Possibly OT.
I read through about half of "Fooled by Randomness" at a bookstore.
IMHO Taleb is a pompous ass. He spends at least third of the book lashing out at people he does not like although he is not often brave enough to give concrete names. Another third is his pseudointelectual hogwash where he tries to tie the "randomness" insight to literature and science, through a bunch of anecdotes. Unfortunately, scientist (or even journalist) he isn't, so the examples are paper thin and rambling. Doesn't stop Taleb though. I really loved his claim that his anecdote (on Solon) is worth more than hundreds of real stories or studies by other people, just because he says so. Of course, he once in a while throws in false pretenses of humbleness.
Now for his theories. Actually there's not much more than what we discussed on this thread. Most things that happen in life are random and difficult to predict. You might be better off through talent and hard work, but there's no guarantee for that. (Here he goes into the ramblings how most people he hates were lucky idiots that were punished by fate at the end - go Taleb, you'r da fate!!! :))). Some professions (and actions) are more predictable than others. Taking his example, a dentist will have more predictable career than a trader. However, even a dentist may be affected by randomness. Extending his example, a jewish dentist in Nazi Germany would have very different life from dentist in USA; even US dentist's patient might randomly die and he could be financially devastated by a lawsuit. Still, considering his thought experiment of running through thousands of possible lifetimes, the dentist's life would be less varied than a trader's life. This insight is not bad in itself, actually there are investors who claim to follow this pattern of considering (imagining) all possible bad outcomes and trying to avoid loss of capital in almost any case. I am not sure this works very well, but it can bring some useful approaches, e.g. not to buy leveraged companies.
A related thought is that people cannot recognize a historical event as it occurs. Only hindsight is 20/20. This is again pretty useful - I am reading Buffett's biography now and it's amazing to read about Americans being isolationist on WWII - great example of people thinking very differently at the time than what we think post-factum about the war and victory against Nazi Germany. To take example closer to our topic, we cannot clearly see how 2007-2009 recession will play out - as a big event or just a whimper in history. That also makes it more clear why people would sell out in the bottom - it is hard or almost impossible to know whether the crash will continue. In some sense, Buffett buying WFC in March 2009 WAS betting on lucky guess that the crash won't spread.
So overall, IMHO, the book has some useful insights, but it is horridly written. Of course, Taleb deflects any chance of criticism by claiming in the foreword that the book is not a scientific treatise and is pretty much a collection of his musings. It would have been great that randomness would have found a better author to present the ideas, but we'll have to live in this particular version of reality... ;) |
