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The cover of Fooled by Randomness

Fooled by Randomness

Nassim Nicholas Taleb, 2001

Why we mistake luck for skill in markets and in life: how survivorship, rare events and hindsight make lucky fools look like geniuses, and how to live with chance.

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20 parts, about 27 minutes to read.

Why read it

  • Argues that we routinely mistake luck for skill and noise for meaning, especially in markets and careers
  • Teaches you to judge a result by the alternatives that could have happened, count the hidden losers and respect rare disasters
  • Nassim Nicholas Taleb draws on his trading life, philosophy and probability, and admits he works around his own biases rather than escaping them

Who it is for

  • Traders and investors who judge managers by past returns
  • Professionals comparing themselves with successful peers
  • Readers drawn to probability, skepticism and Stoic philosophy

What the summary covers

  1. Prologue: Mosques in the Clouds1 min
  2. Part I: Solon's Warning1 min
  3. If You're So Rich, Why Aren't You So Smart?2 min
  4. A Bizarre Accounting Method1 min
  5. A Mathematical Meditation on History2 min
  6. Randomness, Nonsense, and the Scientific Intellectual1 min
  7. Survival of the Least Fit: Can Evolution Be Fooled by Randomness?2 min
  8. Skewness and Asymmetry2 min
  9. The Problem of Induction2 min
  10. Part II: Monkeys on Typewriters1 min
  11. Too Many Millionaires Next Door1 min
  12. It Is Easier to Buy and Sell Than Fry an Egg2 min
  13. Loser Takes All: On the Nonlinearities of Life1 min
  14. Randomness and Our Mind: We Are Probability Blind2 min
  15. Part III: Wax in My Ears1 min
  16. Gamblers' Ticks and Pigeons in a Box1 min
  17. Carneades Comes to Rome: On Probability and Skepticism1 min
  18. Bacchus Abandons Antony1 min
  19. Epilogue: Solon Told You So1 min
  20. Postscript: Three Afterthoughts in the Shower1 min

Recommended by

  • Malcolm GladwellAuthor of Blink
  • Robert J. ShillerAuthor of Irrational Exuberance
    We need a book like this.

About the author

  • Nassim Nicholas TalebEssayist, former option trader and New York University professor
    • Born 12 September 1960 in Amioun, Lebanon
    • Parents: Nagib Taleb, oncologist and haematologist, and Minerva Ghosn, anthropology researcher
    • The Lebanese Civil War (from 1975) cost his family much of its wealth and political influence
    • Schooled at the Grand LycĂ©e Franco Libanais in Beirut, then university in Paris
    • MBA from Wharton, PhD from the University of Paris
    • Senior trading positions at major banks; ran his own derivatives firm
    • Retired Distinguished Professor, Finance and Risk Engineering, NYU Tandon
    • Relation to topic: 21 years as a risk taker before researching probability; Skin in the Game is the fifth volume of the Incerto

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