Rating: 
Summary: Epistemology at its Best!
Review: This book is unsettling because it asks questions that have no answer. Yet these are questions worth asking: how do we derive our knowledge in the presense of randomness. It strikes at the fundamental problem of knowledge. Taleb seems to carry Popper to its absolute limit. This is not a business book. Look at the more technical document on the author's web site on the structure of "uncharted" and "untamed" stochasticity.
I wrote my thesis on Pareto-Levy distributions, much to the annoyance of academics seeking problems that have a solution. I think that one needs to have the intellectual courage to look at these problems. Sadly, aside from Mandelbrot & Taleb very few thinkers do.
Rating: 
Summary: A key topic but a weak book
Review: Taleb makes some valid observations on most peoples' weak skills at understanding randomness. But these are fairly simple, and described well elsewhere. And, what a bore Taleb is! He opens the book with one Nero Tulip (a weak pun on his own name) and then spends most of the book arrogantly and humorlessly talking about himself. He aspires to intellectualism, and drops more names than I can count. Some he idolizes, others he treats with extreme contempt. The second part of the book is a discombobulated collection of platitudes. Random, without a discernible signal, like most of what he tells us we shouldn't be reading. There is a thinly veiled promotion of his hedge fund (if "all the quants" use poor tools and misunderstand randomness, where does his wisdom come from?) An inelegant book that includes a lecture on personal elegance. There is little of substance here. Save your money and time.
Rating: 
Summary: An Interesting Premise but a Disappointment
Review: Upon seeing an ad for this book in The Economist, I immediately bought this book. Unfortunately, while the book is highly readable and interesting, I felt that Taleb only touched on half of the equation. He spends the entire book highlighting the fact that most people cannot accurately understand probabilities and randomness. However, he does not get shift into prescriptive mode at all aside from highlighting the fact that he has built his living on buying options in anticipation of unforeseen events. I read the whole book hoping for a punch line, but it never comes. Three stars for making me think, but I believe he did not cover this topic sufficiently to satisfy my initial enthusiasm for the book's topic.
Rating:
Summary: A near miss from an original and smart market practitioner
Review: If you have ever listened to economists, analysts, or other supposedly intelligent commentators and wondered is it just you or are they really talking complete rubbish, then this book is for you. Taleb has produced a witty, informed, and entertaining book that debunks much of what passes for analysis and success in financial markets. Taleb has a clear admiration for Physics and adopts a physics approach. He dives right into the heart of the problem, finds the essential truth - that markets are random, the path we observe is only one of many, and that we cannot make proper assessments on trading strategies until a sufficient time-period has elapsed to give a significant sample which includes those rare but headline-making events that occur from time-to-time. He picks out several consequences of this phenomenon. The principal manifestation is Survivorship Bias (that those experiencing good fortune at picking the right investments will be elevated to guru status, until one of those rare but extreme events removes them from their pedestals). There are many other useful insights here; how the shorter the time-scale we use to study performance the more noise we see; how journalists comment on the one random outcome we observe and interpret it as significant news; how pseudo-science has spread to all sorts of unsuitable areas; and how groups of traders form collective opinions which defy rational analysis (the so-called "fire-station" effect); how lucky traders become all puffed-up with their own success, and the link to Seretonin levles and evolutionary benefits of being able to identify winners in competitions. This entertaining section gives compelling reasons for sharing Taleb's scepticism about much of the modern financial world. Physics, however, has difficulty providing a complete explanation for any system more complex than a single particle. Real problems benefit from a more all-round approach, or a more heuristic analysis. Taleb's single parameter analysis of success in financial markets and the behaviour of participants and institutions soon runs into contradictions and problems. He frequently talks about "good traders" and "bad traders", but sees this only in terms of buying low-probability events which he insitst are universally undervalued, and gives pseudo-real case histories of bad traders who blew up buy selling these lo-probability events. Yet he also comes up with a list of distinguishing features of bad traders; so could a bad trader become self-aware and learn to become a good trader, but still sell low-frequency extreme events? Is anyone who buys extreme events a good trader? More analysis is needed here to give a water-tight case. When discussing bubbles such as the recent tech-stock bubble, Taleb's single variable explanation misses a whole dynamic. Everyone knew it was a bubble that would burst, yet many made money from buying into it, and some who held out against going into it at lost their jobs. The mass-psychology that sucks so many people into bubbles against their better judgement is a fascinating subject. There is much that can usefully be said, and now would be a good time to say it, but it isn't said here. Elsewhere, Taleb's explanations also fail to enlighten as much as they might. The influence of randomness in medical research and medical practise is mentioned briefly, and the use of statistics in the legal profession gets a mention as well. There are many legal cases where statistical arguments have formed the basis of judgements and mis-judgements, from the Dreyfus case right up to the Sally Clark case in the UK today, yet all we get is a couple of throw away-examples from the O.J. Simpson trial. Perhaps if Taleb had spent less time reading high-society gossip pages and a bit more time researching his arguments he might have produced more significant arguments here. Taleb has written a useful, readable, and thought-provoking book. Reading it is probably a better use of your commuting time than reading the Wall Street Journal. Yet the book ultimately disappoints because Taleb is neither original enough to fill an entire book with his musings and thoughts, nor diligent enough to give a properly researched presentation of his case.
Rating:
Summary: Measure Theory for the UncommonThinker
Review: Paul Levy the famous french mathematician would have written this book if he were ever to explain his theories in plain "English". The brilliance of this text is to make a significant contribution to our understanding of familiar observable phenomena (such as, preponderance of millionaires in Park Avenue, the preponderance of excessive praise for all new products, the existence of Microsoft and Bill Gates, the above average performance of all Hedge Funds ...). Dr. Taleb has the unique ability to think from first principles the most complicated of mathematical theories and propound his own. A must read ... for all Ph.D's in probability, statistics & finance. Dr. Shivaji Rao, Managing Director, Derivative Product Group, FIMAT USA Inc.
Rating: 
Summary: An Interesting Look At Success
Review: Nassim Taleb, a successful options trader in his own right, takes an interesting "intellectual" look at the role of randomness, or "luck" in success. One of the general theses of the book is that the risk that an actor took to gain their ex poste success must be factored in when determining the probability-adjusted success of that particular individual. He weaves in extreme (and appropriate) examples to make this point - a janitor who plays lottery tickets (and wins) vs. a conservative dentist that cleans teeth but doesn't play lottery tickets. If you would re-run their lives in some alternate histories, the dentist would come ahead, perhaps 999,999 out of 1,000,000 - you could hardly call the winning janitor more successful in other words. Absolutely, the one nit that I would make however is that such cases are not the rule, but the exception. To determine the role of luck or randomness in these other cases would be nearly impossible, since we can't re-run lives. He takes this issue (the role of randomness) and runs with it (correctly in my estimation) to make the point that extreme success in life is a result in many cases of such randomness - that a "survivorship bias" exists (in the media in particular) that focuses on those that succeeded in strategies that would not be successful in most cases - the home runs were hit in the same (but not in as extreme) example as the lottery winner. Somebody has to win, just by random chance, and to ascribe this success solely to talent, skill, or insight is wrong. And the media doesn't get this. To some degree one might say that this is the rambling of a conservative professor who has been successful in hitting singles and doubles in life, but has missed the home runs. And they would be right (I believe), however Mr. Taleb is correct to a degree in his statements. Where I believe that he is wrong is in three areas. First, successful people - those that add value to their area of expertise - are better able to determine the forward probabilities of decisions than the general public. In practical terms, this might mean that they are better able to pick a good stock (ie the market might think it has a 20% likelihood of success, but based on their better skill or knowledge, they determine that the probability of success is closer to 60% - and they make a killing by bringing this knowledge to the market). Second, people that take these risks (and succeed) - are the people that drive the world forward. These are the entrepreneurs that make new discoveries, find new markets, and add wealth and prosperity to the people around them. If you were to re-run their lives again perhaps they would turn out differently -- but then perhaps we would be the worse for it. Third, and simply, luck counts. Notwithstanding some of my comments, I really enjoyed this book, it made me really think about things, and my wife (a non-financial person) picked it up just devoured it as well. 4 Stars.
Rating:
Summary: Overuse of Platitude!
Review: I just did not find the book as great as the majority of the reviewers. Frankly, the only thing that really stuck out in this book was the number of times the author used "Platitude", and maybe that was for effect, but who knows? The premise was fine, and the stories and examples were cute, they just did not go anywhere. Mr Taleb just bounces from one story to the next, again perhaps for effect. Had the author built on the statistical probabilities of any of his stories, and maybe the stories themselves it would have been a more satisfying read. He mentions Victor Neiderhoffer and how much he admires him, but does not talk about him blowing up his trading account, or the chances of it happening. Mention of Long Term Capital Management, perhaps the single biggest financial catastrophe of our time. But no explantion to the reader of what happened, why it happened, or what were the chances of it happening. On and on the author went with unfinished story after story, just no meat in my opinion. Others have found the book interesting, so there is a chance I am wrong.
Rating:
Summary: Both rigorous and fun to read
Review: The book is very rigorous albeit in a little cavalier tone of voice which can get irritating for those unused to reading such texts devoid of the usual formalism. He may be too idiosyncratic.
1) I went and checked the example on page 167, which seems to correspond to a periodic function with noise. The noise can be removed using many possible methods (including Fourier transform or smoothing kernels used in stat). Nonacademic reviewers making statements should update their textbooks and/or not focus on trivialities.
2)Taleb has sometimes a tendency to tempt you with a topic and then forget about it. He should have made the book a little longer...or perhaps write another.
Rating: 
Summary: muzzy reading
Review: I found the book diffcult to follow because the author is writing down to his audience. He tantalizes us with broad generalizations but fails to provide the kind of back-up detail which will support his conclusions. His language in many instances is vague and the syntax unclear. I suspect the trouble is that he knows what he is talking about, but can't express his ideas clearly in layman's languague and he dare not get into the math of the subject because it is too complex. People who enjoyed the book mostly seemed to do so because he uses a variety of examples and techniques to provide amusing or human traits, but they simply do not add up to a clear exposition of his main theme. which, I think, is that when it comes to randomness few people can detect the signal from the noise. P. T. Barnum expressed it clearly and simply years ago. "There's a sucker born every minute."
Rating:
Summary: Taleb fooled by himself
Review: Comments on Nassim Taleb's ?Fooled by Randomness? I must first say that I am not a trader or a mad scientist trying to tell were the stock market is heading. I am just an engineer and an entrepreneur for quite a while. Being interested by stock markets I read Taleb's book and found it rather annoying. Not because of the points Taleb is trying to run home, nor because I certainly agree with the fact that a lot of ?Masters of the Universe? are mere mortals with a little more luck than others - You see the same happening among entrepreneurs - No, the reason is the tremendous amount of platitude that fill the book from page one. Over the course of the past 15 years I have had some success and some failures but overall I'm making rather good and I am happy with my life. I believe I was a bit lucky on average. So why did I need to react on this book?
Taleb's tone is arrogant as if he was revealing some great information to all the blind in this world. He also thinks that the world starts and finishes with the stock markets and that the rest is a sort of decoration to entice the otherwise dull trader's world.
Now let me point out to some mistreated scientific laws. Survivorship bias caught Taleb right in the face At page 159 Taleb is mentioning a supposedly embarrassing experiment with doctors being asked about the probability of a patient being struck by a given disease. As it comes out in Taleb's book, only one out of five professionals (doctors) got the answer right, the answer was 1/51. Taleb therefore concludes that you should's trust your doctor when he tests you for a disease, given (in this particular example) that you have roughly 2% chance of actually being sick. Well, I disagree ferociously!
If, like Taleb, you spend your time reading reports from the pharma industry on how they test the quality of a new drug, instead of trying to imagine what is the every day life for a doctor in his practice you are biased, big time. Let me explain : If you take randomly 1000 people knowing statistically that one is stricken by that particular illness and put them trough a test that is accurate (minus false positives) at only 95%, you get indeed 1/51 probability. Does this correspond to a real life situation?
No! In real life, say we have 10% hypochondriacs and say this particular illness hurts (which most do), so what is the population you would find in the doctor's practice? 90% of the people who go to a doctor and feel sick are actually sick. Say a doctor treats a thousand patience in a given period of time, 900 will be sick and 100 will not. The test will find 905 people stricken out of a 1000 patients which translates into a 90.5% chance of being sick once you decided to go to your doctor's practice because you don't feel well. This changes the odds that your doctor might be right after all, doesn't it ? On this illustration I must say I don't doubt doctors are not very good at mathematics but some of those having taken the test maybe just extrapolated live experiences from their everyday dull life (as we read in Taleb's book). Using Taleb's filtering method would have gotten me an F in electronics class Though I understand what Taleb is trying to run home with the example of page 167, what he says is plain wrong. To dissociate noise from signal, you don't do amplitude filtering but frequency filtering. You take your signal function as amplitude over time and do a Fourrier transform to get amplitude over frequency, the noise's frequency being at least a factor of scale higher than the signal itself, with an in-band filter you can keep only the band of frequencies around the signal and get rid of the noise. I would advise Mr. Taleb to read an electronics book sometimes to get his basics right. Final words Having spoken with friends in the banking business (that is a Swiss platitude), I must say that Taleb's central point is certainly interesting and revealing for them and I give the book some credit for that. Nevertheless, the constant bashing of others, the less than rigorous approach, some too quickly drown conclusions make me say the book lacks credibility. My final words are for Mr. Taleb to think about: In French we say ?La culture c'est comme la confiture, moins on en a, plus on l'étale? (culture is like jam, the less you have of it, the more you spread it out thin).
Solon would appreciate, he who saw the future of Croesus in the bowels of a bird! Pierre Kladny
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