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A review by ahmedh409
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb
5.0
A trader-turned-statistician explains the role of probability and randomness in everyday life in an informative yet casual tone. This book is about dealing with uncertain events, which make up the majority of events in life. Many people seem to be complaining about Taleb’s seemingly pretentious and snarky tone throughout the book, as well as his anecdotes which he provides as evidence for his theories, but I prefer to look at it as a memoir of someone who has specialized in dealing with noisy data throughout his life. He’s a bit arrogant, but he has extremely useful things to say, so it’s okay.
Some notes:
- Scientists are seeing more and more evidence that we are specifically designed by mother nature to fool ourselves. Carefully pick insurances and pick them often; limit downsides from negative randomness, take advantage of positive randomness.
- Luck is fragile. It cannot be repeated reliably, so never rely on luck (but take advantage of it when you have it).
- It does not matter how frequently something succeeds if the potential downside is catastrophic. For example, if there is a 99% chance of winning $1 million and 1% chance of death of yourself and family members, NEVER take the bet.
- Signal over noise: the majority of life’s events come from noise (randomness), do not try to extract meaning from noise.
- Anxiety is the result of thinking of about an issue constantly and mistaking noise for signal. Check on your anxieties and examine your bets infrequently, this will lead to a higher signal-to-noise ratio in your emotions and clearer thinking.
Some notes:
- Scientists are seeing more and more evidence that we are specifically designed by mother nature to fool ourselves. Carefully pick insurances and pick them often; limit downsides from negative randomness, take advantage of positive randomness.
- Luck is fragile. It cannot be repeated reliably, so never rely on luck (but take advantage of it when you have it).
- It does not matter how frequently something succeeds if the potential downside is catastrophic. For example, if there is a 99% chance of winning $1 million and 1% chance of death of yourself and family members, NEVER take the bet.
- Signal over noise: the majority of life’s events come from noise (randomness), do not try to extract meaning from noise.
- Anxiety is the result of thinking of about an issue constantly and mistaking noise for signal. Check on your anxieties and examine your bets infrequently, this will lead to a higher signal-to-noise ratio in your emotions and clearer thinking.