Fooled by Randomness Quotes

“Mathematicians of probability give that a fancy name: ergodicity. It means, roughly, that (under certain conditions) very long sample paths would end up resembling each other. The properties of a very, very long sample path would be similar to the Monte Carlo properties of an average of shorter ones. The janitor in Chapter 1 who won the lottery, if he lived one thousand years, cannot be expected to win more lotteries. 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.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Most of the examples used in this book were created with my Monte Carlo generator, which I introduce in this chapter. Yet it is far more a way of thinking than a computational method. Mathematics is principally a tool to meditate, rather than to compute.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“not to be swayed by well-sounding remarks. I remind myself of Einstein’s remark that common sense is nothing but a collection of misconceptions acquired by age eighteen. Furthermore, What sounds intelligent in a conversation or a meeting, or, particularly, in the media, is suspicious.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“It means that rational thinking has little, very little, to do with risk avoidance. Much of what rational thinking seems to do is rationalize one’s actions by fitting some logic to them.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“In a now famous experiment they found that the majority of people, whether predictors or nonpredictors, will judge a deadly flood (causing thousands of deaths) caused by a California earthquake to be more likely than a fatal flood (causing thousands of deaths) occurring somewhere in North America (which happens to include California).”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“I later got some plausible explanation from evolutionary psychology, which claims that such physical manifestations of one’s performance in life, just like an animal’s dominant condition, can be used for signaling: It makes the winners seem easily visible, which is efficient in mate selection.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Does the book industry suffer from the classical “expert problem” with the buildup of rules of thumb that do not have empirical validity? More than half a million readers later I am discovering that books are not written for book editors.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“This text is a series of logical thought experiments, not an economics term paper; logic does not require empirical verification (again there is what I call a “round-trip fallacy”: It is a mistake to use, as journalists and some economists do, statistics without logic, but the reverse does not hold: It is not a mistake to use logic without statistics). If I write that I doubt that my neighbor’s success is devoid of some measure, small or large, of luck, owing to the randomness in his profession, I do not need to “test” it—the Russian roulette thought experiment suffices.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“That all millionaires were persistent, hardworking people does not make persistent hard workers become millionaires:”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“The same applies to the conventional values of persistence, doggedness and perseverance: necessary, very necessary. One needs to go out and buy a lottery ticket in order to win. Does it mean that the work involved in the trip to the store caused the winning? Of course skills count, but they do count less in highly random environments than they do in dentistry.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“The wise man listens to meaning; the fool only gets the noise. The modern Greek poet C. P. Cavafy wrote a piece in 1915 after Philostratus’ adage “For the gods perceive things in the future, ordinary people things in the present, but the wise perceive things about to happen.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Borrowed wisdom can be vicious. I need to make a huge effort not to be swayed by well-sounding remarks. I remind myself of Einstein’s remark that common sense is nothing but a collection of misconceptions acquired by age eighteen.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong (Fooled by Randomness) with us seems to flow from it.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“This point has applications in evolutionary biology, evolutionary game theory, and conflict situations. A mild degree of unpredictability in your behavior can help you to protect yourself in situations of conflict.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“We can see that my activity in the market (and other random variables) depends far less on where I think the market or the random variable is going so much as it does on the degree of error I allow around such a confidence level.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Now, what if you were going to Chicago, where you are told that the weather, while being 60 degrees, will nevertheless vary by about 30 degrees? You would have to pack winter and summer clothes.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Unless something moves by more than its usual daily percentage change, the event is deemed to be noise. Percentage moves are the size of the headlines. In addition, the interpretation is not linear; a 2% move is not twice as significant an event as 1%, it is rather like four to ten times. A 7% move can be several billion times more relevant than a 1% move!”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Significance: How did I decide that it was perfect noise? Take a simple analogy. If you engage in a mountain bicycle race with a friend across Siberia and, a month later, beat him by one single second, you clearly cannot quite boast that you are faster than him. You might have been helped by something, or it can be just plain randomness, nothing else. That second is not in itself significant enough for someone to draw conclusions. I would not write in my pre-bedtime diary: Cyclist A is better than cyclist B because he is fed with spinach whereas cyclist B has a diet rich in tofu. The reason I am making this inference is because he beat him by 1.3 seconds in a 3,000 mile race. Should the difference be one week, then I could start analyzing whether tofu is the reason, or if there are other factors.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“There is a category of people, generally finance academics, who, instead of fitting their actions to their brains, fit their brains to their actions. These people go back and unwittingly cheat with the statistics to justify their actions. In my business, they fool themselves with statistical arguments to justify their option selling.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“As Sherlock Holmes noted in the Silver Blaze case—the curious thing was that the dog did not bark. More problematic, there are plenty of scientific results that are left out of publications because they are not statistically significant, but nevertheless provide information.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“The problem is that they did not want these tables to exhibit any form of regularity. Yet real randomness does not look random!”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Remember that nobody accepts randomness in his own success, only his failure”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“They will find something he did before when he was successful that he has subsequently stopped doing, and attribute his failure to that. The truth will be, however, that he simply ran out of luck.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“that even a broken clock is right twice a day.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“In a nutshell, the survivorship bias implies that the highest performing realization will be the most visible. Why? Because the losers do not show up.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“The randomness content of his profession and the number of monkeys in operation.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Theories that have not yet been known to be wrong, not falsified yet, but are exposed to be proved wrong. Why is a theory never right? Because we will never know if all the swans are white”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“By generalization, I started to label a rare event as any behavior where the adage “beware of calm waters” can hold. Popular wisdom often warns of the old neighbor who appears to remain courtly and reserved, the model of an excellent citizen, until you see his picture in the national paper as a deranged killer who went on a rampage.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“In other words, history teaches us that things that never happened before do happen. It can teach us a lot outside of the narrowly defined time series; the broader the look, the better the lesson. In other words, history teaches us to avoid the brand of naive empiricism that consists of learning from casual historical”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

“Median means roughly that 50% of the people die before eight months and 50% survive longer than eight months. But those who survive would live considerably longer, generally going about life just like a regular person and fulfilling the average 73.4 or so years predicted by insurance mortality tables. There is asymmetry. Those who die do so very early in the game, while those who live go on living very long.”
― Nassim Nicholas Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets