Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

Fooled by randomness

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
By Nassim Nicholas Taleb, Penguin, 2014

Nassim Nicholas Taleb unleashes Fooled by Randomness, his second best-selling book on Finance; to academics, philosophers and the Wall Street Journals general reading populace as well as providing a valuable tool for those trading or supporting others to do so.

Taleb began his career as a trader before adopting the somewhat unlikely path to becoming “the hottest thinker in the world”, per The Times newspaper. Marrying up his fondness for theories, understanding thought and reportedly copious consumption of various books; Taleb is currently Distinguished Professor of Risk Engineering at New York University’s Polytechnic Institute. With a leaning towards the mathematical and logical, Taleb espouses the notion of ‘randomness’ as a key factor that is missing from many businesses and entrepreneurs around the world, in almost every imaginable number-related pursuit. Much like Malcolm Gladwell’s The Tipping Point, a key aim of Fooled by Randomness is to pinpoint one element to hang the achievement of success on. Taleb urges us to ‘understand randomness’ and to learn more about probability rather than skill-up in order to get results.

Taleb himself has been hailed successful by many, including Gladwell himself; with excellent reviews and conclusions being drawn by respected agencies who have taken the time out to see if Fooled by Randomness has anything on its best-selling predecessor Black Swan (read about Black Swan right here on this site). In keeping with his theme, Taleb seems to offer his explanations in a scattered style, using chapter headings as places to begin or nice sentences to read rather than being used as a cohesive point at which the content of respective chapters ties together. That said, the book is still useful and offers much ‘food for thought’ whilst sharing a new perspective on business success. Some may view this perspective as a critique of Finance, as Taleb concludes that those who gain monuments notoriety lack any actual skill, rather a disciplined application ‘randomness’.

Taleb is happy to assert that anyone who is sufficiently versed in probability is likely to be successful within trading for instance and just as worthy of praise as those who make it onto the front cover of Forbes. Pithy chapter titles include:

  • If You’re So Rich Why Aren’t You So Smart?
  • A Bizarre Accounting Method
  • A Mathematical Meditation on History
  • Randomness, Nonsense and the Scientific Intellectual
  • Survival of the Least-Fit – Can Evolution be Fooled by Randomness?
  • Skewness and Asymmetry
  • The Problem of Induction
  • Too Many Millionaires Next Door
  • It is Easier to Buy and Sell Than to Fry and Egg
  • Loser Takes All
  • Randomness and our Brain: We are Probability-Blind
  • Gamblers’ Ticks and Pigeons in a Box
  • Carneades come to Rome: On Probability and Scepticism
  • Bacchus Abandons Antony.

Whether or not including the chapter titles in this review is helpful or not, considering how much Taleb diverts from them during each section remains to be seen so do let us know what your thoughts are! All in all, we enjoyed Taleb’s ‘random’ musings very much.

Review by Andrea Photiou

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