Fooled By Randomness
Book: Fooled by Randomness
Author: Taleb, Nassim Nicholas
What I'm currently reading now. It was a little tough to understand at first, given that we're not biologically tuned to recognise randomness correctly (as stated in the book) and the probability that I'm one of those fools too. Am helped tremendously by the irreverent, witty and ultimately entertaining way in which Mr Taleb wrote his piece. This may well be one of the best books, in terms of the non-fiction I've read this year. More notes to come (am halfway through now).
Anyway. I've realised I've backtracked in writing my booknotes, so here are what (little) I can remember out of reading this great work. In list form for simplicity's sake.
1. It is better to be lucky than being skilful. But success requires skill as a prerequisite.
2. Be willing to go against general judgment; we are engineered to be probability fools, so by understanding probability we go against the natural grain, literally.
3. Prospect theory & survivorship bias: we tend to gauge our situation not in actual terms, but in relation to other situations around us. Learning to be objective will do us good in terms of feeling and identifying true worth, but it takes practice.
4. According to Hume, we cannot ascertain that all swans are white, but we can be sure that all swans are not white the moment a rare black swan is spotted. This means we need to think in reverse hypothesis to establish certainty.
5. Do not take the world so seriously; it is too random to begin with, and what we can do is condition ourselves to live with this randomness.
6. Learn to differentiate between actual attributes ("right-column") and attributes attributed to randomness ("left-column"). I need to revisit the book on this. (Gotta buy it again. D'oh! Amazon, Amazon.)
7. Be humble and listen to masters of the old for wisdom.
8. Probability, when played over for a reasonable amount of time, peters out. That is why, although having good luck is important, one needs to cultivate real earnings and learning to prepare for "The Black Swan".
9. Instead of losing through the Black Swan event, one can look at it from another perspective and obtain massive gains from it with ample preparation beforehand. i.e., the Taleb Distribution.
10. Nassim Taleb is awesome, and not just because this is a random entry.
After rereading, I may refresh this list again.
Sanny's rating:
Fun:★★★✩✩
Brain capacity required:★★★★✩
Real-world application:★★★✩✩
Learning:★★★★★
Inspirational value:★★✩✩✩
Value for time spent:★★★★✩
Update Jan'10: I finished this book last year and sent it over to my home in Jakarta as I was moving out of London. I was planning to read another book by Taleb, the now-famous The Black Swan. Sigh. The package also contained other books I have yet to read. This is the second time I've lost a book package. Guess the bookstores will love me for all those repeat purchases (of the same books).
