In the last half-hour of my internship workday for today, I decide to blog. Shortly I have to use the Bloomberg Terminal and prepare my daily market commentary.
Today I finished the book Fooled by Randomness while at work (my supervisor's in Switzerland, so I had more leeway to do some other things, but I strongly believe I've done my fair share of work for today! Work ethics lives on). This is Nassim Taleb's second book, I believe, and he has done a great job. It's the prequel to The Black Swan, which has an updated 2010 version with a chapter on Robustness and Fragility.
The book is, simply put, about randomness disguised as determinism. An example includes certain fund managers disguising their luck in the stock markets as investing skill when his profits are attributable to noise. This noise refers to randomness.
This book is highly intellectual and borders on philosophical, which makes for good reading: some of the important things he talks about are -
1. Effect of randomness on social pecking order and jealousy.
2. Alternative histories.
3. Mathematics as a tool for thinking and meditating, not blind application. The Monte Carlo simulation.
4. How Darwinism and evolution are concepts that are poorly understood in the non-biological world.
5. The problem of induction.
6. Why the terms "bull" and "bear" have little meaning outside of zoology.
7. Why it is not scientific to take science seriously.
8. Survivorship bias.
9. Loser takes all - the nonlinearities of life.
10. Randomness and our brain - we are probability blind.
11. Why journalists who say things like "the stock market went up 1% today because of increasing confidence in the US economic recovery" are charlatans.
12. Why I am privileged to be "the fool of all fools" and to be aware of it.
13. Marrying yourself to ideas is a bad thing.
It's actually quite a profound book to me, and I'll have to reread some parts of it and corroborate it to The Black Swan. I'm happy to discuss ideas from the book. Overall, I like the book because it challenges conventional wisdom about many things, and encourages us to be Skeptics. Now I believe nearly everyone is a lucky fool.
Mr Taleb's website is also interesting and has links to interviews with him!
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2 comments:
ah how coincidental! i saw that book on my colleague's desk the other day.
Yeah it's a good book, u should read it although it's not related to medicine :P Hope you're doing good in the UK for now!!
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