Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets |
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Author:
Nassim Nicholas Taleb
By Penguin
Average Customer Rating: 
List Price: £9.99
Our Price: £3.40
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 Enjoyable read - if you can endure Taleb's God complex!, 2009-10-22
I agree with most of the reviews here - good and bad. Taleb has some interesting things to say, but clearly thinks extremely highly of himself. I was more amused at just how fantastic he thinks he is rather than irritated, which helped me enjoy the book far more than the guys giving it 1 star!
A lot of the book should be taken with a pinch of salt. His mathematics may be a bit ropey, but many of the ideas are stimulating and the trader-bashing quite funny. If you can endure Taleb's epic smugness without feeling angry that you've further lined his pockets you'll definitely enjoy this book!
 Fooled by Hype, 2009-12-28
I don't have a problem with this writer's ego or his over-reliant dependence on anecdote. I don't have a problem with his evident erudition and how often he chooses to display it. I don't even have a problem with what might be his central thesis (though as a mere layman I still think that one has to make decisions in investment matters, as in life).
The problem I have with this book is that it is unstructured to the point of unreadability. If you are going to write a book on the power of randomness it absolutely doesn't help your case if you also apply randomness to the organisation of your material. I came out of this book gasping for air and never before have I so looked forward to reading the other reviews on here to help explain to me what the book I've just read was actually about.
Foolishly (and entirely non-randomly) I bought Taleb's other book at the same time as this one. Such wisdom as it might contain will now remain undiscovered by me.
I'm sure there are several books that touch on Taleb's chosen subjects that are much better thought out and considerably easier to read. One of those that I've already been lucky enough to find is Dan Gardner's beautifully accomplished (and vitally important) Risk: The Science and Politics of Fear, for unlike Taleb's book rarely a day goes by that I don't think about some aspect of its content, as opposed to barely having a clue about what the content is in the first place.
 Fooled by his own sense of importance, 2009-08-18
'Fooled by Randomness' is clearly a text which provokes different responses in different people. This was of particular appeal to me when purchasing the book as I think that any text which has landed 5 star glittering reviews whilst also being branded with 1star "stay away" warnings is worth a look.
Having finished the book I can certainly identify with this split reaction. You can't help but acknowledge some of Taleb's ideas as being extremely relevant to many aspects of life and particularly, the over hyped status attributed to much of the banking world. His opinion that much of a trader's financial performance is due to market noise and randomness rather than his/her speculative skill will, I'm sure, strike a particularly welcome tone to many of us who are feeling the effects of the current financial meltdown. It's surely about time that bankers get over their egos and face up to the responsibility of their risk taking decision processes.
Having said this, Taleb's writing style is incredibly narcissistic. He is clearly very pleased with himself for assimilating a host of ideas which predominantly stem from mathematical, philosophical and psychological literature and applying them to an economic framework. This, in my opinion, is where he starts to go wrong. His book is incredibly anecdotal and has a habit of touching on a topic for a few paragraphs and then moving on (often saying that he will return to something later in the book). This flighty approach means that he never really gives you a sense of closure on any of the ideas he is talking about. He boasts an impressive reading list at the end of the book which he pretentiously rams into many of the chapters, for instance, often quoting the results of empirical psychological findings. However, his book is anything but empirical. It is speculative and subjective and if anything, Taleb comes across as being more of a glorified gossip than an intellectual thinker.
For example, p224 he introduces the concept of Wittgenstein's ruler and applies it to how he deals with receiving criticism regarding his book: "Unless you have confidence in the ruler's reliability, if you use a ruler to measure a table you may also be using the table to measure the ruler....The point carries practical implications: The information from anonymous reader on Amazon.com is going to be all about the person, whilst that of a qualified person, is going to be all about the book."
I think that this statement truly reveals Taleb's inconsistency as, in my opinion, this statement is merely an extension of the very principles which he has used in this book. Surely he is fooling himself by refusing to acknowledge the credibility of an anonymous Amazon.com reviewer's opinion who may not, in his eyes, have the relevant professional qualifications. In my opinion, this shows a lack of rational thought and an inability to see through his pompous image. Forgoing this, if I were to apply this same level of discriminatory analysis to him using Wittgenstein's ruler, I would say that this book reveals more about him than any of the concepts he discusses. Most of the literature he has assimilated has been around for years and exists, in the most part, in a far more empirical form than the way he portrays it. One could argue he over attributes importance to himself and his profession by borrowing psychological concepts to promote the ideas like "behavioural economics". This is clearly a logical cross disciplinary connection but, when combined with his arrogance, it makes you feel like he is suggesting that the psychological principles in question have only gained importance once they have been fitted to their economic framework.
I can't help but think that Taleb is a bit contradictory when it comes to the alignment of his message and that of his writing style. All in all, a bit of a confused book but worth reading to get your head around the arguments he puts forward. Definitely not a ground breaking text. This is a clear illustration of the exaggerated egos which exist within the banking world. Taleb clearly loves himself.
Mathematically illiterate claptrap, 2009-07-28
This review covers both "The Black Swan" (TBS) and it's predecessor work "Fooled by Randomness" (FBR).
An old joke speaks of a book entitled "How to Be Taller" published in two volumes, one for each foot. IMO the only way that TBS and FBR will enlighten people is by allowing them to see farther if they stand on them.
If you are going to write books about randomness and rare events, then it helps to know what you are talking about. Unfortunately Taleb appears not to have taken so rudimentary a precaution. Random processes have inherent non-determinism. Non-linear processes do not but they do exhibit chaotic behaviour that is mistakenly regarded as random.
Taleb fails to make an essential distinction between chaotic and random systems. (See for example page 142 of TBS where he states, "... There is no effective difference between my guessing a variable that is not random but for which my information is partial or deficient ... and predicting a random one ...") This is true *only* if the guessing itself is random. Otherwise one may readily design experiments that can distinguish between non-linear and truly random systems. Needless to say, the inferences that he makes from his mistaken premise are flamboyantly unsound.
In his examples what Taleb calls random behaviour is often the behaviour of deterministic but non-linear systems. Such systems have the property that small changes in initial conditions may produce large differences in trajectories through the phase space. This is true even when the changes are less than the error inherent in measuring the relevant quantities. Such a system can take markedly *different trajectories from distinct initial states that are indistinguishable by measurement*. Hence there is often negligible correlation between measured initial states and observed trajectory - but such lack of correlation *does not* imply that the underlying process is random.
Statistical methods are fine for truly random processes but non-linear processes do not generally satisfy the conditions under which statistical methods can be validly applied. The quantitative financial analysts that Taleb describes as being "fooled by randomness" are in fact merely incompetent users of inappropriate mathematical modelling techniques.
On the evidence of his writing, and despite his oft-cited "voracious reading", I regard Taleb as mathematically illiterate. the criticism that he makes of others apply just as well, IMO, to himself.
 The genius and irriverence of Mr Taleb, 2009-10-02
I thoroughly enjoyed this book, which I read straight after the other book from Taleb (The Black Swan: The Impact of the Highly Improbable).
I enjoyed this book more than The Black Swan and in hindsight I would recommend to read this one first. Many of the brilliant insights of Fooled by Randomness are again referred in the Black Swan. The latter book expands and operationalises many of the concepts the author presented in Fooled by Randomness.
My key takeaways of Fooled by Randomness:
- Decisions and events affecting our lives are much more influenced by randomness than we lead ourselves to believe
- We are not biologically designed to comprehend nor appreciate the impact of randomness, rather we create stories, create connections see causes and behind events also where there are none to be found
- We need to be skeptical of forecasts and experts, especially of forecasts about systems where rare high-impact events have a preponderant influence on cumulative outcomes (such as financial markets).
- Success is far more dependent on chance (luck) than on skills and capacity. Even further, and contrary to common sense and perceptions, skills and capacity are not even necessary for success.
On the latter point, please also see Malcolm Gladwell's Outliers: The Story of Success, another Five-Star as far as I am concerned.
NNT's writing style is rather original and full of personal anectodes, often straight from the gut. Some readers may find his stile irritating. I found it perfectly in line with the content of the book, which also takes a big sway at the establishemt of pseudo-science and conventional economics thinking.
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Binding: Paperback
EAN: 9780141031484
ISBN: 0141031484
Label: Penguin
Manufacturer: Penguin
Number Of Pages: 368
Publication Date: 2007-05-03
Publisher: Penguin
Studio: Penguin |
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