In Fooled by Randomness, Taleb takes the reader on a fascinating journey through our perceptions of success, failure and luck. He takes the mathematics and psychology of probability and explains them with reference to the financial markets and life in general. Concepts such as survivorship bias, induction and our genetic lack of fitness for the modern world are laid before the reader in a highly entertaining and accessible narrative that sweeps across the trading rooms of New York and Chicago, passing along the way Solon (the Ancient World's wisest man), the philosophy of Karl Popper and the pronouncements of Yogi Berra (it ain't over till the fat lady sings) amongst others. At the end of the journey, the reader is left with a deep understanding of the role randomness plays in all our lives. Taleb delves into the reality of the lucky fool being "in the right place at the right time" who claims some brilliantly conceived plan was behind the success. He explains his ideas against a backdrop of the greatest and most visible forum possible for investigating these misconceptions - the world of trading and derivatives.
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This book is about luck -- or more precisely how we perceive and deal with luck in business and life. Set against the backdrop of the most conspicuous forum in which luck is mistaken for skill -- the world of trading -- Fooled by Randomness is a captivating insight into one of the least understood factors in all our lives. Writing in an entertaining and narrative style, the author succeeds in tackling and explaining three major intellectual issues: the problem of induction, the survivorship biases, and our genetic unfitness to the modern world.
The book is populated with an array of characters, some of whom have grasped, in their own way, the significance of chance: Yogi Berra, the baseball legend; Karl Popper, the philosopher of knowledge; Solon, the Ancient World's wisest man; the modern financier George Soros; and the Greek voyager Ulysses. In addition we meet the fictional Nero, who seems to understand the role of randomness in his trading life, but who also falls victim to his own superstitious foolishness.
But the most recognizable character of all remains unnamed -- the lucky fool in the right place at the right time. The embodiment of the "Survival of the Least Fit." Such individuals attract devoted followers who believe in their guru's insights and methods. But no one can replicate what is obtained through chance. A monkey banging on a keyboard may eventually produce the Iliad, but would you sign him to write the sequel? Are we capable of distinguishing the fortunate charlatan from the genuine visionary? Must we always try to uncover non-existent messages in random events? It may be impossible to guard ourselves against the vagaries of the Goddess Fortuna, but after reading Fooled by Randomness we can be a little better prepared.
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Table of Contents:
1. If you're so rich why aren't you so smart?
2. A bizarre accounting method
3. A mathematical meditation on history
4. Randomness, nonsense, and the scientific intellectual
5. Survival of the least fit - can evolution be fooled by randomness?
6. Skewness and Asymmetry
7. The problem of induction
8. Too many millionaires next door
9. It is easier to buy and sell than fry an egg
10. Loser takes all - on the nonlinearities of life
11. Randomness and our brain: we are probability blind
12. Gamblers' ticks and pigeons in a box
13. Carneades comes to Rome: on probability and skepticism
14. Bacchus abandons antony
Epilogue: Solon told you so
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