Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets Reviews

• Taleb fooled by himself

  
  By A1JZUWA9ZD6SV0 on 2002-01-14
  Comments on Nassim Taleb's ?Fooled by Randomness?

  I must first say that I am not a trader or a mad scientist trying to tell were the stock market is heading. I am just an engineer and an entrepreneur for quite a while. Being interested by stock markets I read Taleb's book and found it rather annoying. Not because of the points Taleb is trying to run home, nor because I certainly agree with the fact that a lot of ?Masters of the Universe? are mere mortals with a little more luck than others - You see the same happening among entrepreneurs - No, the reason is the tremendous amount of platitude that fill the book from page one.

  Over the course of the past 15 years I have had some success and some failures but overall I'm making rather good and I am happy with my life. I believe I was a bit lucky on average. So why did I need to react on this book?
  Taleb's tone is arrogant as if he was revealing some great information to all the blind in this world. He also thinks that the world starts and finishes with the stock markets and that the rest is a sort of decoration to entice the otherwise dull trader's world.
  Now let me point out to some mistreated scientific laws.

  Survivorship bias caught Taleb right in the face

  At page 159 Taleb is mentioning a supposedly embarrassing experiment with doctors being asked about the probability of a patient being struck by a given disease. As it comes out in Taleb's book, only one out of five professionals (doctors) got the answer right, the answer was 1/51. Taleb therefore concludes that you should's trust your doctor when he tests you for a disease, given (in this particular example) that you have roughly 2% chance of actually being sick. Well, I disagree ferociously!
  If, like Taleb, you spend your time reading reports from the pharma industry on how they test the quality of a new drug, instead of trying to imagine what is the every day life for a doctor in his practice you are biased, big time. Let me explain : If you take randomly 1000 people knowing statistically that one is stricken by that particular illness and put them trough a test that is accurate (minus false positives) at only 95%, you get indeed 1/51 probability. Does this correspond to a real life situation?
  No! In real life, say we have 10% hypochondriacs and say this particular illness hurts (which most do), so what is the population you would find in the doctor's practice? 90% of the people who go to a doctor and feel sick are actually sick. Say a doctor treats a thousand patience in a given period of time, 900 will be sick and 100 will not. The test will find 905 people stricken out of a 1000 patients which translates into a 90.5% chance of being sick once you decided to go to your doctor's practice because you don't feel well. This changes the odds that your doctor might be right after all, doesn't it ? On this illustration I must say I don't doubt doctors are not very good at mathematics but some of those having taken the test maybe just extrapolated live experiences from their everyday dull life (as we read in Taleb's book).

  Using Taleb's filtering method would have gotten me an F in electronics class

  Though I understand what Taleb is trying to run home with the example of page 167, what he says is plain wrong. To dissociate noise from signal, you don't do amplitude filtering but frequency filtering. You take your signal function as amplitude over time and do a Fourrier transform to get amplitude over frequency, the noise's frequency being at least a factor of scale higher than the signal itself, with an in-band filter you can keep only the band of frequencies around the signal and get rid of the noise. I would advise Mr. Taleb to read an electronics book sometimes to get his basics right.

  Final words

  Having spoken with friends in the banking business (that is a Swiss platitude), I must say that Taleb's central point is certainly interesting and revealing for them and I give the book some credit for that. Nevertheless, the constant bashing of others, the less than rigorous approach, some too quickly drown conclusions make me say the book lacks credibility. My final words are for Mr. Taleb to think about: In French we say ?La culture c'est comme la confiture, moins on en a, plus on l'étale? (culture is like jam, the less you have of it, the more you spread it out thin).
  Solon would appreciate, he who saw the future of Croesus in the bowels of a bird!

  Pierre Kladny
  
  

• Ironically, Opportunity Lost

  
  By on 2002-12-31
  I'm very much of two minds about this book. There's little need to offer further comment on:

  1. The author's ego (in one paragraph on page 59, he uses the perpendicular pronoun 7 times; the possessive first person another 5); or his hyperbolistic writing style: this might be too easily dismissed as an ad hominem attack.

  2. The many glaring contradictions in this book: they appear so often (sometimes in the next sentence), they can hardly be viewed as a random event: this would take too long, and any intelligent reader can spot them.

  3. The superfluous material: with so much impertinent opinion found between the covers, this would take too much effort.

  4. The missed opportunities: another author can capitalize on this.

  5. The delicious irony between the thesis and the content: this is for the discerning reader to perceive and enjoy.

  If people wanted to be as nasty as Taleb is in dismissing those he disagrees with, they could use a subject line like "Clearly, not a Swan Song," or "A Highly Masturbatory Essay" or "This book is as fat as the argument is thin".

  While there is much to complain about in this nauseatingly self-centered book, so filled with noise and so little signal (seriously estimated at 85:15), such comments would miss the point: this is actually a highly original work and is certainly thought-provoking. Although I give it only 2 stars, it's still worth reading, if only to argue against. A three-paragraph summary of his 200 pages follows:

  1. Thesis: Today's virtual world measures success without sufficiently discerning luck from skill. Intelligence alone is deemed the necessary condition for wealth.

  2. Antithesis: Too much of what is widely held to be worldly success should actually be attributed to luck; i.e., results hidden inside the vicissitudes of random variation. This "common sense" approach is naïve because it fails to establish the link between cause and effect and ignores the effect of variation, which, in one of its tails, can produce extraordinary results. Taleb explores the problem of induction and confronts the non-linearity of regret.

  3. Synthesis: The trick is, of course, to determine post facto, what was random and what was skill, and more critically, to assess the nature of risk going into a decision. Mistakes in these areas can be extremely costly. Beware of the tails, especially if they are fat. If you want to be probabilistic, don't bet more than you can happily afford to lose. Question everything. Be humble. Accept adversity with good grace.

  This is an interesting thesis; too bad Taleb doesn't focus on examining the evidence instead of talking about himself and offering unsupported opinions. He dabbles with epistemology, but equivocates on whether knowledge is arrived at by rational or empirical means. Despite frequent and inappropriate abuse of the word "clearly," he doesn't clarify the ontological considerations that lie at the heart of this book: sufficient cause and non-contradiction. Though he's personally fond of the Monte Carlo technique, many of us could be spared much of that bother by answering a few simple questions:

  1. What is the worst-case scenario?
  2. What is the best-case scenario?
  3. What is the most likely scenario?
  4. How confident am I in the assessments?
  5. What can I afford to lose?

  The author raises the work of Kahneman and Tversky, but hardly surveys it; the work of other key economic thinkers is ignored: Thaler and Arrow come to mind immediately; many others should appear but do not. No wonder Japanese librarians classify this work as literature: it's little more than an essay, largely devoid of footnotes or a meaningful bibliography.

  Being unlettered in mathematical sciences, I ought to be cautious about questioning his math, as simple as it is, but must nonetheless question both Taleb's assumptions and his logic in the few examples he provides. He rails against "pseudo-science" but dabbles happily in many disciplines in which he lacks formal qualifications, jumping from lily-pad to lily-pad, seemingly unaware that his dilettantism is evident to even the fellow layperson. Despite his professed aversion for "borrowed wisdom," it abounds in this tome. Taleb's editor took a vacation, especially towards the end of the book, where there are many errors of punctuation.

  Incidentally, in one of many delicious ironies of this book, Taleb uses the very Hegelian logic he rails against to make his point. It would be interesting to see John Horgan (he of The End of Science fame) interview Taleb. The ultimate irony is that Taleb has actually co-written a concise account of his thesis in 26 pages at his own web page.

  Intriguingly, in some of the interviews also linked to his web page, he comes across as being lucid and pithy, and also a polished and gracious reviewer. Some of his other writings show a keen insight into human and abstract sensibilities. Sadly, the same cannot be said of this book, which appears to be more a transcript of a session with his psychoanalyst. This is an opportunity lost. A severe edit of this book could likely bring it up to the level (5 stars) for which it has the potential. But it's nowhere near there, yet.
  
  

• Managing Unpredictable Variations in Order to Prosper!

  
  By A1K1JW1C5CUSUZ on 2001-09-19
  Every person who is interested in investing should read this book!

  In investing, few can tell the difference between being lucky and smart. Being successful in the short term can come from either source. If it is coming from unrecognized sources of luck, however, the behavior that the investor associates with success can sink the ship. The cautionary tale of Long Term Capital Management is cited in the book as an example of this point. �If you�re so rich, why aren�t you smart?� is the wonderful reversal here on the old saw.

  I see this effect all the time in my consulting practice with helping companies understand how their decisions affect their stock price. A large percentage of people feel that they know all the answers when their stock price is rising. They keep doing the same things when the stocks are falling. Few survive to still have top jobs when the cycle shifts again. Then a new group of self-confident people take over who often don�t know any more than those who preceded them. It�s just that their track records look better.

  Fooled by Randomness will help make you more knowledgeably humble about what you can expect to accomplish with investments. Not only do fewer than one percent outperform the market averages over long time periods, the ones who do are probably often being aided by luck as well. �Get thee to the index funds as soon as possible� is the message that most should take away from this book. Better yet, buy them when multiples are low!

  The book�s fundamental point is that there is tremendous volatility in any investment. Ignore that volatility to your peril.

  At the same time, you should be cautious about how well you understand the volatility. Stocks at their lows can still go to zero. There are all kinds of events that can happen, that have not done so yet. When they do, throw out all the old rules of investing. The terrorist attacks on the United States last week are probably an example of this. So each investment must be made as though you could be totally wrong. This means that you have to manage your risk exposure to events you don�t even know how to expect.

  I loved his example of the joint probabilities of having a rare disease if you get a positive result on a test for that disease. Even most doctors apparently don�t know how to evaluate that one. If even well educated people cannot quantify two known risks occurring simultaneously in their own field, how can investors be expected to make good decisions?

  Dr. Taleb has some very good advice for how to handle the psychology of being able to do this. He upholds the Stoic ideal -- �the attempt by man to get even with probability� which encourages �wisdom, upright dealing, and courage.� This means not chasing the latest investment fad or fashion, not looking at your investments very often, and being open to both sides of any idea (it could go wrong as well as right --what are the consequences of both?). I especially liked his idea of watching CNBC with the sound off so that the �experts� seem humorous and you are less likely to hear and follow their advice. Even more poignant was his advice not to live on Park Avenue where living with all of the arrogant, temporarily lucky can make you feel small. Instead, live somewhere that the results of your cautious approach will cause you to be the envy of all.

  Dr. Taleb impressed me with his willingness to tell stories on himself about how quickly he can become superstitious when things are going well, take on excess risks, and start looking too short term. After all, we are only human!

  The importance of this book can only be appreciated if you go back and think about your biggest investing successes. How much was luck versus skill? A good way to test is to see if the same approach has continued to work for you whenever you use it. Another good test is to see how often it would have backfired in the past.

  In my research on good decision making, I find that those who guard the downside first make the most money in the long run. They are able to find ways to get the best of both worlds!

  Remember that the two-edged sword can cut in either direction!

  
  
  

• Some interesting discussion, but plenty of Taleb's large ego

  
  By A3PT58X1XDHXXB on 2003-06-01
  As a professional options trader and familiar with Taleb's "Dynamic Options Hedging", I expected a very professional book with interesting insights into the human and mathematical aspects of probability and randomness.

  And while the book does provide some of that, the valuable information is embedded in writing that is overly self-centered if not egomaniacal.

  I'd like to point out that I REALLY wanted to love this book. But I didn't.

  Taleb writes about interesting ways in which people do not understand randomness but he does it in a way which is unnecessarily insulting and condescending.

  Even worse, I find him hypocritical. He spends a lot of energy talking about the value of being able to change one's mind, as well as the value of large sample sizes in probability-based decision making. But then he describes how far out of his way he goes to avoid information (which might cause him to change his mind or which would increase his sample size.) Further he implies that anyone who takes in certain information, like almost any form of news broadcast, must be an idiot and lives in a world of self-delusion.

  Taleb writes like a smart but anti-social and holier-than-thou trader. He writes some very useful stuff about randomness and its misapplication in modern thinking. But then he goes on psychological tangents which are nothing more than trying (and failing) to find a mathematical basis on which to defend his personality foibles (flaws?).

  He over-generalizes about trading in a style which he does not employ, i.e. selling premium or making bets based on past occurrences. He writes as if his way is the only way that makes sense, and implies that in the long run it is only because of randomness that anyone who does not trade the same way he does could be successful. ("Ergoditic" is definitely the best word in the book....)

  Taleb gets very close to interesting discussions of a non-mathematical nature as well, such as the level of emotion involved with success or failure, as well as some interesting historical information. But he lessens the effect of the good writing by then telling us how all this fits into how he lives his life, using as many obscure references as possible, in an ongoing attempt to justify (to the reader or to himself?) the lifestyle he has created for himself. For example, he uses the above discussion to explain why he does not like to look at his own trading profit or loss statements. And he writes it in a way that shows he expects us to think he's brilliant or heroic for having such discipline. Very silly stuff....

  Taleb describes his hero worship (of a philosopher named Popper) and it becomes clear that at least a partial goal of this book is to get the reader to revere (or emulate) Taleb the way he reveres (and tries to emulate) Popper. Unfortunately, it doesn't work that way.

  Overall I found the probability discussion interesting, but not worth the tedium of having to listen as if the reader is Taleb's (badly needed) therapist.

  Luckily for Taleb, he says directly in the book that he will ignore all reviews. I think you should be able to find a less tedious source for the bits of valuable information "Fooled By Randomness" provides without having to suffer the insufferable smugness of the author.
  
  

• Critical review from a trader

  
  By A1IP8EA9X22YQ9 on 2001-10-26
  I picked up this book because I read Mr. Taleb's quantitative derivatives book, Dynamic Hedging. Dynamic Hedging was an extremely insightful and intuitive foray into vanilla and exotic options. It was enhanced by Mr. Taleb's occasional commentary on life in the markets. I imagined that an entire book containing Mr. Taleb's viewpoints on probability would be compelling.

  It was indeed compelling. But I did not wholly agree with him. I suppose that is my right.

  At risk of great oversimplification, Taleb argues quite articulately that extreme occurrences in a distribution happen a lot more frequently than humans are prone to believe. Ergo, in derivatives trading, it makes no sense for one to be "frontspread" (short gamma/vega). Ever.

  My experience is in equity derivatives. Mr. Taleb's is presumably in fixed income and FX. Without knowing much about the world of FX options, I can assert that in the equity listed options markets, downdrafts in volatility can be almost as deadly as explosions in volatility. The vol crush of the summer of 2000 wiped out as many traders as the Russian debt default of 1998. Out of the money options are never cheap; lots of people buy them for the protection that Taleb seeks. Sometimes even they are too expensive to own.

  Going further, I found Mr. Taleb's insights on the role of luck in human performance to be EXTREMELY unsettling. He talks at length about the rich idiot trader and the vastly more competent but underpaid trader (presumably himself). He goes on to ascribe most of those who are wildly successful in life to LUCK, and that individuals ascribe way too much of their own success to their own ability and hard work (which he scorns).

  I find this to be frightening. I'm sure Mr. Taleb would find this reaction entirely predictable. The implications are most frightening, from a political standpoint: if most wealth is undeserved, then therefore it can be rightfully taxed (expropriated) and redistributed to those are not so lucky. Furthermore, most individuals who despise hard work do so not because they are brilliant, but because they are lazy. Evaluation of a particular person's work ethic is an imperfect but reasonably good indicator of performance.

  Many of the MBAs he derides as being shallow thinkers and pluggers, while may not be (ahem) the intellectual giant that Taleb is, are no slouches themselves. They do not represent the legions of clueless option sellers that Mr. Taleb has somehow encountered throughout his career. Most young associates do have the luxury of telling their boss they did not read the Wall Street Journal in the morning because it represents nothing but random noise.

  As you can tell from this review, I enjoyed the book. Otherwise I wouldn't be so critical of it. I couldn't put it down. You probably won't agree with all of it, but it will cause you to think about things in a very different way for a long time.
  
  

• Essential for understanding the workings of the world
  By on 2002-03-12
  Anyone who holds any doubts in regards to the validity of this book must read Edward Chancellor's 'Devil Take the Hindmost,' which provides a history of financial markets from the dawn of the Roman Empire up to now. After reading such a sweeping historical account, one sees the financial markets for exactly what they have always been: one vast bubble machine where people have even invested in, according to Chancellor, a company that refused to explain anything about what it did but simply assured the investors that it had a great idea for making money. Sounds rather similar to some of the dot coms in recent years. Through a compliation of both antecdotes and thoughts, Taleb provides an explanation as to why the markets work in this way, why so many fail to realize this, and how these issues are mirrored in our everyday lives. He addresses many issues that everyone should understand in order to view the world in a realistic manner. Evolution is not a one way road to nirvana but rather the process through which those adapted to the current situation fare better, and they may not be best adopted when things change. When judging the validity of any strategy in business or in life one must consider that the winners write the history books; you can only talk to survivors of war but that certainly doesn't mean that everyone survives it. When deducing anything from viewing a sample you must consider the forces that created that sample: should you consider yourself unintelligent because you're behind your classmates at a top law school? Are a good outcome and a good decision the same thing, and likewise for a bad outcome and a bad decision? And the list goes on.

  While Taleb does not fully dive into this issue until later in the book, the primary conjecture of the piece is that human beings are psychologically prone to misinterpret random events. We need to explain things, whether it be in the social sciences, art and literature, or the natural sciences, so we find ways to explain them. Considering the infinite quantities of data at our disposal, no statistician denies that extremely powerful correlations will occur simply out of chance. Certain aspects of an author's life will be almost identical to passages in his or her novels, certains stocks will share perfect correlations, and we are creatures in need of explanation, and whole industries have been created to mine the data and tell us why things occur.

  Prior to this book, Taleb had already written 'Dynamic Hedging,' considered by many, including myself, to be one of the best books ever written on exotic and vanilla options. That book is not for anyone who has not spent years studying (or preferably practicing) options, but in 'Fooled by Randomness' he illustrates his ideas in terms that anyone could understand. In 'Dynamic Hedging' he provides more insights into his trading strategies than he would have done had he been solely profit motivated, and likewise, as the boss of a fund that profits from other people's misconceptions of probability, he cannot have any reason to try to increase people's awareness of how the world really works other than a genuine desire to play the role of the teacher. Many have attacked the book as arrogant, but it must be remembered that anyone who goes against the common ways of thinking is essentially suggesting that he or she understands things better than do most people and therefore cannot help but come off as arrogant. Several times in the book Taleb specifically states that he falls victim to the tendencies that he condemns, and that the main difference that he sees between himself and others is that he is at least aware of it.

  Considering the fact that Taleb blatantly argues that many who consider themselves the rulers of the universe were in fact a group of lucky fools, it is inevitable that many will come away from it with a sense of anger and a refusal to believe it. I am therefore almost surprised that the book has not drawn harsher reviews than it has, for Taleb was certainly not seeking to make friends through the publication of it. I suspect that those who rate the book as poor fall into two general categories: those who were troubled by the thought that a considerable portion of their success may have resulted from luck, and those who are attached to their current views on the workings of the markets and are hostile to any new views on them. These two categories naturally overlap quite often. An important thing to remember is that even if you work very hard, not only are the outcomes of your projects the result, to varying extents, of chance, but chance also played a role in getting you to the position where you can work hard and actaully see it pay off. Considering the complexity of the world we live in, and the infinite forces that push and pull on our lives, this book is critical to anyone who desires an objective veiw of how things come to be...
  
  

• What is this guy's problem?
  By A1I1Z1P04F3QCR on 2005-02-05
  This is a painfully bad book. Nassim Nicholas Taleb's observations are completely trivial, lacking any depth and conclusion whatsoever, and it takes you a while to understand that this book is not about randomness and the way the human brain is easily fooled when interpreting information.
  
  This book is about Taleb himself - one huge ego trip and at the end impossible to read. No one can criticize the intellectual message of the book - that humans make bad decisions because they underestimate the fundamental effects of uncertainty. But Taleb misses to discuss the immense amount of research available in this field performed since quite some time by economists, psychologists, and others. In fact, the entire field of behavioral finance is devoted to the broad outlines of this book. It is one thing that there is absolutely nothing new in this book; it does not even provide a synopsis of interesting research or real-live implications or applications. What is more embarrassing even is that Taleb steals some of the best episodes in behavioral finance without feeling the need to reference his sources.
  
  What makes Taleb's book so unbearable is that he is so full of himself for knowing Greek mythology and all the philosophers while at the same time knowing about financial engineering. He tells us several times that he is working out. At the end of this book you would like to beat the b'jesus out of this guy for writing a book so irrelevant and arrogant.
  
  If you are looking for intellectual stimulation, you are better off with some of the classics, such as J.A. Paulos' "Beyond Numeracy". Or I suggest you read G.A. Akerloff's "Market for Lemons" article, just a couple of pages long and written in 1970, a little masterpiece that is as powerful as it is simple.
  
  
• Brilliant
  By on 2002-06-08
  This book presents a highly entertaining and informative view of the role of probability in the markets as well as in daily situations, and Taleb will often force you to crack an amused smile and nod with agreement at the same time. The book explores the idea that human beings are not wired to think rationally, and how we therefore misinterpret many events in life. I am no less than shocked that the book has received so many harsh reviews; and I ask anyone who considers not purchasing it to consider that the following points no doubt apply to many of the people who gave it any less than 4 stars.
  1) If you want a technical work on finance, read Taleb's 'Dynamic Hedging.' In 'Fooled by Randomness' he intentionally writes so that people outside of the fields of finance and math can understand it. These reviews that attack it for diluting certain points are therefore ridiculous and miss the very point of the book.
  2) Since this book's thesis states that many people who think they rose to power or wealth actually did so out of pure luck, of course many people are going to react with hostility and will not want you to read it. Any scathing reviews are no doubt therefore people who don't want you to realize the truth about them.
  3) The book is not arrogant. I have trouble seeing how so many can describe it as egotistical when one of Taleb's main points is that he knows nothing about how the markets will act, and that the only thing that seperates him from most people is that he realizes this lack of knowledge, and designs his strategies accordingly. My contention is that it is inevitable that anyone who goes against the common theories will be labeled as arrogant, which is why so many view Taleb as so.
  4) Taleb is right. September 11th, the Russian collapse, the interent bubble; the markets are ruled by sudden rare events and you ignore them at your own risk.
  I therefore implore you to not listen to all this silly reviews that attack it for entirely groundless reasons. Taleb is one of just a few members of the derivatives theory hall of fame; other members include Nobel Prize winners Robert Merton and Myron Scholes, who derived the famous Black-Scholes formula. What he has to say is worth listening to.
  
  
• BE FOOLED NO MORE - (by charlatans, anyway)
  By A3Q77CS1DEQLMG on 2001-10-31
  I normally dislike business books and approached this one with a slight diffidence. The title, nonetheless, seemed interesting. However, I soon became drawn into it and found its writer so brilliant as to become envious of his obvious ease at weaving excerpts of knoweldge acquired from many fields to produce such entertaining and insightful writing. Apart from investing and finance the book really attempts to answer the question: are great men made by circumstances or are they born ? I doubt this book will become a bestseller; it's simply too original and intellectual to attract the average minds that run business and finance. This book is about philosophy, science, psychology, history and literature as much as it is a useful guide to investment strategies - though I doubt Mr, Taleb would appreciate the last qualification. Those privileged enough to read it will share an amazing secret and advantage.
  In short, I loved it.
  
  
• Fooled by Amazon
  By A1U7WHE5J1FY9R on 2003-08-24
  Sometimes it serves no purpose to look at the rating of the book (4 average stars), it is as misleading as the closing price in terms of understanding future profitability. The book full of hackneyed examples and anecdotes culled (maybe plagiarized) from better pop-science books. Berstein's Against the Gods is more entertaining, J Allen Paulos is more original, and R. Dawkins is far more erudite.
  In his book Dr. Taleb makes much of his love of books, and his foreign (non-US) education. Yet Taleb's book was published by some no-name (vanity?) publisher, Texere, which apparently does not have enough money to hire an editor, nor even a simple fact-checker. Perhaps the brilliant Dr. Taleb don't need no friggin' fact-checker? Well...Barnes & Noble is on 18th street, not 21st street. This might seem like a small detail, but Taleb's book uses that mistake as a chapter sub-heading and it is just a simple example of sloppy editing. I will not even start on the lack of style and wit throughout the book.
  Of course, I did not expect any heavy math in this book, I have enough of that in my day job (insurance), but I did expect something more than this limp treatment of statistical reasoning in business life. But one should bear in mind that Taleb is simply a (Phoenician) trader who believes he has something interesting to say simply because he has an above-average income. He is fooled by skewness.
  
  
• Fun read + thoughtful ideas
  By A1UAOANQOVS56P on 2002-03-12
  I am a trader myself, and ran into this book as, ironically, a lucky coincidence: I happened to read the emerging markets chapter as a draft that was getting emailed around the office, and enjoyed it so much i purchased the rest of the book...

  I found the book to be well written, opinionated and with some great ideas that frankly are hard to argue against. His book, at the core, is about the problem of induction. Statistics, for how useful they may be day to day, certainly do not solve this problem, and indeed, luck and skill are hard to differentiate in the markets.

  He exposes a problem of a philosophical nature, and he is certainly not suggesting to drop all induced laws and redefine a day to day life full of uncertainty and incapable of establishing practical rules.

  This book is not meant to be a textbook so i am not sure why Taleb's flair as a writer is getting attacked so repeatedly here. I think his writing style is elegant, amusing and smooth. This book is about opinion, so accusing him of having an opinion seems a misplaced objection. Also, i believe his writing is being somewhat misinterpreted. While there is an undertone of arrogance, it is self mocking. He does not claim to know better. His only, somewhat socratic claim is that he at least knows he does not know...I am surrounded by arrogance at work, and i can tell you, Taleb's ain't so!
  
  

• Intiguing but ultimately unsatisfying
  By A225R1W4F6LWX2 on 2002-04-30
  I bought FOOLED BY RANDOMNESS after reading the Malcolm Gladwell profile on Nassim Nicholas Taleb in the April issue of the New Yorker. Like others who have reviewed this book, I found that Gladwell captured the most important details of Taleb's thoughts in a shorter, more entertaining way. However, I thought that this book can be a worthwhile read for those with a passion for this type of book.

  FOOLED BY RANDOMNESS is an introduction to the difficulties human beings have at reasoning around probability. Taleb argues that human beings are genetically hardwired to misattribute the results of human endeavors to skill and knowledge that are, in fact, just coincidental, random events. Taleb discusses the results of this embedded flaw in human reasoning in three areas.

  In part 1, Taleb discusses impacts of `rare events' on both financial markets and on human history. Taleb argues we should beware seemingly successful strategies if they are not proven by the test of history. In particular, we should examine human history in the long term for general trends and treat skeptically claims that humanity has reached `the end of history' or `a new economic model' where the old, proven rules do not apply.

  In part 2, Taleb discusses the `survivor effect', or mistaking success based on luck for success based on skill. In particular, Taleb warns against judging a strategy by its actual results. Instead, we should judge strategies based upon a sum of all possible outcomes.

  In part 3, Taleb briefly discusses `tricks' he has developed to try and derail his flawed, ingrained, statistical reasoning and live a rational and, to a great degree, classical life based upon a good understanding of the effect of randomness on our lives.

  The book is peppered with classical references to ancient philosophers and literature, as well as humorous anecdotes to Taleb's own experience in the world of Wall Street. Unfortunately, interesting nuggets and provocative thoughts throughout the book are rarely fully explored. While I was entertained and intrigued, when I got to an end of a chapter or section, I often felt dissatisfied, as if I was trying to wrap my arms around some meaty ideas and came away with empty air.

  Unlike other reviewers, however, I did not find Taleb particularly pretentious. In fact, I often felt that Taleb was more than open with his own particular foibles and failings. His only source of pride seemed to be in realizing that he had these failings. Ironically, Taleb attributes this understanding to the experiences suffered in his own personal, contingent history.

  Overall, I found the book to be like a good Chinese dinner: entertaining at the time of reading, but left hungry an hour later.

  Dav's Rating System:
  5 stars - Loved it, and kept it on my bookshelf.
  4 stars - Liked it, and gave it to a friend.
  3 stars - OK, finished it and gave it to the library.
  2 stars - Not good, finished it, but felt guilty and/or cheated by it.
  1 star - I want my hour back! Didn't finish the book
  
  

• Over rated, Boring
  By A3OD8ZLEWVKS19 on 2005-06-11
  I went into this book with high expectations, especially based on the reviews the book has gotten and the high praise heaped upon it. I don't remember the last time I was so disappointed by a book.
  
  The author provides surperficial, arrogant criticism of some people, notably traders and George Will, and paises people with superficial, poorly reasoned complements.
  
  The book is arrogant and too long, by the 10th page you could put the book down and not miss anything the author has to say.
  
  
• Fabulous, IF you judge it on its own terms.
  By A1NUA9J2JJQW0C on 2006-09-06
  The spolighted reviews are unfair and irritating. I enjoyed the hell out of this book, not because the author's thesis is necessarily correct, but because it is extremely entertaining and well-written.
  
  This is a brief literary essay about epistemology, not a textbook. It tells the story of a philosopher who unintentionally stumbles into options trading, and presses his neuroses to his advantage. It does not purport to be a handbook for success in the stock market. Nor COULD it resolve the perennial debate between empiricism and rationalism. Taleb does not "ignore" the possibility of deductive reasoning from a priori truth, he discounts it. He's a empiricist, and this is an polemic for empiricism. He's a partisan, not an ignoramus.
  
  I also disagree with the contention that Taleb spreads his "cultural comfiture" thin, though I am not at all surprised to learn that that is a French idiom. As a TRUE sophisticate, I can vouch for the fact that this a culturally-sophisticated book, even if he gets the details of signal/noise filtration wrong on page 167. Or whatever. (Not caring much, I'll have to take his word on it.)
  
  I can understand why this book has hurt feelings, since the author adopts a cavalier and often snide tone toward those who have experienced success in the market. But, come on here, it isn't as though he's picking on crippled children; his targets are high-risk traders - they should have thicker skins. In any event, the streak of self-deprecation that runs through this book is obvious. The author humorously portrays HIMSELF as a petty, jealous, greedy snob. It's an ironic pose and -if your ego's not wrapped up in these things- it's pretty damn funny.
  
  There is a growing market for the philosophical business book. Rather than panning Taleb's book, the critics above should write their own. If anyone can explain "praxeological analysis" with the same style and grace that Taleb has brought to black swans, heuristics and biases, then I will eagerly buy their book, too.
  
  
• A time thief - listen carefully to the negative reviewers
  By A3PJZLH2GBCGRA on 2007-01-26
  Some readers of this type of book don't want to be distracted by important ideas when seeking nuggets about how to make wads of money. So when deciding to purchase this book, I dismissed the many criticisms as reflecting a lack of appreciation for narrative style and individuality. This was a mistake.
  
  Other reviews amply (and accurately) document the author's narcissism, so I won't belabor that. I'll limit myself to two points.
  
  1) Taleb extensively details the weaknesses of others' investment strategies, and explains how some pretty dopey people can do quite well, at least in the short term (basically, due to luck). He also frequently touts the superiority of his approach. Unfortunately, he never clearly specifies what that approach is. I kept turning the pages in a vain search for an affirmative, lucid explication of his advice. Near as I can tell, and to save the need for anyone to read the book, here it is: make frequent, small bets on long shots because the market consistently underestimates their frequency and therefore underprices them. You may bleed a little along the way, but the home runs will more than compensate for your discomfort. Details on how to implement this strategy are left, implicitly, as an exercise to the reader.
  
  (As an aside, I note that occasional success of investors due to chance is entirely compatible with standard financial theory, but unusual returns at the tails are not. Taleb fails where Mandelbrot succeeds - see below - in making the distinction clearly and explaining why it exists.)
  
  2) Taleb takes the reader on a meandering, though occasionally entertaining, tour of some of the trendiest ideas in academia - evolutionary psychology, behavioral economics, social network theory, chaos theory (now getting a bit stale) - as well as some chestnuts from statistics, finance, and philosophy. Don't get me wrong. I think these things are all important, interesting, exciting, and worth reading about. And Taleb makes no gross misrepresentations of their content, at least none worth quibbling about. But neither does he demonstrate anything but a superficial understanding, failing to go beyond their obvious implications. It reads like "here's another interesting thing I've learned a little about" rather than a deep synthesis relating them to each other and/or to investing.
  
  I recently finished Mandelbrot and Hudson's "(Mis)Behavior of Markets" and the contrast could not be more stark. Though I have significant problems with it (perhaps to be detailed in a separate review), theirs is an excellent book, well worth reading. Mandelbrot also suffers, though less frequently, from the bouts of pomposity and self-promotion as Taleb; the difference is that Mandelbrot has some justification, having been a leader in more than one area of applied mathematics. Where Taleb scratches the surface, Mandelbrot goes to the core. Neither provides any "get rich quick" answers, but you will learn something from Mandelbrot.
  
  Normally, I would cut some slack for a book where the sentences are generally well constructed and lots of interesting ideas are integrated, but in this case, so little value is added (especially relative to its exaggerated sense of erudition and self-importance) that I cannot recommend it at all.
  
  
• Read Against the Gods, not this book!
  By A1QGRAU44UW1Z1 on 2003-04-24
  I have never written a book review before, but I feel obligated to dispell the ideal that this book has even one redeeming quality. This is by far the worst book I have picked up in years. It was so bad that I couldn't waste my time finishing it. After 60+ pages I realized the author had nothing interesting or unique to say--I skimmed the rest and found no value to continuing. I can certainly agree with his premise: indeed there are many random events in the world and we often look for correlation or causation where there is none. However, the author spends his time developing storylines that have no basis in reality nor support his thesis while promising to get to the real meat in later chapters. As for building a solid and interesting framework on mathematics? Forget it. 100 pages into the book and the big revelation he provides is there is a difference between mean and median due to skewness in data? Big revelation!. Please tell me something else I learned in statistics 101.
  This author should be named Narcisist, not Nassim. The rest of the book is devoted to propping himself up in his own version of an occupational caste system, where he is on some higher plain because he fancies himself to be some sort of quant jock who knows basic statistics and probabilities. In the meantime, he manages to insult MBAs, academics, specific authors, people who live provident lifestyles, successful but "non-quant" traders, scientists (those with poor social and hygene skills), dentists, and on and on. Pompus, self-serving, and hollow.
  Please read Against the Gods by Peter Bernstein. It is excellent, engrossing, compelling, well written, with wonderful mathematically-sound examples. The only thing I can say bad about Bernstein is that, to my dismay, he endorsed this book.
  
  
• A near miss from an original and smart market practitioner
  By on 2002-02-04
  If you have ever listened to economists, analysts, or other supposedly intelligent commentators and wondered is it just you or are they really talking complete rubbish, then this book is for you. Taleb has produced a witty, informed, and entertaining book that debunks much of what passes for analysis and success in financial markets.

  Taleb has a clear admiration for Physics and adopts a physics approach. He dives right into the heart of the problem, finds the essential truth - that markets are random, the path we observe is only one of many, and that we cannot make proper assessments on trading strategies until a sufficient time-period has elapsed to give a significant sample which includes those rare but headline-making events that occur from time-to-time. He picks out several consequences of this phenomenon. The principal manifestation is Survivorship Bias (that those experiencing good fortune at picking the right investments will be elevated to guru status, until one of those rare but extreme events removes them from their pedestals). There are many other useful insights here; how the shorter the time-scale we use to study performance the more noise we see; how journalists comment on the one random outcome we observe and interpret it as significant news; how pseudo-science has spread to all sorts of unsuitable areas; and how groups of traders form collective opinions which defy rational analysis (the so-called "fire-station" effect); how lucky traders become all puffed-up with their own success, and the link to Seretonin levles and evolutionary benefits of being able to identify winners in competitions. This entertaining section gives compelling reasons for sharing Taleb's scepticism about much of the modern financial world.

  Physics, however, has difficulty providing a complete explanation for any system more complex than a single particle. Real problems benefit from a more all-round approach, or a more heuristic analysis. Taleb's single parameter analysis of success in financial markets and the behaviour of participants and institutions soon runs into contradictions and problems. He frequently talks about "good traders" and "bad traders", but sees this only in terms of buying low-probability events which he insitst are universally undervalued, and gives pseudo-real case histories of bad traders who blew up buy selling these lo-probability events. Yet he also comes up with a list of distinguishing features of bad traders; so could a bad trader become self-aware and learn to become a good trader, but still sell low-frequency extreme events? Is anyone who buys extreme events a good trader? More analysis is needed here to give a water-tight case.

  When discussing bubbles such as the recent tech-stock bubble, Taleb's single variable explanation misses a whole dynamic. Everyone knew it was a bubble that would burst, yet many made money from buying into it, and some who held out against going into it at lost their jobs. The mass-psychology that sucks so many people into bubbles against their better judgement is a fascinating subject. There is much that can usefully be said, and now would be a good time to say it, but it isn't said here.

  Elsewhere, Taleb's explanations also fail to enlighten as much as they might. The influence of randomness in medical research and medical practise is mentioned briefly, and the use of statistics in the legal profession gets a mention as well. There are many legal cases where statistical arguments have formed the basis of judgements and mis-judgements, from the Dreyfus case right up to the Sally Clark case in the UK today, yet all we get is a couple of throw away-examples from the O.J. Simpson trial. Perhaps if Taleb had spent less time reading high-society gossip pages and a bit more time researching his arguments he might have produced more significant arguments here.

  Taleb has written a useful, readable, and thought-provoking book. Reading it is probably a better use of your commuting time than reading the Wall Street Journal. Yet the book ultimately disappoints because Taleb is neither original enough to fill an entire book with his musings and thoughts, nor diligent enough to give a properly researched presentation of his case.
  
  

• Don't waste your money!
  By AUZHWO992YCLU on 2004-06-08
  (...) There's nothing here which would surprise anyone even remotely acquainted with the market; it's just a shallow and poorly-structured rehash of well-known ideas, mixed in with a few ill-timed rants and some copious name-dropping by the author. If you're interested in behavioural economics (which I heartily recommend), then try Belsky & Gilovich's popular book or some of the excellent online articles; if you want market war stories, then "Liar's Poker", "When Genius Failed", and "Inventing Money" are all far better bets.

  The one thing I can say in Taleb's praise is that he raises some nice ironies in a self-reflexive sort of way. One of his "big ideas" is survivorship bias, to which the publication of this book provides a counter-example.
  
  

• Fooled By Randomness
  By A2TZ57JB4XNMIV on 2005-02-07
  The principal subject could have been adequately covered in a dozen pages or less. The rest of the book is just a lot of rambling. Numerous put downs of famous people that only reflected the author's lack of maturity. Also many pages of trying to convince you of his brilliance. You time and money can be better spent elsewhere.
  
  
• Rare, useful advice
  By A3F8VLSZ032KJX on 2003-11-08
  This is a book about probability and the way we misunderstand it. Author Taleb introduces the concept of the `lucky fool', and reflects on how we (wrongly) ascribe positive characteristics to the schmuck who succeeds purely as the result of luck.

  Taleb's domain (and that of the book) is the world of finance. He is quite rightfully scornful of financial journalism, which attempts to fit rationales to the most insignificant movements in asset prices. According to Taleb, most of this price activity is purely random, pointless to predict and futile to explain. The flip side is the tendency of markets (and natural phenomena) to exhibit extreme, unusual behaviour that confounds conventional theory. The occurrence of this skewed behaviour (referred to as the `Black Swan' problem) has plenty of precedents in financial markets and has bankrupted numerous traders and former experts.

  As a general rule, practical advice on financial speculation is almost always useless. If Taleb has a core belief, it is that `I may be a fool, but my edge is that I know I am'. This recognition is not an exercise in humility; it is a prerequisite for success in a world where we are continually fooled by uncertainty and causation.

  Taleb's book is a convincing, entertaining lecture on probability and human nature. His written style is little difficult to digest, possibly because of his classical influences. His insights are fantastic, though. Anyone who trades or invests should read this book, and reread it until the message sinks in.
  
  

• More or less a pretender
  By A8331CPMABSDA on 2005-10-19
  I studied finance with the best professors in the field at one of the Ivy League institutions but never have I heard from any of them the kind of self-complimentary stuff you will find in this book. I paid $12 for the book mainly because the cover looks clever and the review about a hand grenade rolling down Wall Street sounds like it could be read either way. I also bought The Misbehavior of Markets by Benoit Mandelbrot used for $5. I read about 100 pages of this book here and decided that I would just throw it away. The book may have been of interest for those with little formal education in the working of the financial market and so are still awed by big talks by one of the street's traders but people who have even one advanced course in finance would find this book boring, unoriginal, and the author a terrible bragger at best.
  
  By contrast, the book by Benoit Mandelbrot, though somewhat esoteric and not conclusive, stands somewhere near the classics of books on the new wave in finance. I highly recommend it to the serious reader and learner while advise against buying this fooled by randomness book. I learned nothing from the author. I could have written a better book with deeper insights and fewer compliments for my own self.
  
  
• repellent
  By A34MFTFJSBPIRP on 2006-04-30
  This book was a disappointment to say the least. I would like to give it negative stars, but amazon won't let me. Every soul-sucking paragraph was sheer anguish, and I am dumber for having read it. I am one of those poor souls with a compulsion to finish a book once I start reading it, and I have never been so tortured as while reading Fooled by Randomness.
  
  The ideas are mundane. The writing, on the other hand, is so stupendously, spectacularly bad, that I am embarassed for the author. His writing conveys only one thought with lucidity: his earnest belief that he is the greatest thinker who has ever lived, not just on earth but throughout the cosmos, while the rest of us are apparently a rabble of benighted, barely conscious, lizard-brained troglodytes he would feel sorry for if we weren't always telling him how truly god-awful his writing is. (By the way, Nick, noise is filtered out of a signal by frequency, not amplitude. Back to undergrad with you.)
  
  Despite his obvious desperate desire to be thought of as a scientist, Taleb does not think (or write) like one. Try Mandelbrot if you have an interest in financial mathematics, and leave Taleb to his pitiable, self-aggrandizing ramblings.
  
  Fortunately for my conscience, I have no fear of offending Taleb in this admittedly almost ad hominem review because in the book he *actually boasts* that he, as a matter of policy, refuses to read or listen to any negative criticism, likening it to Odysseus' putting wax in the ears of his crew. Riiiiight.
  
  Please, I beg you, do not read this book. Do not let your loved ones read this book. I'd say give it to your enemies, but... no one deserves that. No one.
  
  
  
• Fooled by the Author
  By on 2004-06-19
  This book has little substance on the central theme of people having a poor understanding of the cause and effect of events, and that people with poor math literacy are often misled by numbers.

  A far better book on this topic is "Innumeracy: Mathematical Illiteracy and its Consequences by John Allen Paulos.

  More than the lack of substance the tone of this book makes one think that the author doesn't respect the intelligence of others. Yet he doesn't any new value to this subject as you'll see if you read other authors on this topic. Perhaps the author was fooled by the fact that someone would publish his book, but that doesn't make him a mavin on this topic, especially since his examples are retreads.
  
  

• superfluous
  By A1IG3975LWM0IS on 2006-02-09
  This book is comprised of the author's musings on the subject of randomness. Taleb is an academic/classicist type who is embarrassed to be a trader. He brags about not watching TV, reading newspapers or engaging in small talk, and refers to himself in the book as an "intellectual snob".
  
  The problem with "intellectual snobs" is that they have an exaggerated opinion of the importance of their thoughts, lapsing into verbose tangents discussing meaningless minutiae. As a consequence, the author spends 200 pages discussing a topic that could be condensed into a few paragraphs. In fact, I will save you the time and effort by providing you with those paragraphs.
  
  Our minds are not wired to think well in the mathematics of probability, and often times ascribe meaning to events that are actually random.
  
  Funds, traders and investors often believe themselves to be experts as a result of a run of good results, when in actuality those runs were the result of randomness. For example, during the 90's many traders and investors who went long in tech stocks thought they were experts (everyone's an expert on the way up), only to find out during the subsequent crash that they were not qualified to detect major market turns, and lacked the skills and discipline to utilize trailing stops (the laws of probability dictate that every once in a rare while there will be a long run of almost uninterrupted price appreciation). The book discusses several similar examples where traders and funds blew up because they didn't properly understand the risks and became married to positions, even after those positions started crashing.
  
  That's pretty much it. The critical point it is that all of the trading dangers discussed by the author can be completely avoided by extensively testing your system to verify that it has a true statistical edge, rather than just being an artifact of random noise, and employing standard trading rules: always use appropriate stops, never average down, don't get married to a position, be flexible enough to reverse your position in a heartbeat, etc.
  
  Now that wasn't so hard, was it, Taleb?
  
  
• Pathetic Ignorance
  By A3EM1NFKTUHKS6 on 2006-04-08
  We are experiencing a dramatic shift in America where individuals are assuming greater risks. The old defined retirement benefits plans are being replaced by defined contribution plans (i.e. 401k plans). Under these contribution plans, it is the employee who makes the investments decisions and faces a loss in retirement wealth when these investments sour. Job security is not what it once was. Our future well being is becoming increasingly dependent on random events. This makes the topic in Taleb's "Fooled by Randomness" very timely. In order to make good decisions, we need to be both financially and statistically literate.
  
  Taleb's book gets us off to a good start. All too often we mistake random events with deterministic ones particularly when judging a person's past performance. If this book is worth buying it is because of the Table P.1 that summarizes how we can make faulty judgments by "being fooled by randomness." After this, it deteriorates. He does not explain important concepts correctly, and he tries to give the impression that nobody accounts for randomness. He criticizes mathematicians for ignoring randomness, even though there is an entire field in mathematics devoted to understanding randomness. Taleb is confused. Risk adverse individuals attempt to avoid the potential ill effects of randomness; however, this does not mean that they avoid the understanding of randomness. Randomness can be synonymous with vulnerability.
  
  The book is filled with contradictions where he says one thing and a few pages later reverses himself.
  
  For a PhD he has an amazingly poor grasp of probability theory. No wonder he does not like mathematicians, he does not understand the discipline. Although he claims that financial markets are unpredictable, he claims to have a trading strategy that guarantees him positive profits. Go figure. No where in his book does he discuss the concept of conditional expectation.
  
  His fictional characters are not convincing. The "risk averse" Nero is supposedly buying Treasuries when he could get a higher and equally safe after tax return with buying municipal bonds.
  
  The worst part of this book is the moral implications. All of life is uncontrolled randomness. Our decisions and our efforts do not matter and there is no role for personal responsibility. People who do try to explain randomness or who try to take responsibility are personally attacked.
  
  After writing this book, Taleb appeared on CNBC TV. He told the announcer that if a person comes into your office and uses the word "standard deviation", you should throw him out. The announcer asked Taleb why this should be done. And Taleb responded, "Because everything is not normally distributed." Do I need to say anything more?
  
  
  
• Fooled by Taleb
  By A172G0HLBFV1JI on 2007-05-31
  Slipshod thinking and appalling writing from a preening egoamaniac with a fat wallet. Of course, the great irony is that, for all Taleb's admonitions to beware survivor bias, this would never have been published if he himself had been unsuccessful in his trading.
  
  The author confesses in the first few pages that he did no research specifically for the book, and relied entirely on memory -- and it shows whenever he writes about anything not autobiographical. Even then! Maybe this is a fictional memoir of a repulsive, unreliable narrator, a Nabokovian game? Taleb does claim to be a "connoisseur" of literature. The joke's on us, I think.
  
  
• meandering, inconsistent, and pompous
  By on 2002-03-12
  While trying to pass himself off as Nero Tulip, the fictional protagonist of this annoying book, he comes across more as a simple... His points are banal: that successful people are often lucky but don't acknowledge it, or that empirical distributions have fatter tails than predicted by normal distributions. Further, he's inconsistent, one moment praising the truth and beauty offered by mathematical analysis, the next slamming simpletons who make assumptions in order apply those tools (e.g., stationarity). Lastly, his pomposity would be only mildly irksome if it didn't also reflect an ignorance of why his insights are not that new, true, or interesting. I wish I didn't wast time reading the first half of this book, and have no plans to read the last half.
  
  
• Reconsidering a classic
  By A2F7XU97CYFHDY on 2006-05-10
  When FBR came out, it created a sensation among quantitative financial traders, but the arguments are primarily philosophical, not mathemtical or financial. It slowly trickled out to a wider readership and became the classic exposition of the nature of randomness in human experience. People bought it for clever writing and insight into the world of quantitative finance, but the ideas stuck with them because they are important and true in a much broader context. Yes, this book teaches how to make high risk trades without blowing up, but the bigger point is life consists of high risk trades, and there are powerful social forces dedicated to hiding that fact.
  
  Inevitably, a reaction set in and you see a lot of newer reviews saying either "I knew this all along," or "he should be nicer and more humble." While the core ideas have been explored for at least 2,500 years, there is important new insight in this book. And the only reason someone could make these points in a quiet voice today is that FBR shattered the ossified consensus and introduced a new paradigm.
  
  While it's true many of the ideas have been reflected in other works, sometimes sanded down to be less upsetting or stripped of philosophic rigor, you should go back to the original. Agree or disagree with Taleb, an educated person today has to know what he said, in his own words. This is a classic people will be reading for decades, maybe longer. Accept no substitutes.
  
  
• just how intelligent am I?
  By on 2001-09-27
  The book is disappointing because of the authors need to prove how intelligent he is compared to the rest of us mental pigmies. Although taleb infers thaty he has a small ego in trading, it seems that in everything else in life he suffers from a massive one (ego). there are some interesting facets in the book ,but these are clouded by the disappintments.
  
  
• Solid assessment - poor presentation
  By on 2002-09-19
  This is an tough book to review. I give it 3 stars because the points he makes are valid and should be more widely understood. Unfortunately you must wade through much rambling to find them. He seems more interested in proving that he's as arrogant as people expect him to be than in discussing the key points at any length. With a fairly strong background in probablility assessment and risk evaluation I was able to follow his arguments reasonably well but I suspect anyone who does not already understand probabilities and Monte Carlo modeling will not understand the points he is trying to make. This is because the explanatory points are almost always one sentence buried in a rambling paragraph. Our society would be better off if every citizen understood his points but I don't think this book will enlighten many people. On a side note - I don't know what book several of the other reviewers read but it wasn't this one. Nowhere does this book discuss specific trading strategies or approaches or taxes. Several reviewers also clearly didn't follow the discussion. The point of survivorship bias is not that it proves LUCK is responsible for a given individuals success in any of the many areas where it holds. The point is that you don't KNOW the source (luck or skill) and you can't PREDICT future results.
  
  

• The Black Swan: The Impact of the Highly Improbable
• When Genius Failed: The Rise and Fall of Long-Term Capital Management
• Against the Gods: The Remarkable Story of Risk
• Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street
• Liar's Poker: Rising Through the Wreckage on Wall Street