Mediocre, but better than most rubbish out there

books:


	• Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets Nassim Nicholas Taleb Random House Trade Paperbacks, 2005 - 368 pages average customer review:based on 379 reviews view larger image
	for more information click here

highly recommended

Mediocre, but better than most rubbish out there

Certain parts of the book are enjoyable and a good reminder of how emotions skew rational thinking. Furthermore, the authors explanation of probability versus expectation is also written in a pretty entertaining manner.

Basically, he is saying that majority of traders trade strategies where probability of making small amounts everyday is high and the probability of a catastrophic loss is much smaller ... and that, they eventually blow up. What is insane about this author is that, he implies this in multiple places, he is trading where others blow up (loose money most of the time and make it big on a few occasions). How is this any scientific and rational? given just as those traders cannot foresee that they will blow up, this literally over developed author/trader type cannot tell he will make money because a big event will happen tomorrow and his bet is on the right side. This author probably has option positions out there betting on aliens will invade 20,000 years from now. Too bad, he won't be around to see the outcome.

Another point, he is quite popular right now, in various magazines, articles, people seeking his advice... However, this is also ex-post. If a credit sequeeze hadn't happened in the last year or so, he would not get the same attention he is getting now. I wonder if he is thinking about that sometimes. This reflects his trading style, this is a brief moment in his life, where he hit the jackpot. He will probably ride this as long as he can. I don't think his book will leave serious mark, because he does not even come close to answering any of the fundamental questions he is debating. Also, at places in his book he is discussing technical terms like ergodicity. I don't think he fully understands the meaning but he tries to find some verbal explanation for it based on everyday experiences. Sometimes, mathematical concepts may not have a direct translation in life. They are abstract. He does not discuss "stationarity" at the same level for example, and even if he did readers would have little to gain from his explanation.

for more information click here

Great Book

I thought this book was great although I didn't read the whole thing. It appears to confuse people because it attacks statistics while spending so much time examining them, but the title makes it clear that this is the intention of the book. This is an important point in our statistics obsessed socieity. Books like Freakenomics (which has a column in the NY Times) treat statisitcs as facts and reality as an illusion. (So if statistics show something obviously wrong then our "perceptions" must be wrong.) Educated people use statistics to show trounce those with less eduction and of course there's the stock market and various new financial istruments that rely on statistics. All of this is fatally flawed.

The other issue is his writing style, which is really old fashioned. I haven't read lots of old science books but it reminds me of Frankenstein, the mad scientist of alchemy. Of course, every writer is a politician now and with all the political correctness often you can't figure the sex of the writer let alone what they actually believe. But then they try to connect with you through way too much biography, like with Greenspan's book. Taleb obviously wasn't trying to run for office and he doesn't really tell us much about himself. If you've worked in tech or been to grad school lately you'd recognize this new personality, which can be insulting although Taleb is actually moderate in this regard. If you don't like him then don't go to grad school and don't work in any area with lots of elite foreigners.

for more information click here

I liked it

I liked this book. (Ignore most of the philosophy junk...)

One thing you have to say for this guy. The book is published in 2004. He predicts that some hedgefunds trading short treasuries and long sub-prime with 20 times leverage will blow up because they're not factoring in the risk right. In 2006 four such funds blew up...

The key pieces to walk away with here are....

Don't think YOU KNOW for CERTAIN that something is going to happen or not happen because of history or what you know...

You can't statistically prove that something won't happen because it has never happened before.

That most of what's on the news is rubbish or hype... (Which I buy because most of it is either dumbed down or cut short that the meat is missing... )

Most market movement is noise...

People need to evaluate not only the probability of an event or a move up or down... but you have to factor in the amounts/size of that movement. Example: So if you make a dollar a day for 99/100 days only to loose 1000 dollars in one bad day, is that a bet worth taking...

Limit your use of leverage or know the downside.

for more information click here

reviews: 1, 2, page 3, 4, 5, 6, 7, 8, 9, 10, 11, 12

hot

not?

What's your opinion?

Write a review and share your thoughts!

recommendations

Understanding Markets, Finance, and Life as a risk taker
Business Books For Non MBA's
The fine art of skepticism
Books on Investing
Risk Books

search for books
chance, fooled, hidden, life, markets, randomness, role

Impressum / about us