Rating: 
Summary: Fooled by "fooled by randomness"
Review: I initially enjoyed reading the book although I was irritated by Taleb`s persistent egoistic writing style (without a track record to back it up),and disagreed with some of his core views that showed a lack of understanding of probabilities.In fact,I was more disappointed after watching his interview describing rare events,the man behind the curtain and for criticizing "triumph of the optimists" for not taking into account survivorship bias.His comments gave away his superficial understanding of statistics,probabilities and his inability of deep critical thinking since "triumph of the optimists"is the only book I know that took into account that specific phenomenon.Mr.Taleb,if you took the time to analyze further,you`d have discovered that the authors used historical newspapers for the data used in their
research,so no survivorship bias of any kind was involved.
After watching the interview,I reread the book and was able to point to more flaws than I did the first time.
For instance,his implications that Niederhoffer is one of the lucky fools or that Jim Rogers doesn`t understand the role of chance since he never buys options were not well researched and explained.In fact,I have both of these fellows` books.The former is one of the top books I read,well researched with enough data to back every assertion.While,like fooled by randomness, the book criticizes all the popular methods of trading,unlike fooled by randomness,it has data to back up the criticism; and unlike fooled by randomness gives the alternative in the second part.
The other book while not as deep as Niederhoffer`s,is definitely more entertaining than Mr.Taleb`s open ended randomness theory.
Which brings me to the second part of the criticism of fooled by randomness..."the I don`t know part".
While Mr.Taleb qualitatively described randomness, admittedly in an entertaining way,that even I was initially fooled by the amount of non founded, random,qualitative observations in the book,he still didn`t give an answer as to how you can account for its existence in your life.His answer came on a later chapter "I DON`T KNOW".
I am wondering if Mr.Taleb used the same "I DON`T KNOW" logic for his PHD thesis on randomness.
Overall there are better books on the phenomenon of randomness and statistics out there.
The book is definitely more entretaining than most books on technical and fundamental analysis,however it lacks the deep understanding of the very phenomenon it tries to treat.
Rating: 
Summary: interesting tidbits scattered through text
Review: A lot of chaff, but some interesting tidbits. Some of the philosophizing is also engaging.
Rating: 
Summary: Unconventional and thought-provoking.
Review: To anyone who has ever traded the markets long enough to survive the occasional blow-up, Nassim's book gives one plenty to think about. I've had my own share of "fat-tail" events over the past eight years while I evolved from amateur trader to professional money manager, and only when one's mind gathers a need to address such issues does a book like this become more relevant. You know how the saying goes, "When the student is ready, the teacher will come."Practitioners with rigorous experience in the markets and who place importance in critical-thinking approaches will find value in the unconventional thought patterns presented in this book, and will make one think about the nature of one's past successes in the market and the biases inherent in one's methodologies to reach such success. This is highly relevant for critical thinkers who (1) practice prudent money management rules and (2) speculate on the market. For money management practioners, the concepts of bias exposure and the often-raised 'black swan' problem (i.e., no matter how many confirming data points you present, you can never really prove something is always right, but with only one contradicting piece of evidence, you can prove something is wrong) are central themes of the book, and increase one's awareness and ability to implement risk management methodologies to control for changing fundamental landscapes and the unexpected 'five-sigma' events (which occur more frequently than models suggest)--concepts alone that are worth more than the value of the book. This book is also noteworthy for speculators who wish to develop an increased awareness of the nature of the 1-2% of your trades that can blow up a good chunk of one's entire equity. The mark of a mature speculator is one who learns that prevention of blow-ups can be far more valuable than an outright win. This book leads you further along that path. From someone who lives and dies by the everyday decisions in the market, I highly recommend this book for your consideration.
Rating:
Summary: Tortured by randomness
Review: This book is an extended narrative on our inept ability to account for randomness. First, we don't do a good job of attributing the correct proportion of random luck to skill in life's ups and downs. We assume our good fortune is skill and bad fortune is luck. We don't split it down the middle, it is either luck or skill, not a blend. Taleb calls this probability blindness. Probability blindness is a term for our inability to maintain the existence of simultaneous realities. The glass is about full or about empty. It cannot be 'about full' and 'about empty' simultaneously. Second, we forget the drop outs, and focus on the survivors. Taleb calls this the 'Survivor bias'. If you train a million monkeys to pound on a million typewriters for an infinite amount of time, one of them will write an exact duplicate of a Shakespeare sonnet. Still the 'surviving monkey' who produces a great sonnet has achieved this through pure luck.. The effort is entirely random. We are simply prone to attribute the 'one' monkey's success with skill, just because he was randomly chosen to have the winning lottery ticket. In financial markets, a flim-flam stock broker uses the survivor bias to make big bucks. He sends 5000 people a letter saying the market is going up, and 5000 a letter saying it will go down. A month later, the 5000 recipients of the 'correct' letter, get a second letter. Half get the up message, the other half get the down message. A month later, the 2500 recipients of the winning call get a third letter, 1250 up and 1250 down. The 1250 who have now gotten 3 correct calls in a row, receive solicitations and 200 invest in the broker's offshore fund. The flim-flam man disappears with a million dollars. Why do the 200 invest? They forget that surviving the test does not imply skill. They are fooled by randomness. While interesting, this is not unfamiliar. Taleb throws in a very useful twist, though. He points out that knowing this doesn't insure we do any better. As Taleb puts it, 'my only advantage is my awareness of my frailty.' The humility invoked here raises this book to an entirely more interesting level. I was reminded of Thomas Merton's anti-biography, '7 Storied Mountain'. Like Merton, Taleb seems to spend more time contradicting himself and going on odd tangents. For example, we are treated to a digression on honorable suicides and the sweet poetry people wrote to remember the practitioners. In another section, we are advised to treat people as Martians because they become easier to ignore. Like Merton, Taleb's style of delivery tells us more than the words alone can communicate, we must fumble through the paradoxes. This isn't a book on doing probability, its about developing humility. There is no prescription for defeating our instincts, only advice for living with them. In this, you find the best the book has to offer . Taleb suggests he is tortured by probability. It is not an 'interest,' it is an obsession. How refreshing an insight. His drive doesn't come from 'reason', it comes from his emotional constitution. Not the sort of stuff you usually hear.
Rating:
Summary: Lucky or good?
Review: The central image of this interesting, erudite and somewhat self-indulgent book is the "black swan," a metaphor for both the rare event that eventually will happen, and for the fact that you can't prove a negative (the problem of induction) because no matter how many white swans you count, you do not prove that the next one won't be black. Taleb's central thesis is that many people are successful in the markets and in life not because they are clever or skillful, but because they are lucky. They are the beneficiaries of randomness. Randomness (or "luck" or "chance") is one of those illy-defined abstractions that may or may not actually exist in the real world, but is very handy nonetheless. Certainly no one has yet come up with a device that gives truly random results. Indeed even if such a device were found (say the digits of pi) how could we be sure the results are random? The human mind finds patterns in all things of any complexity from cloud formations to stock charts. But should we ever find a complex entity, say a string of numbers, in which we can discern no pattern, we can surmise that that string is not random because a purely random result would not be constrained by the requirement that there be no pattern! Thus the paradox of randomness that Taleb addresses. He argues persuasively, using evidence from science, literature, and his own experience as a derivatives trader, that the human mind is not wired to cope with randomness. He believes that we see causality and order where there is none. We think we become rich or poor based on our wise or unwise behavior, but Taleb believes that much of the time it is capricious chance that accounts for our fate. Thus Bill Gates becomes fabulously rich not because his software was the best or even because he worked harder than anyone else or because he was smarter, but because he was luckier. (Just ask his competitors!) Taleb calls the rise of Microsoft "a spectacular lucky success." (p.145) What we don't see, Taleb assures us, as we gaze upon these successes are the "alternate histories," that is, the lives of those very many who tried and failed to achieve success. Taleb uses an old con (p. 128) to illustrate this point: Suppose you are a money manager seeking clients. You send out a newsletter to 10,000 prospects predicting with absolute certainty in 5,000 of the letters that the market will rise next month, and in the other 5,000 that it will fall. If it goes up you now send out 5,000 more letters to those who received the bullish prediction, in 2,500 of them predicting again that the market will go up next month, and in the other 2,500 that it will go down. You repeat this and after seven months you will have about 78 potential clients left who have seen you predict market direction unerringly for seven months in a row! I first encountered this scheme in the world of sports betting in Las Vegas. A tout guarantees a mortal "lock" on an NFL football game, half of its sheets touting team A and the other half team B. Taleb applies this phenomenon to marketing executives, asserting, "One can make money in the financial markets totally out of randomness." (p. 80) What he means again is that one can get lucky. And this can go on for a long time. If you happened to be a "dip buyer" and traded stocks during the middle to late nineties, you did very well. There were some people who entertained only that idea, and ended up looking like geniuses. But in this "analysis" Taleb is guilty of the very bugaboo he warns against, namely that of seeing patterns in data, and assigning causality to events, where there is none. It may be the case that the "dip buyer" carefully assessed the market everyday and the result of his technical and fundamental analysis was that in virtually every case his research was the deciding factor, not any propensity to buy on dips. Was it luck or expertise? It is hard to say for sure. Well, when is it NOT luck? one might ask. Dr. Taleb anticipates this question and responds, "To be honest, I am unable to answer it." (p. 141) Taleb is on solid ground however when he warns against "data snooping." (pp.134-135) This fallacy of "fitting the data to the rule" is something every trader (and sports bettor, by the way) should know about. You can look at past results and if you look long enough you will find a pattern. That pattern usually is randomness fooling you. Bet on that pattern and you will have the same expectation that you would have if instead you threw darts at the market pages of the newspaper and bet on the stocks the darts hit. Taleb doesn't mention this, but the way to separate the chaff of the past from the wheat is to have an empirical theory first and then test that theory against the data. If your theory is a good one and the data supports the theory, you may have discovered something. This is not the same thing as fitting the data to the theory or "data snooping." This is in fact science. To find something like this in the financial markets, however, is like the alchemist's dream of transmuting lead into gold. "I am emotional and derive most of my energy from my emotions" Taleb tells us. (p. 180) This is something we all do. The difference--as Taleb happily tells us--is that he knows what drives him but most of us don't. We imagine that we act from reason.
Rating: 
Summary: Read Against the Gods, not this book!
Review: I have never written a book review before, but I feel obligated to dispell the ideal that this book has even one redeeming quality. This is by far the worst book I have picked up in years. It was so bad that I couldn't waste my time finishing it. After 60+ pages I realized the author had nothing interesting or unique to say--I skimmed the rest and found no value to continuing. I can certainly agree with his premise: indeed there are many random events in the world and we often look for correlation or causation where there is none. However, the author spends his time developing storylines that have no basis in reality nor support his thesis while promising to get to the real meat in later chapters. As for building a solid and interesting framework on mathematics? Forget it. 100 pages into the book and the big revelation he provides is there is a difference between mean and median due to skewness in data? Big revelation!. Please tell me something else I learned in statistics 101.
This author should be named Narcisist, not Nassim. The rest of the book is devoted to propping himself up in his own version of an occupational caste system, where he is on some higher plain because he fancies himself to be some sort of quant jock who knows basic statistics and probabilities. In the meantime, he manages to insult MBAs, academics, specific authors, people who live provident lifestyles, successful but "non-quant" traders, scientists (those with poor social and hygene skills), dentists, and on and on. Pompus, self-serving, and hollow.
Please read Against the Gods by Peter Bernstein. It is excellent, engrossing, compelling, well written, with wonderful mathematically-sound examples. The only thing I can say bad about Bernstein is that, to my dismay, he endorsed this book.
Rating:
Summary: Great book: what can you write when there are 136 reviews
Review: Taleb's book if fantastic. I did not buy it originally
because I was put off by the reviews that stated that Taleb was
an out-of-control egotist and name dropper. However, I read
a few interviews with Taleb and he hardly seemed to fit this
profile. So I ordered the book. It is one of the best books
I have read this year (and I read a lot). The book is heavily infused with Taleb's work and obcession:
the market. But it also covers his view of life and one of the
best discussions of how to think about statistics I've ever
read (and I collect statistics books). Taleb is a very accomplished man. He has been a successful
options trader, he wrote a respected book on options and he
has a successful hedge fund. You cannot do these things without
a healthy ego and Taleb's is indeed healthy. He escapes being
an egotist because he realizes that he has the same flaws that
he skewers others for having. The only difference between these
people and Taleb (he writes) is that he understands that he
has these flaws. Taleb has an unusual and fascinating world view. He explains
the many sides of this view and reading this book has given me
things to think about for weeks after I finished. I easily
believed Taleb's view that humans have a hard time thinking
about random events. One of our greatest strengths is the
recognition of patterns. But we also see patterns where they
do not exist. In short, we are easily fooled by randomness.
Rating:
Summary: Taleb delivers the goods
Review: Fooled by Randomness is to-the-point and amusing to boot. Taleb makes a persuasive argument without resorting to ponderous logic or mindbending mathematical formulae (which I am sure he could have done, basis the brilliant Dynamic Hedging). The book is quick and witty in describing how we underestimate randomness in our lives. An original and refreshing read.
Rating:
Summary: Probability Matters
Review: This book is a very charming literary essay on probability. I bought plenty of copies of it and I distribute it to people to prevent them from becoming arrogant.
5 stars (the max!)
Rating:
Summary: Life explained
Review: Taleb is profound. He looks at day to day events but comes up with new ways of explaining "why" and predicting "what could be". He demonstrates how poorly perception measures reality. He illuminates the dramatic role that seemingly low probability events play in shaping the future. While everyone is taught to plan for usual outcomes, he illustrates the importance of preparing for the exceptions to the rule. Taleb has brought a new perspective to the topic of measuring cause, and anticipating and preparing for effect (risk). I think his book should be a "must read" for any serious economics / business / philosophy student. I would also recommend reading his interview by Malcolm Gladwell for the New Yorker (easily found via Google.com).
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