Fooled by randomness : the hidden role of chance in life and in the markets
by Taleb, Nassim Nicholas, 1960-
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Summary
This work has shaken Wall Street thanks to its contention that much of what people perceive as skill playing the markets is often nothing more than luck. Full description
Table of Contents:
- pt. I: Solon's warning : skewness, asymmetry, induction. If you're so rich, why aren't you so smart? ; A bizarre accounting method ; A mathematical mediation 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
- pt. II. Monkeys on typewriters : survivorship and other biases. Too many millionaires next door ; It is easier to buy and sell than fry an egg ; Loser takes all : on the nonlinearities of life ; Randomness and our mind : we are probability blind
- pt. III. Wax in my ears : living with randomitis. Gamblers' ticks and pigeons in a box
- Carneades comes to Rome : on probability and skepticism
- Bacchus abandons Antony
- Epilogue: Solon told you so.
- Preface
- Acknowledgments for the updated second edition
- Chapter summaries
- Prologue
- pt. I. Solon's warning : skewness, asymmetry, induction
- 1. If you're so rich, why aren't you so smart?
- Nero Tulip
- Hit by lightning
- Temporary sanity
- Modus operandi
- No work ethics
- There are always secrets
- John the high-yield trader
- An overpaid hick
- The red-hot summer
- Serotonin and randomness
- You dentist is rich, very rich
- 2. A bizarre accounting method
- Alternative history
- Russian roulette
- Possible worlds
- An even more vicious roulette
- Smooth peer relations
- Salvation via aeroflot
- Solon visits Regine's nightclub
- George Will is no Solon : on counterintuitive truths
- Humiliated in debates
- A different kind of earthquake
- Proverbs galore
- Risk managers
- Epiphenomena
- 3. A mathematical mediation on history
- Europlayboy mathematics
- The tools
- Monte Carlo mathematics
- Fun in my attic
- Making history
- Zorglubs crowding the attic
- Denigration of history
- The stove is hot
- Skills in predicting past history
- My Solon
- Distilled thinking on your PalmPilot
- Breaking news
- Shiller redux
- Gerontocracy
- Philostratus in Monte Carlo : on the difference between noise and information
- 4. Randomness, nonsense, and the scientific intellectual
- Randomness and the verb
- Reverse turing test
- The father of all pseudothinkers
- Monte Carlo poetry
- 5. Survival of the least fit, can evolution be fooled by randomness?
- Carlos the emerging-markets wizard
- The good years
- Averaging down
- Lines in the sand
- John the high-yield trader
- The quant who knew computers and equations
- The traits they shared
- A review of market fools of randomness constants
- Naive evolutionary theories
- Can evolution be fooled by randomness?
- 6. Skewness and asymmetry
- The median is not the message
- Bull and bear zoology
- An arrogant twenty-nine-year-old son
- Rare events
- Symmetry and science
- Almost everybody is above average
- The rare-event fallacy
- The mother of all deceptions
- Why don't statisticians detect rare events?
- A mischievous child replaces the black balls
- 7. The problem of induction
- From Bacon to Hume
- Cygnus Stratus
- Nordhoff's
- Sir Karl's promoting agent
- Location, location
- Popper's answer
- Open society
- Nobody is perfect
- Induction and memory
- Pascal's wager
- Thank you, Solon.
- pt. II. Monkeys on typewriters : survivorship and other biases
- It depends on the number of monkeys
- Vicious real life
- This section
- 8. Too many millionaires next door
- How to stop the sting of failure
- Somewhat happy
- Too much work
- You're a failure
- Double survivorship biases
- More experts
- Visibility winners
- It's a bull market
- A guru's opinion
- 9. It is easier to buy and sell than fry an egg
- Fooled by numbers
- Placebo investors
- Nobody has to be competent
- Regression to the mean
- Ergodicity
- Life is coincidental
- The mysterious letter
- An interrupted tennis game
- Reverse survivors
- The birthday paradox
- It's a small world!
- Data mining, statistics, and charlatanism
- The best book I have ever read!
- The backtester
- A more unsettling extension
- The earnings season : fooled by the results
- Comparative luck
- Cancer cures
- Professor Pearson goes to Monte Carlo (literally) : randomness does not look random!
- The dog that did not bark : on biases in scientific knowledge
- I have no conclusion
- 10. Loser takes all, on the nonlinearities of life
- The sandpile effect
- Enter randomness
- Learning to type
- Mathematics inside and outside the real world
- The science of networks
- Our brain
- Buridan's donkey or the good side of randomness
- When it rains, it pours
- 11. Randomness and our mind : we are probability blind
- Paris or the Bahamas?
- Some architectural considerations
- Beware the philosopher bureaucrat
- Satisficing
- Flawed, not just imperfect
- Kahneman and Tversky
- Where is Napoleon when we need him?
- "I'm as good as my last trade" and other heuristics
- Degree in a fortune cookie
- Two systems of reasoning
- Why we don't marry the first date
- Our natural habitat
- Fast and frugal
- Neurobiologists too
- Kafka in a courtroom
- An absurd world
- Examples of biases in understanding probability
- We are option blind
- Probabilities and the media (more journalists)
- CNBC at lunchtime
- You should be dead by now
- The Bloomberg explanations
- Filtering methods
- We do not understand confidence levels
- An admission.
- pt. III. Wax in my ears : living with randomitis
- I am not so intelligent
- Wittgenstein's ruler
- The Odyssean mute command
- 12. Gamblers' ticks and pigeons in a box
- Taxi-cab English and causality
- The Skinner pigeon experiment
- Philostratus redux
- 13. Carneades comes to Rome : on probability and skepticism
- Carneades comes to Rome
- Probability, the child of skepticism
- Monsieur de Norpois' opinions
- Path dependence of beliefs
- Computing instead of thinking
- From funeral to funeral
- 14. Bacchus abandons Antony
- Notes on Jackie O.'s funeral
- Randomness and personal elegance
- Epilogue. Solon told you so
- Beware the London traffic jams
- Postscript. Three afterthoughts in the shower
- First thought : the inverse skills problem
- Second though : on some additional benefits of randomness
- Uncertainty and happiness
- The scrambling of messages
- Third thought : standing on one leg
- Acknowledgments for the first edition
- A trip to the library : notes and reading recommendations
- Notes
- References
- Index.