Book Review: Fooled By Randomness

Sunday, December 07, 2008

Fooled By Randomness, Nassim Nicholas Taleb

Being a trader myself, along with the author, this is the best book I have read in a long time. Taleb's use of the black swan is highly illuminating showing the seismic shifts that occur from unseen and unexpected future occurences. Taleb shows us, especially those of us involved in financial markets, the importance of understanding chance and its impacts on our lives and investments. Taleb offers coherent, comprehensive explanations for why we misunderstand the role of chance and often attribute our successes to skill and, yet, our failures to bad fortune. He shows us that so-called six-sigma events occur much more often than our neat-and-tidy normal distributions would have us believe. A recognition of this divergence can lead us to structure our investments around an ability to profit from the positive deviations rather than blindly suffer from the negative. I would highly recommended this book to anyone involved in the financial markets. It is a a wholly different, yet comprehensive, way of seeing the world and the judgments we derive from it.


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