"To compensate a little for the treachery and weakness of my memory, so extreme that it has happened to me more than once to pick up again, as recent and unknown to me, books which I had read carefully a few years before . . . I have adopted the habit for some time now of adding at the end of each book . . . the time I finished reading it and the judgment I have derived of it as a whole, so that this may represent to me at least the sense and general idea I had conceived of the author in reading it." (Montaigne, Book II, Essay 10 (publ. 1580))

Sunday, January 14, 2024

Fooled by Randomness - The Hidden Role of Chance in Life and in the Markets Nassim Nicholas Taleb, 2004)

 Author is a good Twitter follow, in part because I sometimes if not often disagree with him or dislike his tone.

And I enjoyed the book a lot, in part because I agree with much of it and have absorbed some of the ideas over the years.  There are elements of math, probability, and the like that I don't understand.

The "fooled by randomness" concept is crucial - he discusses why it's so difficult for humans to refrain from inferring causation from linked events - partly because we're wired for efficiency/shortcuts and often the inference is fine or at least not materially detrimental. I've had this concept repeated to me often enough that I think, or at least hope, that I'm applying it every now and again.

Another basic - evaluate decisions solely on information available at the time of the decision. Difficult not to use a hindsight lens (which has value in some other ways).

Respect how little we can really know - it's fine. Be wary of those who claim to know. Richard Feynman continually articulated this very well.

Black swan concept as an example of this.  Seeing only white swans doesn't disprove the existence of the black swan. This seems to be a common error.

Karl Popper's idea.

This ties to what is finally coming to the fore in academia - mountains of studies, research, papers that are useless - impossible to take into account all the variables, let alone that we can't even identify all of the variables. Tease out thought patterns, but mostly:  be humble.

Interpreting statistics can be tricky. I'm not good at the math but at least try to determine the goals of the presenter of the statistics, what might be cherry-picked, etc. Taleb is good on this topic.

Survivorship bias. Hard to overcome.

If Taleb watches TV, he has it on mute! (One of my favorite life rules.) Sounds like he reads a ton and ignores media and much screen-entertainment . . . appealing to my idiosyncrasies . . .

Borrowed from Jr., one of a group of five books (Incerto) that I will continue to read over time.

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