Reading: “Fooled by Randomness” by Nassim Nicholas Taleb


  1. We need to accept the things the way they are a little more.
  2. An open mind is necessary for randomness
  3. Silence is far better than noise.

  • It is better to think that things are more random than we think it is than thinking it is random at all.
    • Chance Favors the Prepared. Luck is Democratic.
    • Backfit Logic: Stories normally only make sense when we look at events after the facts. (Since there has only been one observation made)
    • Luck v Skills, Noise v Meaning
    • Symbolism: The child of our inability and unwillingness to accept randomness
    • Utopians believe in the idealized human kind and they are part of the better race. Deemed to be filled with Reason and rationality. The tragic vision of human, we are faulty and does not need to be correct.
  • Dominance: physical manifestations of performance. This is why winners are more visible. (primal mating in origins)
    • Success: are for people who take very little risks they are not prosperous (Dentists)
  • Science: resists randomness + narrow specialization + curiosity (great motivator outside of God) + introspection
    • Mathematicians live in abstraction in order to way to meditate in our world of randomness
    • Business mind: TORTURED by randomness, no introspection
    • The MBA mind: As humans, we have the desire to simplify, to make things easier to understand. However, we are only berefting things of their maximum potential, skewing the probability of things.
    • “Journalism is the greatest plague we face today.”
      • We tend to favor and remember the sensational and emotional. Journalists are molding us to prefer the simplified version of events in a very complicated world.
      • News is noise. Silence rarely surpass anything or any word.
      • Journalists claim to provide explanation for something that amounts to perfect noise.
      • Babbler v thinker, verbiage v allergy to nonsense
    • Einstein: “Common Sense is nothing but a collection of misconceptions acquired by 18.”
      • Inductive: verfiable in some manner, specific to general (a generalization)
      • Deductive: from rules (made more specific)
  • Past (info) cannot predict the Future,
    • Perceiving actual loss as the stimulus as opposed to the actual magnitude. A loss is perceived as just a loss.
    • Statistics today does not evaluate rare events. No Rare events should harm you.H
      • Focus on falsifying as the bare minimum (Yes, all swans are white, but one black one is going to prove it false, therefore not all swans are white.”
      • “The more information you have, the more confident you will be.” (nonsense)
    • Pascal’s Wager: it’s optimal strategy to believe in god.If he does, he is rewarded. If he doesn’t he has nothing to lose. (But don’t let your life depend on it.
  • Past is NOT relevant to future.
    • “Good track method”: just a performance exaggeration by the observer.
    • Regression to the mean: it is more unlikely for the fact not to meet the 80/20 rule.
    • Larger deviation from the norm, more probalistic of it coming from luck than skill and that the larger the deviation the more important the effect.
  • Everything is noise
    • Distilled thinking: thinking based on information strippsed off of meaningless clutter.
    • Undistilled information: News Journalism: a thoughtless process of providing noise that capture people’s attention. Not related to TRUTH, just arguments.Looking at randomness will just burn you out. It’s emotionally taxing.
    • A Negative effect lead up to 2.5 magnitude of a positive one.
  • Ergodicity: Time will eliminate the properties of randomness
  • Life is COINCIDENTAL: Events will happen the same way the monkey will type on the typewriter. As long as you DO NOT specify the book you want to write.
    • Medicine is operated by trial and error. Not statistically
    • IT is always safer and preferable to reserve one’s judgement.
  • Nonlinear = “UNFAIR”
    • Path independent
      • Everyday is a clean slate. Free from past actions
      • Attribution Bias: When Failure is randomness and Success is skill. (BOO!)
      • When small advantages / luck lead to high payoff
      • Chaos theory (nonlinear dynamics) (sandpile effect) small input leads to disproportionate response. When things are path dependent outcome. (the straw that broke the camel’s back.
    • Path-dependent
      • Our brain cannot comprehend this because we prefer Causality of things. Satisfies the linear progression of things.
  • Distortions– What knowledge do you retain since all the reference points are arbitrary?
    • Life is incremental, a way of stating significance: we don’t look at the net worth, we look at the changes made. Why losses hurt more than gains.
    • Difference > absolutes: We always see things in relation to something else ( anchoring)
    • This clarifies our idea of happiness, focusing more on positive steady increases of wealth, not wealth itself.
    • Emotion: One cannot make a decision w/o emotions. They are lubricants of reason.
    • Stoic’s decision is to elect what one can do to control one’s destiny in front of a random outcome. Randomness will always have the last word.
    • The expectation means the average.
  • Personal Elegance is:
    • being dignified and extremely courteous
    • fortune has no control on your behavior  
    • don’t blame other people for your actions
    • Don’t be a nice guy only when you need to be.
    • don’t play victim

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