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A review by sumatra_squall
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
5.0
I'd found Taleb's second book, The Black Swan, a fascinating read and was keen to read Fooled by Randomness, his first foray into exploring the nature of uncertaintly and randomness.
Fooled by Randomness in many ways, is The Black Swan without all the fancy jargon and Taleb's creative vocabulary to describe true randomness and our flawed perception of it - "Mandelbrotian", "Mediocristan", "Extremistan" and "ludic fallacy" just to name a few.
Because of this lack of jargon, Fooled by Randomness also has a more intimate, personal feel to it. The references and examples cited in the book are often grounded in experiences people can relate to readily: what we see on the news (which according to Taleb is flawed, since journalists have a compulsive need to justify themselves by fitting explanations to the data, even random data). How in trading and fund management for example, it is possible for "evolution to be fooled by randomness", where even a mediocre trader can have an incredibly successful run until his luck turns. How survivorship bias (where those who fail disappear from the sample) can skew one's perceptions of success and failure, in areas as diverse as the social pecking order (living in the tiniest apartment in Park Ave makes you feel like a failure since you see only the - bigger - winners - there).
Both books are excellent reads but if I had to pick just one to read, Fooled by Randomness would be it.
Fooled by Randomness in many ways, is The Black Swan without all the fancy jargon and Taleb's creative vocabulary to describe true randomness and our flawed perception of it - "Mandelbrotian", "Mediocristan", "Extremistan" and "ludic fallacy" just to name a few.
Because of this lack of jargon, Fooled by Randomness also has a more intimate, personal feel to it. The references and examples cited in the book are often grounded in experiences people can relate to readily: what we see on the news (which according to Taleb is flawed, since journalists have a compulsive need to justify themselves by fitting explanations to the data, even random data). How in trading and fund management for example, it is possible for "evolution to be fooled by randomness", where even a mediocre trader can have an incredibly successful run until his luck turns. How survivorship bias (where those who fail disappear from the sample) can skew one's perceptions of success and failure, in areas as diverse as the social pecking order (living in the tiniest apartment in Park Ave makes you feel like a failure since you see only the - bigger - winners - there).
Both books are excellent reads but if I had to pick just one to read, Fooled by Randomness would be it.