Fooled by Randomness

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But I don’t think that our success are all depended on luck. At least now I do not think so. The author may do not think so too, experience is useful, at least from the author’s view about the history of the division, he is not against this argument. Although the author does not think that Caesar's victory is related to their strategy. He only admit that they are smart and noble, but that their fate entirely depends on external forces. It is ignorance of randomness by confusing prediction and prophecy. Humans can predict, but cannot predict the future. Most of the probability results are often contrary to intuition, so most of the time, people will ignore the probability. The author also talked about recognizing the probability, in fact, not about the problem of probability, but we believe that there are alternative results, the reasons and the existence of motivation.

Although the randomness of the disregard and misunderstanding can be seen everywhere, but in Taleb’s view, the stock market is the largest observation and it is the deepest place. He is the professor of mathematics in New York University and best-selling author outside the identity, he also is a nice trader. In the long career, Taleb saw many "star traders" around him who ups and downs, there are always some people think they are extraordinary, invincible in a period time because of a good performance, and then they almost "blown up" because of huge losses so that was dismissed.

A trader has to make thousands of transactions in his life, so the stock market is a good place for people to experience "traversal". In the view of Taleb, the black swan is so important because it is a strong asymmetry with the White Swan. A black swan will be able to overthrow thousands of white swans accumulated. In probability theory, if the result is strongly asymmetric with the probability, which is called the skewness of the distribution, it means that if the result of the failure is too heavy, how high the probability of success does not matter.

On the Monte Carlo turntable and the black swan, Taleb established his own trading faith. He chooses a speculation that is not the same as most traders. He observed the distribution rather than only observed the probability. He will make a good outlook and at the same time put a lot of things, that would many traders do not understand. The style of his transaction is constantly losing small money to wait for the emergence of black swans and make a fortune.

The author believes that new things may not be better than the old things, people prefer the new things, because they often see the success, but ignore the losers. So that the new is not necessarily good. Thinking that evolution will be developed to a great direction will lead to misunderstanding of evolution. The adaptability of the Darwin doctrine is used for long-term development of species, not for short-term observation. Evolution can only exist in a period of time, not the average of all possible environments.

In addition to gaining some useful probabilistic knowledge, the most attractive place of this book is that it reveals a very consistent attitude towards the law of probability. Taleb's life experience is full of drama, his grandfather and great-grandfather both have served as Deputy Prime Minister of Lebanon, can be described as official family, but he has suffered from the rich to extreme poverty changes. Later, Taleb became a professor of mathematics at New York University, and when he first entered to the stock market, he succeeded in avoiding a stock market crash, as a result, some Wall Street traders respected him. After six months’ study, Taleb blame it for luck, he was no better than anyone else, also was not foolish than anyone else, everyone has the same faith.

Taleb believed the random. In the process of created an investment fund and published the book, Taleb found that polarization was everywhere: either to attract all the money, or to get nothing. And that either every publisher was rushing to publish, or there is no reply. This kind of polarization makes Taleb very disturbed, too successful is easy to have enemies, but too failed would make people discouraged. Do not be too high , and not be too low, stand in the middle, you will see the most beautiful scenery.

In a word, this book is very valuable for people to read. The author teaches us how to avoid a lot of risk as possible as we can when we put us into the stock market. Don’t just look a luck thing, but also should analysis the results and distributions of lucky thing. No matter in the stock market or other environments, everyone could be success and also could be failed.