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Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets | 
 enlarge | Author: Nassim Nicholas Taleb
Publisher: Random House Trade Paperbacks
Category: Book
List Price: $16.00
Buy New: $8.35
You Save: $7.65 (48%)
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Rating:  387 reviews
Sales Rank: 987
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
Availability: Usually ships in 1-2 business days
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Shipping: International shipping available
Condition: Paperback. brand new
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Amazon.com Review
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
Product Description
“[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
Finally in paperback, the word-of-mouth sensation that will change the way you think about the markets and the world.This book is about luck: more precisely how we perceive luck in our personal and professional experiences.
Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill–the world of business–Fooled by Randomness is an irreverent, iconoclastic, eye-opening, and endlessly entertaining exploration of one of the least understood forces in all of our lives.
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| Customer Reviews: Read 382 more reviews...
 Wow November 17, 2008
This is by far the smartest book I have ever read. As a PhD statistician I thought I was pretty sophisticated about randomness. Wrong, this book made me think about it in ways that I had not before. Every student of life or mathematics must read this book before they can consider themselves educated.
a fun read November 10, 2008
0 out of 1 found this review helpful
"Fooled by Randomness" may not make you a better person or even a better Wall Street trader, but it is fun to read. I took a couple of the typical Statistics courses in college and understood enough to realize that statistics was being misapplied by lots of academics (and others).
It is really pretty subtle and easy to make mistakes.
Taleb is now a personal hero of mine. My hats off to someone that can make a living from the market with seemingly so little effort.
Randomness in life and business, other than finance November 3, 2008
0 out of 1 found this review helpful
I've always thought it was funny for some executives whose company lost major amounts of money to say something like: "so and so, unexpected event occurred, and we lost money. (It's not my fault), just look at all my competitors (who also lost money)". How is this a justification? Did your mother tell you don't jump off the bridge just because everyone else is going to? Don't drink that poison Kool-aid!
Whether it's the dot-com meltdown, the mortage meltdown, the Enron collapse, the Arthur-Anderson accounting scandals, Katrina, Andrew, or 9-11 leading to terrorist wars, when one looks into history, there was always someone who did calculate for such risks factors. They were always overruled by some then-high-flying executives who denied such possibilities. These events are the black swan of reality.
The book is fun and informative book. The author throws his sarcastic personality into this book tells amusing stories of how a finance occupation with a great deal of randomness in success rate produces all kinds of successful incompotent characters. Frequently, as Taleb points out, even after a black swan, these once-successful characters still walk away with millions of dollars or other successes. As for example, the not-indicted Enron executive with $98 million, the Arthur Anderson execs who still had tens of millions, Mayor Nagin of New Orleans, the dot-com and mortage-related companies that kept their money, etc. It's not just the financial market--it is life in general, as Taleb notes.
Most reviewers here find his views narcissitic because he knocks so many occupations and people; I actually think he's just sarcastic; and it is evident he is also highly self-critical. The way he knocks these others is very entertaining. Everything from Russian scientists to MBAs to zero-risk traders to aggressive traders and to himself.
Anyhow, what can one learn from this valuable book (other than be cautious assumming that those who are successful are compotent):
1.If one is in an occupation where there is luck (randomness) involved, the occupation will produce a large number of lucky and unlucky people.
2.People aren't very good at remembering or assessing the percentage of luck in their decision process, and the lucky will be fooled into thinking their luck was skill. Therefore one will meet a large number of successful lucky incompotent people.
3.We as human beings cannot be rational; and thus, one's feelings, and incompotentence about one's luckiness still has to be expressed, understood as luck, and limited in one's decision-making impact.
4.People thinking processes frequently exclude the occurrence of the black swan events.
Taleb is saying more than how this applies to the market. He's saying that human beings are not good mathematical decision calculators, and as such, in recognizing this, one will see differently others and self.
As for financial markets, Taleb is saying something similar to Malkel's (sp?) Random Walk Down Wall Street (first edition). It's actually a great follow-up--the psychology, characters, and black swans of Random Walk.
Very serious philosophical work November 1, 2008
2 out of 4 found this review helpful
I have been trading markets for long time and have been exposed to volatility and its devastating impact on portfolio. I have been trading professionally too (in a bank, different markets). I read numerous books before on trading (technical analysis, strategies, etc..). But trading is more than just fundamental and quantitative analysis. Good trading skills have deep roots into psychology and philosophy. I decided to buy the book and read it after noticing so many negative reviews and I became curious. I can say , that the book was above my expectations. The author confirmed and reinforced many interesting aspects I knew with very nice and interesting examples. This work also broadened my horizons into history, philosophical thinking and gave me new ideas how to improve my own trading. Now, it is time to say to all who say negative things about the author: you are all wrong...Look at the financial crisis and blowouts by hedge funds and banks. Thats because those idiots didnt even understand things covered in this book. After long way of schooling (MBA at NYU) and long years of work, I met a lot of people Taleb talking about (traders, strategists, analysts,and professors), and many of them have wrong way of thinking. Taleb exposes all of this in his book. It is an excellent book for experienced traders (not so experienced ones are unlikely to appreciate the book to its full extent or even understand the concepts covered). Great book to complement someone's quantitative training. To make the long story short, the book is going to benefit everyone and make everyone smarter.
It will encourage you to look at things differently October 30, 2008
2 out of 3 found this review helpful
The first cautionary point I would make the prospective reader of Nassim Taleb (in any form) is that he can definitely come off as extremely arrogant. He pulls very view punches in sharing his opinions, particularly about people, be it groups or individuals. His fellow Wall Street professional are vilified, as are those who can be considered the luminaries of financial theory and plenty of others. Taleb is free with his criticism, though he does also offer complimentary words for some others, like George Soros, whom he clearly respects.
My second cautionary point is that Fooled by Randomness is not a handbook or scientific treatise of any sort. The author is actually pretty upfront about that. Taleb classifies it as an essay. I'll call it an expression of personal observation, opinion, and philosophy.
The main thrust of Fooled by Randomness is quite simple. It's that people are fooled into believing that what are likely random things have instead some meaningful causality. Taleb talks about all the different ways this can happen, and they are fairly numerous. This is probably the aspect of the book which upsets the most readers (or prospective ones), because he essentially says that we cannot necessarily assume the success someone has in trading or business or whatever necessarily has anything to do with that individual's intelligence or skill or whatever. It might just be luck, good or bad.
This is not, as I understand it, to say that Taleb believes everything is a matter of luck. Rather, he suggests that certain ventures (trading, for example) are much more influenced by randomness and uncertainty than others (dentistry, to cite his favored example). Naturally, the idea that randomness may be more important than our decision-making abilities is something that's not going to sit well with many people.
Something I would have liked to see as a compliment to the uncertainly discussion was a bit of practical talk about the implications of uncertainty in how one operates, for example in how one develops a trading strategy. Aside from highlighting the requirement to account for that uncertainty, though, Taleb is mostly silent on the application side of things. Nor does he bring in much specific science or math into the discussion. I would have liked more of that, but the author states from the beginning that such will not be the focus, and he's supplied a number of notes and references in the back of the book toward that end.
It's worth noting that the randomness angle isn't the only one in the book. There are plenty of other philosophical ideas discussed in the text as well.
In terms of writing style, I found Taleb generally engaging and easy to read. There are some complex concepts he discusses which necessarily slow you down, but as I noted about, he doesn't get into stats and math and stuff like that, so the text is generally fluid. Grammar sticklers might be a bit put off by the relatively frequent use of sentence fragments at the start of paragraphs, but the ideas are communicated effectively nevertheless.
As for the overall presentation, I personally found the latter part of the book to get a bit scattered, causing me to wonder where the author was going. Generally speaking, however, it was an enjoyable read. Taleb certainly triggered in me a number of different thoughts and ideas. Given that Fooled by Randomness is above all else a philosophical exposition, that is exactly what should have happened, so I would say the book definitely achieved it's objective. I definitely recommend it
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