Fooled by Randomness

The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb

Who has capability to distinguish a fortunate charlatan and a genuine visionary?

Over a short time, increment, one observes the variability of the portfolio, not the returns.

When I see an investor monitoring his portfolio with live prices on his cellular telephone or his PalmPilot, I smile and smile. 

Economists are evaluated on how intelligent they sound, not on a specific measure of their knowledge of reality.

One would go crazy if one were to listen to the mood swings of the market.

It is not how likely an event is to happen that matters, it is how much is made when it happens should be the consideration. How frequent the profit is irrelevant; it is the magnitude of the outcome that counts.

We think with our emotions and there is no way around it.

Absence of evidence and evidence of absence.

By a law of probability called distribution of the maximum of random variables, the maximum of an average is necessarily less volatile than the average maximum.

Causality can be very complex. It is very difficult to isolate a single cause when there are plenty around.

Why do I want everybody to learn some statistics? The answer is that too many people read explanations.

We do not understand confidence levels.

I consider myself as prone to foolishness as anyone I know.

I was born to be fooled by randomness.

Every day is a clean slate.


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