit from Solon, said to be the wisest man in the ancient world, to trading rooms in New York and London, to discussions of Russian roulette, Monte Carlo math, the survivorship bias, Darwin's theory of evolution, the problem of induction, baseball great Yogi Berra, the philosophy of Karl Popper, and a whole lot more. The range of information and knowledge displayed by the author is impressive. The obvious background against which the book is set is the world of trading, but the real background is the whole mosaic of our common life. One reason the book is fascinating is Taleb's ability to make seemingly esoteric mathematical ideas entirely relevant in evaluating and understanding everything from the stock market to the successes of ordinary people, and "the lucky fool in the right place at the right time." In an uncertain world where much depends on chance events, success is not always explained by the concept of "survival of the fittest" but, rather, by the concept of "survival of the luckiest." How do chance, luck, randomness, and probability impact our lives? Taleb has some ideas about the answers to that question. Don't be fooled by the brevity of this book, a mere 196 pages of textual content. Within its pages is much to ponder and I suggest reading this book once very rapidly to view the broad canvas upon which the author paints his concepts and examples, then go back and read it slowly to grasp its major ideas and important details, and then spend some time merely thinking about the conclusions, consequences, and ramifications of the notions put forth by the author. Fooled by Randomness is a fascinating read and, unusual in a book about such complex topics, an entertaining read as well.
About the author: Nassim Nicholas Taleb is the founder of Empirica Capital LLC, a crisis-hunting trading firm, and a fellow and adjunct professor at the Courant Institute of Mathematical Sciences of New York University. He held senior trading positions in New York and London and worked as a floor trader in Chicago. He has an M.B.A from the Wharton School and a Ph.D. from the University of Paris Dauphine. He is also the author of Dynamic Hedging and was inducted into the Derivatives Strategy Hall of Fame in February 2001 for his record of debunking myths and false gurus. In addition to his scientific and literary interests, Taleb is an avid sportsman. He also enjoys cafe lounging and museum hopping.
Enrich your life with a book about politics and current events... Enrich your political & social life with a politics or news magazine... |
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