Rating: 
Summary: BE FOOLED NO MORE - (by charlatans, anyway)
Review: I normally dislike business books and approached this one with a slight diffidence. The title, nonetheless, seemed interesting. However, I soon became drawn into it and found its writer so brilliant as to become envious of his obvious ease at weaving excerpts of knoweldge acquired from many fields to produce such entertaining and insightful writing. Apart from investing and finance the book really attempts to answer the question: are great men made by circumstances or are they born ? I doubt this book will become a bestseller; it's simply too original and intellectual to attract the average minds that run business and finance. This book is about philosophy, science, psychology, history and literature as much as it is a useful guide to investment strategies - though I doubt Mr, Taleb would appreciate the last qualification. Those privileged enough to read it will share an amazing secret and advantage.
In short, I loved it.
Rating: 
Summary: Thoughts on Randomness
Review: One of the most important lessons of Taleb's book is the importance of risk management, the ability to recognize how the market might go against your initial analysis. Poor traders, he notes "get married to positions," are quick "to change their story" and have "no precise game plan [...] as to what to do in the event of losses." In contrast, strong traders possess the ability to revise their opinions "rather rapidly, without the slightest embarrassment." Taleb's own trading style employs the use of "skewed bets," in which he tries to profit from "rare events that do not tend to repeat themselves frequently, but, accordingly, present a large payoff when they occur."Unfortunately, Taleb does not give us enough examples of such trades from his own experience--or even the experience of others--to whet our appetite on this score. Instead, we get a heavy dose of Taleb's defensiveness about how the role of chance makes certain traders less successful than others. Like many financial professionals turned writers, he also tries too hard to convince us of his erudition. Finally, the sheer number of the trading caricatures he employs becomes strident. Taleb's strength, however, lies in his ability to make the discussion of randomness lucid; his discussion on skewness and asymmetry, in particular, is excellent. In this sense, Fooled by Randomness is an interesting complement to books like Burton Makiel's A Random Walk Down Wall Street, which provides more better historical background on some of the manias that Taleb mentions. And in the end, Taleb offers a peace offering to those that he mocks. "I am just like every single character whom I ridiculed in this book."
Rating:
Summary: Fooled By Nerdiness?
Review: This is a good book; although not a great one. It is, though, a "must read" for anyone involved in the business of convincing others (and indeed themselves) of facts based on statistical "evidence".
Taleb is clearly a gifted thinker but I, as some other readers, couldn't help feeling annoyed by him before I reached the middle of the book. The last time I felt this uncomfortable was reading Michael Moore's last diatribe. Not that I disagreed wholeheartedly with either of the writers' polemic; just that I felt the arguments were so heavily soaked in personal anger as to reduce the rational arguments to a one-sided shouting match.
Taleb's clear failure to communicate to his colleagues and bosses says as much about Taleb's communication skills as it does of his acquaintances' foolishness.
Sadly, and perhaps unsurprisingly, Taleb is not without foolishness himself in some of his spurious arguments (used to back up perfectly rational concepts). When he claims that if someone had invested 1 million dollars in the US stock market in the 1920's he would now effectively own the whole of the listed market we know he's not quite serious. Even assuming that the rest of the investors would sit quietly on the sidelines for 80 years, try finding someone in the 1920's with a million bucks to speculate!
In terms of the foolishness of using past performance and past experiences to predict the future what other tool do we have?
My understanding of the "Bigger Fool Theory of Investing" is that fundamentals are irrelevant to the future returns of an investment. While analysts may look at P/E ratios and capitalized values of companies and claim that the stock is fundamentally over-valued, what of a Cezanne?
Many institutional investors hold works of art in their portfolios for the purpose of tax-efficient investment growth and diversification. Fundamentally, a Cezanne may be worth $50 US tops (and that's if you're prepared to pay current prices for the paint and canvas).
There's nothing rational about paying US$49 million for a Cezanne....unless of course you can sell it to a "bigger fool" later for US$55 million.
Mr Taleb's failing is that he leaves out the "human nature" side of making money (and being successful); success which can never be ascribed mathematically.
That being said, this book, though, despite the "chip-on-shoulder" tone of Mr Taleb (who incidentally, I suggest he goes out and, randomly, finds a nice supermodel to have a nice life with!)should be read.
However, it can only be after you have consumed the excellent "Against the Gods" by Peter Bernstein.
Oh, and Mr Taleb, don't overestimate our foolishness. Or if you do, don't tell us!
Rating:
Summary: Provocative and Informative
Review: Nassim Taleb describes the survivorship bias, which if not carefully allowed for, may mislead a trader into using a flawed investment strategy. This bias is probably well understood by those with some background in statistics, however to those who do not have such a background and who rely, for instance, on 'backtested' trading systems my advice is - read this book before you stake another dollar in trading! This book could act as a useful reminder even for those trained in statistics for, as Taleb points out, where probability is concerned, our emotionals often get the better of our rationality. Taleb writes in an opinionated style which I would describe as provocative rather than tedious. He uses an underlying theme of classical references which lends an entertaining art-science balance to the content.
Rating:
Summary: Slashdot Review
Review: summary: Debunking fallacies of observation, Taleb reminds us of the pervasive ineffables that complicate life at every turn. Marc Tardiveau writes:
I just finished Nassim Nicholas Taleb's Fooled by Randomness. It is an enjoyable book, written engagingly by an interesting character -- the kind of book that makes you think twice about certain things (for instance, the fact that you're not dead: is that really because you're so darn good, or does dumb luck play a part?) Although written all the way back in 2001, this book is more relevant than ever, since one of its major topics is the impact of unpredictable events on markets, insurance, and our perception of life in general. In fact, Taleb makes a living from unforeseen events; these days, that seems like a rather cunning niche. The main topic of the book is the fact that all humans are simply terrible at judging probabilities. Taleb is a securities trader, so a lot of the book revolves around financial probabilities, but his argument is mainstream and requires absolutely no knowledge of the markets. The book details examples of people wildly misjudging risks and probabilities in many contexts. Often that misestimation is understandable in advance of certain events, but harder to excuse after they've occurred; Taleb hits pretty hard on what he calls "data snoopers," his term for people who back-fit theories to existing data. One of the most notorious examples is the Bible code (which has been thoroughly debunked), but Taleb argues that analysts who spend their time trying to find patterns in historical market data are no different: if you try long enough and hard enough, you will unavoidably find apparent regularities, which can be extremely compelling when seen in isolation. In context, though, they dissolve into nothing but meaningless statistical anomalies. Taleb rightfully compares these searches for meaning to the famous monkeys and typewriters parable. Taleb's best example of poor probability intuition is probably the infamous survivor bias, which is our tendency to be disproportionately impressed by success. We almost always ignore the fact that, for one success story, there are many failures. But we seldom hear about the failures (just like we never hear about the many theories that didn't fit the data). So it's all a game of numbers: out of 10,000 traders, a few are statistically bound to be successful, even if they are nothing more than lucky idiots. The fact that they succeeded does not mean anything. It doesn't mean that they are bad traders, but it doesn't mean that they are good traders either, because on average somebody had to succeed. One of Taleb's hot buttons is that people tend to be too confident in what they know. He argues convincingly that we should take everything, including science, with a grain of salt. Writing about Karl Popper, he points out that there are only two kinds of scientific theories: those that are demonstrably false, and those that are not yet demonstrably false. An irksome (but sadly true) observation, yet most people behave as if what they know is eternal truth. One could of course argue that Popper's observation is but another kind of truth, but I tend to put a lot more trust in people who question what they know than in people who don't. Another of Taleb's peeves is the human tendency to over-attribute every random event (the old post hoc, ergo propter hoc). For instance, a commentator saying that "the Dow went down ten points today on concerns about Iraq" is talking nonsense: there is no way anyone can tie such a small market move to any particular reason. I found this specific point (which in retrospect is blindingly obvious) especially enlightening, as I am embarrassed to admit that, until now, I just accepted those market comments at face value. Taleb also has some fun at the expense of economists and analysts, especially those whose predictions turned out wrong, but who claim that the theories were in fact right, and that the facts simply weren't supposed to be that way. This is what he calls denial of history, and is common among investors and gamblers (the two being of course close cousins). The style of the book is informal and funny, and often meandering. We hop from one topic to the next, which occasionally may detract from the book's continuity, but overall the author's points come through loud and clear. Ironically for a man who advocates self-doubt, Taleb is starkly self-confident, though not in an irritating way. Taleb is an intriguing, multi-cultural, iconoclastic character that has been around Wall Street for a while, and now runs his own small firm. Malcolm Gladwell (author of The Tipping Point, an absolute must-read for anyone who owns a brain) has written an excellent article that shows how Taleb's reasoning runs counter to just about every bit of conventional Wall Street wisdom. If you're interested in the markets, especially derivatives, and how Taleb trounces most of Wall Street's voodoo doctors, this moderately technical interview from 1996 is worth reading too. Overall, a warmly recommended book.
Rating:
Summary: great essay
Review: great introspective effort. he does not say it s all luck only that we err by underestimating it.
the 2nd ed is more aggressive
Rating: 
Summary: Stinks! Hardly an ounce of substance or intelligent thought
Review: This book was in a word - HORRIBLE. There was absolutely no depth in the material, not even for someone with NO probability background or experience in the markets. I think a child could pick up this book and read many of the passages and just say - well duh. The parts of the book that don't deal with the absolute simplest most obvious and overplayed probability concepts deal with nothing but the author claiming most successful traders have only been very lucky, stripping them of all the skill they have (which I suspect the author only wishes he possessed). He has no good data (empirical or anecdotal) to back it up, but only makes up fictional characters to back up his claim - which is like me saying most Frenchmen don't bathe and then making up a French character who never bathes do back up my claim. If you are interested in learning anything about the markets or probability theory, do not waste your money on this book. If you are interested in reading ideas about the market from an experienced trader, do not waste your money on this book. If you are interested in reading about "the hidden role of chance in the markets and in life", do not waste your money on this book. This is the best advice I can give you.
Rating: 
Summary: more meat but not more stories
Review: nassim added quite a bit of meat, mostly in the back. I thought he would bring more characters and discuss events like september 11 or the nasdaq bubble, but he only added technical material. It is still fun to read.
Rating:
Summary: Second Edition Review
Review: Don't be fooled by both randomness and second editions. The second edition is basically the same as the first edition, so if you already own it, you can save your money.
Rating:
Summary: Fooled By Nerdiness?
Review: This is a good book; although not a great one. It is, though, a "must read" for anyone involved in the business of convincing others (and indeed themselves) of facts based on statistical "evidence".
Taleb is clearly a gifted thinker but I, as some other readers, couldn't help feeling annoyed by him before I reached the middle of the book. The last time I felt this uncomfortable was reading Michael Moore's last diatribe. Not that I disagreed wholeheartedly with either of the writers' polemic; just that I felt the arguments were so heavily soaked in personal anger as to reduce the rational arguments to a one-sided shouting match.
Taleb's clear failure to communicate to his colleagues and bosses says as much about Taleb's communication skills as it does of his acquaintances' foolishness.
Sadly, and perhaps unsurprisingly, Taleb is not without foolishness himself in some of his spurious arguments (used to back up perfectly rational concepts). When he claims that if someone had invested 1 million dollars in the US stock market in the 1920's he would now effectively own the whole of the listed market we know he's not quite serious. Even assuming that the rest of the investors would sit quietly on the sidelines for 80 years, try finding someone in the 1920's with a million bucks to speculate!
In terms of the foolishness of using past performance and past experiences to predict the future what other tool do we have?
My understanding of the "Bigger Fool Theory of Investing" is that fundamentals are irrelevant to the future returns of an investment. While analysts may look at P/E ratios and capitalized values of companies and claim that the stock is fundamentally over-valued, what of a Cezanne?
Many institutional investors hold works of art in their portfolios for the purpose of tax-efficient investment growth and diversification. Fundamentally, a Cezanne may be worth $50 US tops (and that's if you're prepared to pay current prices for the paint and canvas).
There's nothing rational about paying US$49 million for a Cezanne....unless of course you can sell it to a "bigger fool" later for US$55 million.
Mr Taleb's failing is that he leaves out the "human nature" side of making money (and being successful); success which can never be ascribed mathematically.
That being said, this book, though, despite the "chip-on-shoulder" tone of Mr Taleb (who incidentally, I suggest he goes out and, randomly, finds a nice supermodel to have a nice life with!)should be read.
However, it can only be after you have consumed the excellent "Against the Gods" by Peter Bernstein.
Oh, and Mr Taleb, don't overestimate our foolishness. Or if you do, don't tell us!
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