{"product_id":"fooled-by-randomness-isbn-9781400067930","title":"Fooled by Randomness","description":"\u003cb\u003e\u003ci\u003eFooled by Randomness \u003c\/i\u003eis a standalone book in Nassim Nicholas Taleb’s landmark Incerto series, an investigation of opacity, luck, uncertainty, probability, human error, risk, and decision-making in a world we don’t understand. The other books in the series are \u003ci\u003eThe Black Swan, Antifragile, Skin in the Game, \u003c\/i\u003eand \u003ci\u003eThe Bed of Procrustes\u003c\/i\u003e.\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003eNow in a striking new hardcover edition, \u003ci\u003eFooled by Randomness\u003c\/i\u003e is the word-of-mouth  sensation that will change the way you think about business and the world. Nassim  Nicholas Taleb–veteran trader, renowned risk expert, polymathic scholar, erudite  raconteur, and \u003ci\u003eNew York Times\u003c\/i\u003e bestselling author of \u003ci\u003eThe Black Swan\u003c\/i\u003e–has written a  modern classic that turns on its head what we believe about luck and skill.\u003cbr\u003e\u003cbr\u003e This  book is about luck–or more precisely, about how we perceive and deal with luck in  life and business. Set against the backdrop of the most conspicuous forum in which  luck is mistaken for skill–the world of trading–\u003ci\u003eFooled by Randomness\u003c\/i\u003e provides captivating  insight into one of the least understood factors in all our lives. Writing in an  entertaining narrative style, the author tackles major intellectual issues related  to the underestimation of the influence of happenstance on our lives.\u003cbr\u003e\u003cbr\u003e The book is  populated with an array of characters, some of whom have grasped, in their own way,  the significance of chance: the baseball legend Yogi Berra; the philosopher of knowledge  Karl Popper; the ancient world’s wisest man, Solon; the modern financier George Soros;  and the Greek voyager Odysseus. We also meet the fictional Nero, who seems to understand  the role of randomness in his professional life but falls victim to his own superstitious  foolishness.\u003cbr\u003e\u003cbr\u003e However, the most recognizable character of all remains unnamed–the  lucky fool who happens to be in the right place at the right time–he embodies the  “survival of the least fit.” Such individuals attract devoted followers who believe  in their guru’s insights and methods. But no one can replicate what is obtained by  chance.\u003cbr\u003e\u003cbr\u003e Are we capable of distinguishing the fortunate charlatan from the genuine  visionary? Must we always try to uncover nonexistent messages in random events? It  may be impossible to guard ourselves against the vagaries of the goddess Fortuna,  but after reading \u003ci\u003eFooled by Randomness\u003c\/i\u003e we can be a little better prepared.\u003cbr\u003e\u003cbr\u003e \u003cb\u003e\u003cu\u003ePRAISE  FOR \u003ci\u003eFOOLED BY RANDOMNESS\u003c\/i\u003e\u003c\/u\u003e\u003c\/b\u003e:\u003cbr\u003e\u003cbr\u003e \u003cb\u003eNamed by Fortune One of the Smartest Books of All Time\u003cbr\u003e\u003cbr\u003e A Financial Times Best Business Book of the Year\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003e “[\u003ci\u003eFooled by Randomness\u003c\/i\u003e] is to  conventional Wall Street wisdom approximately what Martin Luther’s ninety-five theses  were to the Catholic Church.”\u003cbr\u003e –Malcolm Gladwell, author of \u003ci\u003eBlink\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “The book that  rolled down Wall Street like a hand grenade.”\u003cbr\u003e –Maggie Mahar, author of \u003ci\u003eBull! A History  of the Boom, 1982—1999\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “Fascinating . . . Taleb will grab you.”\u003cbr\u003e –Peter L. Bernstein,  author of \u003ci\u003eCapital Ideas Evolving\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “Recalls the best of scientist\/essayists like Richard  Dawkins . . . and Stephen Jay Gould.”\u003cbr\u003e –Michael Schrage, author of \u003ci\u003eSerious Play: How  the World’s Best Companies Simulate to Innovate\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “We need a book like this. . . .  Fun to read, refreshingly independent-minded.”\u003cbr\u003e –Robert J. Shiller, author of \u003ci\u003eIrrational  Exuberance \u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “Powerful . . . loaded with crackling little insights [and] extreme  brilliance.”\u003cbr\u003e \u003ci\u003e–National Review\u003c\/i\u003e\"[Taleb is] Wall Street’s principal dissident. . . . [Fooled By Randomness] is   to conventional Wall Street wisdom approximately what Martin Luther’s ninety-nine   theses were to the Catholic Church.”\u003cbr\u003e –\u003cb\u003eMalcolm Gladwell\u003c\/b\u003e, \u003ci\u003eThe New Yorker\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “Fascinating   . . . Taleb will grab you.”\u003cbr\u003e –\u003cb\u003ePeter L. Bernstein\u003c\/b\u003e, author of \u003ci\u003eAgainst the Gods: The   Remarkable Story of Risk\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “Recalls the best of scientist\/essayists like Richard Dawkins   . . . and Stephen Jay Gould.”\u003cbr\u003e –\u003cb\u003eMichael Schrage\u003c\/b\u003e, author of \u003ci\u003eSerious Play\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e “We need   a book like this . . . fun to read, refreshingly independent-minded.”\u003cbr\u003e –\u003cb\u003eRobert J.   Shille\u003c\/b\u003er, author of\u003ci\u003e Irrational Exuberance \u003c\/i\u003e\u003cb\u003eNassim Nicholas Taleb\u003c\/b\u003e has devoted his life to problems of uncertainty, probability, and knowledge. He spent nearly two decades as a businessman and quantitative trader before becoming a full-time philosophical essayist and academic researcher in 2006. Although he spends most of his time in the intense seclusion of his study, or as a flâneur meditating in cafés, he is currently Distinguished Professor of Risk Engineering at New York University’s Polytechnic Institute. His main subject matter is “decision making under opacity”—that is, a map and a protocol on how we should live in a world we don’t understand.\u003cbr\u003e  \u003cbr\u003e Taleb’s books have been published in forty-one languages.Chapter 1\u003cbr\u003e\u003cbr\u003e    Croesus, King of Lydia, was considered the richest man of his time. To   this day Romance languages use the expression “rich as Croesus” to   describe a person of excessive wealth. He was said to be visited by   Solon, the Greek legislator known for his dignity, reserve, upright   morals, humility, frugality, wisdom, intelligence, and courage. Solon   did not display the smallest surprise at the wealth and splendor   surrounding his host, nor the tiniest admiration for their owner.   Croesus was so irked by the manifest lack of impression on the part of   this illustrious visitor that he attempted to extract from him some   acknowledgment. He asked him if he had known a happier man than him.   Solon cited the life of a man who led a noble existence and died while   in battle. Prodded for more, he gave similar examples of heroic but   terminated lives, until Croesus, irate, asked him point-blank if he was   not to be considered the happiest man of all. Solon answered: “The   observation of the numerous misfortunes that attend all conditions   forbids us to grow insolent upon our present enjoyments, or to admire a   man’s happiness that may yet, in course of time, suffer change. For the   uncertain future has yet to come, with all variety of future; and him   only to whom the divinity has [guaranteed] continued happiness until   the end we may call happy.”\u003cbr\u003e\u003cbr\u003e    The modern equivalent has been no less eloquently voiced by the   baseball coach Yogi Berra, who seems to have translated Solon’s   outburst from the pure Attic Greek into no less pure Brooklyn English   with “it ain’t over until it’s over,” or, in a less dignified manner,   with “it ain’t over until the fat lady sings.” In addition, aside from   his use of the vernacular, the Yogi Berra quote presents an advantage   of being true, while the meeting between Croesus and Solon was one of   those historical facts that benefited from the imagination of the   chroniclers, as it was chronologically impossible for the two men to   have been in the same location.\u003cbr\u003e\u003cbr\u003e    Part I is concerned with the degree to which a situation may yet, in   the course of time, suffer change. For we can be tricked by situations   involving mostly the activities of the goddess Fortuna—Jupiter’s   firstborn daughter. Solon was wise enough to get the following point;   that which came with the help of luck could be taken away by luck (and   often rapidly and unexpectedly at that). The flipside, which deserves   to be considered as well (in fact it is even more of our concern), is   that things that come with little help from luck are more resistant to   randomness. Solon also had the intuition of a problem that has obsessed   science for the past three centuries. It is called the problem of   induction. I call it in this book the black swan or the rare event.   Solon even understood another linked problem, which I call the skewness   issue; it does not matter how frequently something succeeds if failure   is too costly to bear.\u003cbr\u003e\u003cbr\u003e    Yet the story of Croesus has another twist. Having lost a battle to the   redoubtable Persian king Cyrus, he was about to be burned alive when he   called Solon’s name and shouted (something like) “Solon, you were   right” (again this is legend). Cyrus asked about the nature of such   unusual invocations, and he told him about Solon’s warning. This   impressed Cyrus so much that he decided to spare Croesus’ life, as he   reflected on the possibilities as far as his own fate was concerned.   People were thoughtful at that time.\u003cbr\u003e\u003cbr\u003e      If You’re So Rich, Why Aren’t You So Smart?\u003cbr\u003e\u003cbr\u003e    An illustration of the effect of randomness on social pecking order and   jealousy, through two characters of opposite attitudes. On the   concealed rare event. How things in modern life may change rather   rapidly, except, perhaps, in dentistry.\u003cbr\u003e\u003cbr\u003e    Nero Tulip\u003cbr\u003e\u003cbr\u003e    Hit by Lightning\u003cbr\u003e\u003cbr\u003e      Nero Tulip became obsessed with trading after witnessing a strange   scene one spring day as he was visiting the Chicago Mercantile   Exchange. A red convertible Porsche, driven at several times the city   speed limit, abruptly stopped in front of the entrance, its tires   emitting the sound of pigs being slaughtered. A visibly demented   athletic man in his thirties, his face flushed red, emerged and ran up   the steps as if he were chased by a tiger. He left the car   double-parked, its engine running, provoking an angry fanfare of horns.   After a long minute, a bored young man clad in a yellow jacket (yellow   was the color reserved for clerks) came down the steps, visibly   untroubled by the traffic commotion. He drove the car into the   underground parking garage—perfunctorily, as if it were his daily   chore.\u003cbr\u003e\u003cbr\u003e    That day Nero Tulip was hit with what the French call a coup de foudre,   a sudden intense (and obsessive) infatuation that strikes like   lightning. “This is for me!” he screamed enthusiastically—he could not   help comparing the life of a trader to the alternative lives that could   present themselves to him. Academia conjured up the image of a silent   university office with rude secretaries; business, the image of a quiet   office staffed with slow thinkers and semislow thinkers who express   themselves in full sentences.\u003cbr\u003e\u003cbr\u003e    Temporary Sanity\u003cbr\u003e\u003cbr\u003e    Unlike a coup de foudre, the infatuation triggered by the Chicago scene   has not left him more than a decade and a half after the incident. For   Nero swears that no other lawful profession in our times could be as   devoid of boredom as that of the trader. Furthermore, although he has   not yet practiced the profession of high-sea piracy, he is now   convinced that even that occupation would present more dull moments   than that of the trader.\u003cbr\u003e\u003cbr\u003e    Nero could best be described as someone who randomly (and abruptly)   swings between the deportment and speech manners of a church historian   and the verbally abusive intensity of a Chicago pit trader. He can   commit hundreds of millions of dollars in a transaction without a blink   or a shadow of a second thought, yet agonize between two appetizers on   the menu, changing his mind back and forth and wearing out the most   patient of waiters.\u003cbr\u003e\u003cbr\u003e    Nero holds an undergraduate degree in ancient literature and   mathematics from Cambridge University. He enrolled in a Ph.D. program   in statistics at the University of Chicago but, after completing the   prerequisite coursework, as well as the bulk of his doctoral research,   he switched to the philosophy department. He called the switch “a   moment of temporary sanity,” adding to the consternation of his thesis   director, who warned him against philosophers and predicted his return   back to the fold. He finished writing his thesis in philosophy. But not   the Derrida continental style of incomprehensible philosophy (that is,   incomprehensible to anyone outside of their ranks, like myself). It was   quite the opposite; his thesis was on the methodology of statistical   inference in its application to the social sciences. In fact, his   thesis was indistinguishable from a thesis in mathematical   statistics—it was just a bit more thoughtful (and twice as long).\u003cbr\u003e\u003cbr\u003e    It is often said that philosophy cannot feed its man—but that was not   the reason Nero left. He left because philosophy cannot entertain its   man. At first, it started looking futile; he recalled his statistics   thesis director’s warnings. Then, suddenly, it started to look like   work. As he became tired of writing papers on some arcane details of   his earlier papers, he gave up the academy. The academic debates bored   him to tears, particularly when minute points (invisible to the   noninitiated) were at stake. Action was what Nero required. The   problem, however, was that he selected the academy in the first place   in order to kill what he detected was the flatness and tempered   submission of employment life.\u003cbr\u003e\u003cbr\u003e    After witnessing the scene of the trader chased by a tiger, Nero found   a trainee spot on the Chicago Mercantile Exchange, the large exchange   where traders transact by shouting and gesticulating frenetically.   There he worked for a prestigious (but eccentric) local, who trained   him in the Chicago style, in return for Nero solving his mathematical   equations. The energy in the air proved motivating to Nero. He rapidly   graduated to the rank of self-employed trader. Then, when he got tired   of standing on his feet in the crowd, and straining his vocal cords, he   decided to seek employment “upstairs,” that is, trading from a desk. He   moved to the New York area and took a position with an investment   house.\u003cbr\u003e\u003cbr\u003e    Nero specialized in quantitative financial products, in which he had an   early moment of glory, became famous and in demand. Many investment   houses in New York and London flashed huge guaranteed bonuses at him.   Nero spent a couple of years shuttling between the two cities,   attending important “meetings” and wearing expensive suits. But soon   Nero went into hiding; he rapidly pulled back to anonymity—the Wall   Street stardom track did not quite fit his temperament. To stay a “hot   trader” requires some organizational ambitions and a power hunger that   he feels lucky not to possess. He was only in it for the fun—and his   idea of fun does not include administrative and managerial work. He is   susceptible to conference room boredom and is incapable of talking to   businessmen, particularly the run-of-the-mill variety. Nero is allergic   to the vocabulary of business talk, not just on plain aesthetic   grounds. Phrases like “game plan,” “bottom line,” “how to get there   from here,” “we provide our clients with solutions,” “our mission,” and   other hackneyed expressions that dominate meetings lack both the   precision and the coloration that he prefers to hear. Whether people   populate silence with hollow sentences, or if such meetings present any   true merit, he does not know; at any rate he did not want to be part of   it. Indeed Nero’s extensive social life includes almost no   businesspeople. But unlike me (I can be extremely humiliating when   someone rubs me the wrong way with inelegant pompousness), Nero handles   himself with gentle aloofness in these circumstances.\u003cbr\u003e\u003cbr\u003e    So, Nero switched careers to what is called proprietary trading.   Traders are set up as independent entities, internal funds with their   own allocation of capital. They are left alone to do as they please,   provided of course that their results satisfy the executives. The name   proprietary comes from the fact that they trade the company’s own   capital. At the end of the year they receive between 7% and 12% of the   profits generated. The proprietary trader has all the benefits of   self-employment, and none of the burdens of running the mundane details   of his own business. He can work any hours he likes, travel at a whim,   and engage in all manner of personal pursuits. It is paradise for an   intellectual like Nero who dislikes manual work and values unscheduled   meditation. He has been doing that for the past ten years, in the   employment of two different trading firms.\u003cbr\u003e\u003cbr\u003e    Modus Operandi\u003cbr\u003e\u003cbr\u003e    A word on Nero’s methods. He is as conservative a trader as one can be   in such a business. In the past he has had good years and less than   good years—but virtually no truly “bad” years. Over these years he has   slowly built for himself a stable nest egg, thanks to an income ranging   between $300,000 and (at the peak) $2.5 million. On average, he manages   to accumulate $500,000 a year in after-tax money (from an average   income of about $1 million); this goes straight into his savings   account. In 1993, he had a bad year and was made to feel uncomfortable   in his company. Other traders made out much better, so the capital at   his disposal was severely reduced, and he was made to feel undesirable   at the institution. He then went to get an identical job, down to an   identically designed workspace, but in a different firm that was   friendlier. In the fall of 1994 the traders who had been competing for   the great performance award blew up in unison during the worldwide bond   market crash that resulted from the random tightening by the Federal   Reserve Bank of the United States. They are all currently out of the   market, performing a variety of tasks. This business has a high   mortality rate.\u003cbr\u003e\u003cbr\u003e    Why isn’t Nero more affluent? Because of his trading style—or perhaps   his personality. His risk aversion is extreme. Nero’s objective is not   to maximize his profits, so much as it is to avoid having this   entertaining machine called trading taken away from him. Blowing up   would mean returning to the tedium of the university or the nontrading   life. Every time his risks increase, he conjures up the image of the   quiet hallway at the university, the long mornings at his desk spent in   revising a paper, kept awake by bad coffee. No, he does not want to   have to face the solemn university library where he was bored to tears.   “I am shooting for longevity,” he is wont to say.\u003cbr\u003e\u003cbr\u003e    Nero has seen many traders blow up, and does not want to get into that   situation. Blow up in the lingo has a precise meaning; it does not just   mean to lose money; it means to lose more money than one ever expected,   to the point of being thrown out of the business (the equivalent of a   doctor losing his license to practice or a lawyer being disbarred).   Nero rapidly exits trades after a predetermined loss. He never sells   “naked options” (a strategy that would leave him exposed to large   possible losses). He never puts himself in a situation where he can   lose more than, say, $1 million—regardless of the probability of such   an event. That amount has always been variable; it depends on his   accumulated profits for the year. This risk aversion prevented him from   making as much money as the other traders on Wall Street who are often   called “Masters of the Universe.” The firms he has worked for generally   allocate more money to traders with a different style from Nero, like   John, whom we will encounter soon.\u003cbr\u003e\u003cbr\u003e    Nero’s temperament is such that he does not mind losing small change.   “I love taking small losses,” he says. “I just need my winners to be   large.” In no circumstances does he want to be exposed to those rare   events, like panics and sudden crashes, that wipe a trader out in a   flash. To the contrary, he wants to benefit from them. When people ask   him why he does not hold on to losers, he invariably answers that he   was trained by “the most chicken of them all,” the Chicago trader Stevo   who taught him the business. This is not true; the real reason is his   training in probability and his innate skepticism.New York Times bestselling author of The Black Swan [quote]--Bryan Appleyard, The Sunday Times (London)","brand":"Random House","offers":[{"title":"Default Title","offer_id":46304462373093,"sku":"NP9781400067930","price":32.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781400067930.jpg?v=1767727529","url":"https:\/\/k12savings.com\/products\/fooled-by-randomness-isbn-9781400067930","provider":"K12savings","version":"1.0","type":"link"}