November 22, 2011 Leave a comment
Malcolm Gladwell in his book “What the dog ate” has a chapter on a very different kind of stock trader, a risk averse trader. This is where I first read about Nassim Nicholas Taleb, who is now the Dean’s Professor in the Sciences of Uncertainty at the University of Massachusetts.
I was so intrigued by Mr Gladwell’s description, that immediately ordered for both of Taleb’s books- Fooled by Randomness (The Hidden Role of Chance in Life and in Markets) and The Black Swan. I don’t invest in stock market actively and the intention of reading the book was not to gain tips and trick to make a quick killing. I found these books to change some of the my notions and stereotypes. The book “Fooled by Randomness” was selected by Fortune as one of the smartest books of all times
In the preface to his book, Fooled by Randomness, Mr Taleb writes- “The principal asset that I need to protect and cultivate is my deep-seated intellectual insecurity. My motto is “my principal activity is to tease those who take themselves and the quality of their knowledge too seriously”. He points out- “We underestimate the share of randomness in about everything and applied probability is almost nonexistent.” The book is idiosyncratic and will compel you to think and see life from a different perspective.
“Black Swan” is the second book and continues to stir the thoughts and an extension to “Fooled by Randomness” philosophy. Mr Taleb defines “Black Swan” as an unexpected large impact random event. Till very long the swans were white because almost on all observation (statistical) one would spot swans which were white, hence swans were white. However, this changed with just one observation of ‘Black Swans” in Australia. Mr Taleb urges us to be vary of such randomness and events.
Only word of caution, you need to read this book with an open mind, this is not one of the self help books which will give you 10 mantra’s for success. His writing style is very conversational and full of mentions of philosophers, mathematical concepts and theories.