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

4.01 of 5 stars 4.01  ·  rating details  ·  20,657 ratings  ·  841 reviews
Fooled by Randomness is a standalone book in Nassim Nicholas Taleb’s landmark Incerto series, an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world we don’t understand. The other books in the series are The Black Swan, Antifragile,and The Bed of Procrustes.
Paperback, 368 pages
Published August 23rd 2005 by Random House Trade Paperbacks (first published 2001)
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Yeah, you see. I’ve just checked and most of the other reviews of this book do pretty much what I thought they would do. They complain about the tone. This guy is never going to win an award for modesty and he probably thinks you are stupid and have wasted your life. And it gets worse – like that quote from Oscar Wilde that has tormented me for years: “Work is the refuge of people who have nothing better to do”, this guy reckons that if you work for more than an hour or so per day you are probab ...more
Riku Sayuj

The modern world regards business cycles much as the ancient Egyptians regarded the overflowing of the Nile. The phenomenon recurs at intervals, it is of great importance to everyone, and natural causes of it are not in sight.

~ John Bates Clark, 1898

Yeah, right!

~ Nassim Nicholas Taleb, 2001
Renowned statistician George Box once said, “All models are wrong, but some are useful.” The author of Fooled by Randomness is all over the first part of this statement, but apparently doesn’t consider it part of his job as an iconoclast to say anything about the second. Taleb goes to great lengths to point out how some of the original assumptions made in investments and finance have blown up in people’s faces. Yes, unusual events do happen more often than a normal distribution suggests. Yes, re ...more
I love the theses that he has in the book, but jesus christ, this is horribly written.

I think the powerful ideas could have been condensed down to a New Yorker length article:
1. We tend to see the "survivors"; by hiding those who have failed, our understanding of many systems is skewed.
2. Leveraged betting on conventional wisdom provides consistent returns in the short run, but can explode when something weird happens (his "black swan idea").
3. You can reproduce the results of many systems by s
"Expect the unexpected" -- an aphorism that almost completely summarises the book. Cliches exist for a reason, but 196 pages later I feel the point has been well made.

Taleb is a stock market trader. As a trader, he believes that there is no way in general to predict the stock market -- that there are so many variables that the resulting stock price is indistinguishable from pure noise. Unfortunately, his profession is filled with people who believe that they *can* predict the market. In fact, so
Dec 14, 2008 Carolyn rated it 5 of 5 stars
Recommends it for: everyone. The concepts in this book are invaluable for those developing critical thinking skills.
Shelves: economics
This is the best book I have read all year, closely followed by his other book, The Black Swan. Fooled by Randomness is one of that select group of books that changes your mind entirely. Once I read it I could never look at the world the same again, nor could I take my old assumptions for granted.

We are so accustomed to looking at the world and seeing patterns that we do not always understand that we may be seeing randomness and imposing a pattern where none belongs. Taleb talks about the variou
I'm not certain if it was this book I read or Black Swan by the same author. Importantly I was not convinced by the blurbs or the reviews that there is any great significance in which one, if any, of these two books you may read.

It is one of those books with an interesting premise that grows steadily less interesting as you read. And as I read I had the growing feeling that the book could have been conveniently summarised in a dozen and a half bullet points with a few anecdotes tacked on for amu
One of my business school professors raved about this book. I expected to get an entertaining and informative investment professional's take on how our irrational tendencies keep us from applying basic probabilities that would help us make better decisions.

Instead, this book read like a pretentious, ranting diary. In the introduction, the author brags that he ignored nearly all of the suggested changes his book editors made (he labels book editors along with journalists, MBAs, and most social sc
This is a book by a trader with an intellectual streak -- although he might say he’s an intellectual with a trading streak. Nassim Taleb's book is highly idiosyncratic and personal, which is both what lends it a lot of its interest and what occasionally makes it irritating. Overall, he does not seem like a likeable man, and in fact is probably proud of that fact. But, it does get kind of tiresome to be told for the 5th or 10th time how unimpressed by wealth he is. In fact, he is clearly impresse ...more
Kai Schreiber
A nice thesis (humans are unable to correctly assess risk and probability and therefore fall into all kinds of traps) wrapped in pompous and befuddled writing. At times the logic and flow is so jumpy and flawed that I thought there was something wrong with my copy.

There is something wrong almost constantly, but the biggest WTF moment came for me, when Taleb, who constantly reminds the reader that everybody else is a fool and it's just him who has insight and the tools to master probability, talk
Marvin chester
You can't learn anything from this book; it's just a rant. The author's message is an incessant din of, 'I'm smart. They're stupid'

"trading rooms were populated by people ..devoid of any introspection, flat as a pancake..." p28

"these scientists ... devoid of the smallest bit of practical intelligence" p 30

The author likes the word 'devoid'.

"I was saved from the conversation of MBAs."

"but i could not conceal my disrespect ... as he could not make out the nature of my conversation" p.31

"a journal
Sarah Clement
This book is a lot of painful reading for little reward, as there was nothing truly remarkable or revelatory about Taleb's insights. Most of what can be said of this book has already been said by other reviewers on GoodReads, so I will just briefly recap here: he is incredibly unlikeable, and infuses the book with anecdote and a general disdain for most of humanity, while exemplifying many of the characteristics he rails against. His insights will not be news to anyone who has read even a little ...more
Tony Cohen
This is one of the best books I have ever read. It has everything in a book that I yearn for....interesting ideas...some of which I don't grasp because hey are too clever for me...a smug narrator who seemingly knows more than everyone else...and a well-written and pleasing style.

Here is the crux of the book. Brokers have a very common weakness. They fail to appreciate that the likelihood of an event can not be the only factor one looks at when deciding to make a move. The likelihood, and the cos
The author says right at the beginning in his 20+ page preface that the book is intentionally left unstructured so that it may resemble the flow of his thoughts as and when they popped up. And that I believe is the problem. He seems to go around in circles repeating his ideas and thoughts, coming back to the same points, pulling in unrelated anecdotes while already inside one, leaving thoughts hanging without any form of closure, and generally ensuring you end up doing exactly what he says you s ...more
Greg Linster
Using his trademark aphoristic bent, Friedrich Nietzsche wrote: “Arrogance in persons of merit affronts us more than arrogance in those without merit: merit itself is an affront”. I’ve come to realize that some people find Nassim Taleb’s arrogance quite repugnant, but, personally, I find it rather charming. I suspect that the same people who find Taleb’s arrogance off-putting are the people who wish they possessed a shred of his erudition. Nietzsche was certainly on to something; it’s hard to av ...more
Steve Bradshaw
Nassim Taleb has to be a strong contender for the title of Most Pretentious Author of the 21st century. Despite his obnoxious writing style, he has created an interesting synthesis of existing ideas that speak powerfully to societies inability to appreciate the role of chance when looking back at events, and to underweight the probability of extremely unlikely outcomes.

Unfortunately these ideas come littered with classical references, none of them properly explained, that do little to strengthe
While reading this book some odd prejudices from my childhood, a long gone and forgotten, came to mind. Wearing a particular t-shirt made my basketball team lose; crossing my fingers the night before a test and going to school from a particular hidden route helped me score higher; or that whenever i learned a new word i noticed that many people started using it as well, as if they just learned it themselves or probably copying me.
Idiotic as these ‘observations’ were, looking back at them some y
The author continually pontificates that random events happen in life. But he neither uses actual events or statistics. He merely invents parables to expound on his points. He continues down this train of thought until he reaches the conclusion that the ultimate success and failure of some people can primarily be explained by luck. The author’s most famous exclamation is that the 40 years of investment success experienced by Warren Buffett, "may be by chance." He claims that with the number of i ...more
In his witty, informative, sober yet often ludicrous and sarcastic tone, Taleb expounds on the simple yet unsolvable problem of inference. This problem is as old as Solon at least, who already warned against the human tendency to infer from little empirical evidence rules and predictions expected to apply in general context, especially in the future. The echo of Solon's warning comes across the book and is embodied by Popper's (naive, as some say) falsificationism and his suggestion not to take ...more
This is a reread of Taleb's first discourse on probability and markets, which I wanted to reread after reading The Black Swan earlier this year. I still found the ideas important and well organized. There was just a hint of the author's attitude that literally permeated the second book, making this a much more effective read.

Anyone reading both books might get the impression that this guy is an infalible trader. He is, if there are regular market catastrophes. He started his own fund based larg
Well, if you can get beyond the fact that Nicholas T Taleb most likely hates you, his arguments are valuable. The idea of the book is that we discount the true probablistic picture of most situations and make decisions that we think are smarter than they are... we are lucky enough just not to get caught. He hates people who think they made wise decisions but were, in fact, just fortunate not to experience the bad outcomes. Hates them. They are so incredibly stupid. The neat idea I found myself c ...more
May 17, 2007 CJ rated it 3 of 5 stars
Recommends it for: people who think they are better than journalists, pundits, economists, or sociologists
The book is an easy read and most of what it offers can be gleaned from undergraduate level statistics and psychology classes. Specifically: a catalog of unintuitive statistical results, and explanations/anecdotal examples of many psychological biases, and a lecturer with a swollen ego.

I read a used copy of this book lent to me by a friend who peppered it with wonderful marginalia. My favorite of these captured the narrative tone well in response to the author making a fairly mild generalizatio
I love this book. It's like a course in critical thinking and the use of the scientific method to make important decisions instead of falling into a number of errors of logic that seem to be the defaults for the human mind throughout history. It's also frequently hilarious. I wish this book had existed, and I'd read it, when I was in high school, and if I had the power to do so, I'd make it a required course there now. Of course, that would never fly, given that it would equip people to see thro ...more
Colin Bendell
The bottom line is that our brains are really hyper active pattern matchers. We see patterns where they don't really exist and we have an over tendancy to see causation where it isn't (aka "hind-sight" / "survivor" bias). Put another way, our brains are ill equipped to handle probability and decision making in uncertainty. We tend to believe stupid things and make poor decisions because of these deficiencies. It takes a lot of extra work to overcome our own propensities toward silliness.
Now, two stars are not bad, they mean "it was ok." And for me, the book was ok.

Having taken several probability and econometrics classes, I really respect how scientists get around the problem of uncertainty. Probability is a powerful tool, but we are not well informed yet. And to tell the truth, the way probability is taught doesn't help either: textbook would like to lose track of real life and our minds are not engineered to fathom abstract things so well.

I agree with Taleb's main ideas enoug
Vasil Kolev
Увлекателна и приятна книга. Основната и идея може да се повтаря твърде много из нея, но поне според мен авторът не е прекалил и всичките примери са пходящо направени. Винаги може да се намери човек за какво да се заяде, но като цяло изводите и идеите са си съвсем правилни.

Препоръчвам я на всички, които са им интересни икономиката, финансите и като цяло ролята на случайността в живота. Книгата би подействала и доста приземяващо на хора, които се взимат твърде насериозно.
The first chapter was so funny I was laughing out loud, and compelled me enough to go ahead and purchase the 'Black Swan', but having finished the book am wondering if the chapter was probably ghostwritten cos the humour just stopped there, I did not discover even sarcasm. All the wonderful promise of some new insights presented with solid humor, a bitter medicine with sugar, was swept away as I waded through the rest of the book. While the theories / ideas presented are enlightening, as most re ...more
Shehab Hamad
nassim nicholas taleb, the improbable best selling author of the black swan believes that success is illusionary (at times it seems he believes everything is illusionary – it’s all random, all luck!). his main thesis is that luck is often behind what we normally perceive to be success and that humans are hard-wired to under-estimate the role that randomness plays via various biases:

sample bias. (over-generalizing or generalizing based on unsuitable data sets, winners only for instance). hindsigh
I would have given the book 5 stars but there were some grammatical and syntax errors that bothered me. I guess I am used to editors who fix that kind of thing. But maybe that's not a good thing, maybe language irregularities are the way a language grows, so what one person calls an error another could call progress. But hey, don't we need some kind of standard, I mean where is the stability?
Aha - that is one of the issues this book tackles - the randomness of events that shakes us up. We expec
The problem I had in reading this book was that I couldn't remove two comedy characterisations from my mind. The first was that the narrative voice reading the text in my head was that of Artie Ziff, he of the "busy hands" on The Simpsons.
The second was the Harry Enfield character who is "Considerably Richer Than You". If you bumped into Mr Taleb at a dinner party, you'd be expecting him to quickly interrupt your conversation with the observation, "Excuse me, I couldn't help but noticing that I
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A little repetitive? 3 45 Jul 09, 2013 10:44PM  
  • The (Mis)Behavior of Markets
  • 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
  • Irrational Exuberance
  • Reminiscences of a Stock Operator
  • Manias, Panics, and Crashes: A History of Financial Crises
  • The New Market Wizards: Conversations with America's Top Traders
  • Devil Take the Hindmost:  a History of Financial Speculation
  • More Money Than God: Hedge Funds and the Making of a New Elite
  • Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor
  • The Essays of Warren Buffett: Lessons for Corporate America
  • Super Crunchers: Why Thinking-by-Numbers Is the New Way to Be Smart
  • Fooling Some of the People All of the Time: A Long Short (and Now Complete) Story
  • More Than You Know: Finding Financial Wisdom in Unconventional Places
  • A Random Walk Down Wall Street
  • When Genius Failed: The Rise and Fall of Long-Term Capital Management
  • Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
  • The Myth of the Rational Market: Wall Street's Impossible Quest for Predictable Markets
Taleb has devoted his life to problems of uncertainty, probability, and knowledge. He spent two decades as a trader before becoming a philosophical essayist and academic researcher in probability theory. Although he now spends most of his time either working in intense seclusion in his study, or as a flâneur meditating in cafés across the planet, he is currently Distinguished Professor of Risk Eng ...more
More about Nassim Nicholas Taleb...
The Black Swan: The Impact of the Highly Improbable Antifragile: Things That Gain from Disorder The Bed of Procrustes: Philosophical and Practical Aphorisms Dynamic Hedging: Managing Vanilla and Exotic Options Talentidentification,  Selection And  Development

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“Heroes are heroes because they are heroic in behavior, not because they won or lost.” 56 likes
“Those who were unlucky in life in spite of their skills would eventually rise. The lucky fool might have benefited from some luck in life; over the longer run he would slowly converge to the state of a less-lucky idiot. Each one would revert to his long-term properties.” 17 likes
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