Rating: 
Summary: An Abstract
Review: Fooled by Randomness should be considered an abstract to a much bigger and more detailed body of knowledge. For me it has served as both a guide to future study and as a way of coming to know and explain the concept of randomness. Another reviewer commented on the power of this book as a meme and I believe he was correct. To put it another way, the book gives people common ground to discuss the concept of randomness.There has been some criticism leveled at this book by other reviewers. I believe it is a bit missplaced. It would be like critisizing the practice of giving introductory lessons to new piano players*, people need to start somewhere. What makes this book different than other introductions is not the depth in which the topics are covered, for almost no topic is discussed in detail. The difference is that this book brings to light material which is often ignored by even sophisticated practitioners. A full third of the book is essentially autobiographical. Many people have no inclination toward such books and if you are one of them you could find this book annoying. My belief is that life is led by people and learning about them can enhance one's knowledge of how markets (as well as other things) work. Another reviewer called this noise. Is recalling the day one learned that one had cancer noise? In any context? Four and one half stars. *Perhaps a better analogy would be that of giving introductory lessons to a piano player learning a new style of playing.
Rating: 
Summary: Big Disappointment
Review: There is enough material in this book for one chapter. The rest is just fill consisting of the kind of writing one might put in a personal journal not intended for publication by reason of its lack of organization and poor editing. He may be a great trader but he is an inexperienced, sub-average author. Accordingly it may be sufficient to merely read the excerpts and then skip the book.
Rating: 
Summary: Very Thought Provoking
Review: Loved it! Very thought provoking (dare I say life changing) book. Thanks,
---Freddy
Rating:
Summary: Ironically, Opportunity Lost
Review: I'm very much of two minds about this book. There's little need to offer further comment on: 1. The author's ego (in one paragraph on page 59, he uses the perpendicular pronoun 7 times; the possessive first person another 5); or his hyperbolistic writing style: this might be too easily dismissed as an ad hominem attack. 2. The many glaring contradictions in this book: they appear so often (sometimes in the next sentence), they can hardly be viewed as a random event: this would take too long, and any intelligent reader can spot them. 3. The superfluous material: with so much impertinent opinion found between the covers, this would take too much effort. 4. The missed opportunities: another author can capitalize on this. 5. The delicious irony between the thesis and the content: this is for the discerning reader to perceive and enjoy. If people wanted to be as nasty as Taleb is in dismissing those he disagrees with, they could use a subject line like "Clearly, not a Swan Song," or "A Highly Masturbatory Essay" or "This book is as fat as the argument is thin". While there is much to complain about in this nauseatingly self-centered book, so filled with noise and so little signal (seriously estimated at 85:15), such comments would miss the point: this is actually a highly original work and is certainly thought-provoking. Although I give it only 2 stars, it's still worth reading, if only to argue against. A three-paragraph summary of his 200 pages follows: 1. Thesis: Today's virtual world measures success without sufficiently discerning luck from skill. Intelligence alone is deemed the necessary condition for wealth. 2. Antithesis: Too much of what is widely held to be worldly success should actually be attributed to luck; i.e., results hidden inside the vicissitudes of random variation. This "common sense" approach is naïve because it fails to establish the link between cause and effect and ignores the effect of variation, which, in one of its tails, can produce extraordinary results. Taleb explores the problem of induction and confronts the non-linearity of regret. 3. Synthesis: The trick is, of course, to determine post facto, what was random and what was skill, and more critically, to assess the nature of risk going into a decision. Mistakes in these areas can be extremely costly. Beware of the tails, especially if they are fat. If you want to be probabilistic, don't bet more than you can happily afford to lose. Question everything. Be humble. Accept adversity with good grace. This is an interesting thesis; too bad Taleb doesn't focus on examining the evidence instead of talking about himself and offering unsupported opinions. He dabbles with epistemology, but equivocates on whether knowledge is arrived at by rational or empirical means. Despite frequent and inappropriate abuse of the word "clearly," he doesn't clarify the ontological considerations that lie at the heart of this book: sufficient cause and non-contradiction. Though he's personally fond of the Monte Carlo technique, many of us could be spared much of that bother by answering a few simple questions: 1. What is the worst-case scenario?
2. What is the best-case scenario?
3. What is the most likely scenario?
4. How confident am I in the assessments?
5. What can I afford to lose? The author raises the work of Kahneman and Tversky, but hardly surveys it; the work of other key economic thinkers is ignored: Thaler and Arrow come to mind immediately; many others should appear but do not. No wonder Japanese librarians classify this work as literature: it's little more than an essay, largely devoid of footnotes or a meaningful bibliography. Being unlettered in mathematical sciences, I ought to be cautious about questioning his math, as simple as it is, but must nonetheless question both Taleb's assumptions and his logic in the few examples he provides. He rails against "pseudo-science" but dabbles happily in many disciplines in which he lacks formal qualifications, jumping from lily-pad to lily-pad, seemingly unaware that his dilettantism is evident to even the fellow layperson. Despite his professed aversion for "borrowed wisdom," it abounds in this tome. Taleb's editor took a vacation, especially towards the end of the book, where there are many errors of punctuation. Incidentally, in one of many delicious ironies of this book, Taleb uses the very Hegelian logic he rails against to make his point. It would be interesting to see John Horgan (he of The End of Science fame) interview Taleb. The ultimate irony is that Taleb has actually co-written a concise account of his thesis in 26 pages at his own web page. Intriguingly, in some of the interviews also linked to his web page, he comes across as being lucid and pithy, and also a polished and gracious reviewer. Some of his other writings show a keen insight into human and abstract sensibilities. Sadly, the same cannot be said of this book, which appears to be more a transcript of a session with his psychoanalyst. This is an opportunity lost. A severe edit of this book could likely bring it up to the level (5 stars) for which it has the potential. But it's nowhere near there, yet.
Rating:
Summary: Ignore This Book at Your Own Risk
Review: If you are an investor or (especially) a trader, this book is a *must* read. It is not necessarily the easiest read, but it will help you understand several things and debunk some Wall Street myths, e.g. "stocks always go up" (which is false due to survivorship bias). It will also help you understand why financial "accidents" (e.g. LTCM) happen.
Rating: 
Summary: Fooled By Randomness
Review: If you are looking for a book that includes detailed analysis and supporting data, this is not it. Fooled By Randomness is composed of a series of very enjoyable stories that illustrate the foibles of many investors and make the key points of the author. The book is very readable, but ultimately I found it lacking in substance.
Rating:
Summary: One big texas hedge (long implied volatility)
Review: Read the other reviews to get the flavour of the book. I'll only add a few points that haven't been mentioned. 1) There is good advice on avoiding some common mistakes that lead to "blowing up", which will prove useful to inexperienced market practitioners.
2) Taleb's own (claimed) trading methodology (buying OTM options) could easily fall victim to the "black swan" problem. A regime change to persistently higher implied than actual volatility would result in extended losses for his fund (unless he is bluffing us about its methodology).
3) Taleb only focuses on cases where volatility is underpriced - but some of the best opportunities come when it is overpriced, during market panics. Yet according to what he says in the book, one should continue buying such overpriced volatility! As someone whose bread and butter trade is fading market panics, I can confirm that premium selling can be highly profitable - the trick is to sell at the right time, and to employ risk control. Just because some practitioners are incapable of this, does not invalidate the method, any more than OTM options buying is invalidated because many naive speculators buy in a panic just before the VIX is about to collapse.
4) Taleb lumps MBA and businessmen types into the "fool" category. This misses the point. 99% of business is not about risk-assessment, dazzling insight, or grand strategic thought, but about successful *execution* of obvious ideas, and hard work. How many eggheads have had great ideas, but never done anything to put them into action? There is no point knowing that a beach bar in the Bahamas might be destroyed every 10 years by a hurricane, if you aren't even capable of raising capital, employing people, or working 16 hour days getting it off the ground. Good MBAs and CEOs will in any case employ people like Taleb to assess risk for them.
5) Taleb ignores the possiblity of using praxeological analysis (i.e. taking a set of demonstrable a priori truths, then using a logical train of deduction to discover what those truths necessarily imply about reality) to avoid the survivorship bias & noise problems. E.g. you can predict the effect of supply and demand on price without having to test it in the real world. This technique has been used by Murray Rothbard in economics (which has an even greater "non-falsifiability" problem than trading), and Warren Buffett in investing. As an example, you *can* judge if a good track record is "skill" or "luck", by examining the methodology of the trader/investor. If they operated solely during a period favourable to their style, it is probably luck e.g. if they made money buying emerging market bonds from 1994-1998. If they made a bucketload trading a style that was *against* the market regime, then it is almost certainly skill e.g. someone who made good returns as a shortseller of tech stocks from 1997-2000; or someone who has successfully sold premium during market panics. Since Taleb is a follower of Popper, and a hardened quant, it should come as no surprise that he is ignorant of praxeology, but it is a huge oversight all the same.
6) Taleb's scorning of Buffett as a lucky fool is ignorant in the extreme. Buffett clearly did *not* use naive analysis of past data to make his investment decisions, or rely on luck (he did well from 1969-82, a terrible period for equities). Rather he deduced highly probably consequences from demonstrable truths about investment (i.e. firms with pricing power, high barriers to entry, and low working capital requirements are likely to perform very well), and then saw that the market was not pricing these factors efficiently. Anyone reading his writings can see this. And Buffett's approach is ironically more rigorous and less dependent on luck than Taleb's professed trading methods. To elaborate - Taleb is relying on "black swan" events happening more often than people think. Therefore EITHER a reduction in the frequency of these events, OR an increase in people's expectation of them, would be enough to invalidate Taleb's approach - clearly neither can be ruled out. Taleb thinks he is betting on black swan events occuring, whilst ignoring the possibility of the "black swan" of major regime change making his own system unprofitable. Whereas with Buffet, the laws of supply and demand, and basic investment/economics, ensure that certain business methods will *always* work better than others. To conclude - Taleb thinks he has a great idea, but it was already well known by most experienced market practitioners (see the Market Wizards books etc where multiple traders continually bang on about rare event risk and fat tailed probability distributions). He then goes on as if this idea is the only important thing, which is clearly not the case. Finally, he critiques some people, such as Buffett, who use totally rigorous methodologies, whilst himself employing a strategy that is by no means foolproof, and relies largely on past observation (data-mining!) to form its conclusions. All I can say is that he better watch out for the black swan of long-term declining volatility over the next decade! Finally, I would just say that I found the book enjoyable, it's just that (luckily for future my P&L) Taleb hasn't got everything worked out just yet :) Looking forward to the follow-up Nassim!
Rating:
Summary: Nassim is right even though it is not as much fun
Review: Nassim is right-on in his analysis that many investors are fools. The great ones that survive "don't blow up" are the cautious ones that move slowly and pragmatically. Unfortunately, this crowd although survivors are less like the stereotypical 'genius' that Wall Street firms tend to reward. This survivor crowd moves deliberately and analytically and in the end they are the witnesses to the devastation created by the high roller gamblers that are more common on Wall Street. Thank Nassim
Rating:
Summary: An insight into life everybody needs
Review: Interestingly many of the reviews are biased against the book. The concepts are contrversial, yet intuitive, although most people will fail to grasp the essence of the book which is to draw attention to the fact that we humans too readily ascribe our fortunes to skill, and misfortunes to random events. The book is well written, and will easily be reread since there are many insights that can be referred to repeatedly. Taleb's writing style is, at times, difficult to comprehend, however is well worth the investment. I found the book most enlightening.
Rating:
Summary: A Lively Discussion of Chance and Luck
Review: Chance, luck, randomness, and probability are all topics which incite debate among everyone, from the scientist to the philosopher, from the economist to the market trader, from the erudite intellectual to the ordinary thinking person. And Nassim Nicholas Taleb's new book "Fooled by Randomness" deals extensively with those topics for this is a book about how, in both business and in life in general, we perceive and deal with luck or, as the author says, it is a book "about luck disguised and perceived as non-luck...and, more generally, randomness disguised and perceived as non-randomness." Moreover, "It manifests itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributes his success to some other, generally very precise, reason." Taleb, a professional trader and mathematics professor with an M.B.A. from the Wharton School and a Ph.D. from the University of Paris, extensively examines what randomness means in business and in life and why human beings are so prone to mistake dumb luck for consummate skill. His book is an unconventional and highly personal exploration of the nature of randomness that wanders from the court of Croesus and a visit from Solon, said to be the wisest man in the ancient world, to trading rooms in New York and London, to discussions of Russian roulette, Monte Carlo math, the survivorship bias, Darwin's theory of evolution, the problem of induction, baseball great Yogi Berra, the philosophy of Karl Popper, and a whole lot more. The range of information and knowledge displayed by the author is impressive. The obvious background against which the book is set is the world of trading, but the real background is the whole mosaic of our common life. One reason the book is fascinating is Taleb's ability to make seemingly esoteric mathematical ideas entirely relevant in evaluating and understanding everything from the stock market to the successes of ordinary people, and "the lucky fool in the right place at the right time." In an uncertain world where much depends on chance events, success is not always explained by the concept of "survival of the fittest" but, rather, by the concept of "survival of the luckiest." How do chance, luck, randomness, and probability impact our lives? Taleb has some ideas about the answers to that question. Don't be fooled by the brevity of this book, a mere 196 pages of textual content. Within its pages is much to ponder and I suggest reading this book once very rapidly to view the broad canvas upon which the author paints his concepts and examples, then go back and read it slowly to grasp its major ideas and important details, and then spend some time merely thinking about the conclusions, consequences, and ramifications of the notions put forth by the author. "Fooled by Randomness" is a fascinating read and, unusual in a book about such complex topics, an entertaining read as well.
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