Book: 20260819 to 20260831, "Fooled by Randomness" by Nassim Nicholas Taleb

 

20260819 - Prologue 1

20260819 - PART I: SOLON'S WARNING - SKEWNESS, ASYMMETRY, INDUCTION 9

20260819 - One: If You're So Rich Why Aren't You So Smart? 13

Mild success can be explainable by skills and labour. Wild success is attributable to variance. p12
No really. Wild success is attributable to skills and labour and variance.

Rich and solid rich is quite different.

20260819 - Two: A Bizarre Accounting Method 28

How can I remind myself of the potential risk?
Which part of my perception is illusion?

20260820 - Three: A Mathematical Meditation on History 46

My models showed that ultimately almost nobody really survived; bears dropped out like flies in the rally and bulls ended up being slaughtered, as paper profits vanished when the music stopped. But there was one exception; some of those who traded options had remarkable staying power and I wanted to be one of those. p50
I think Mr Taleb must used leverage. The risk is much lower if no leverage, and close to zero if spread the investment on many stocks or ever cross many industries.

The problem with information is not that it is diverting and generally useless, but that it is toxic. p60
This information is not just news and social media web sites, but all information from all screens. Can I stop wasting time on screens?
Furthermore, it's not just external stuff, but the thoughts in our mind.
The problem is about emotion those thoughts cause. That derail our attention and consciousness.

20260823 - Four: Randomness, Nonsense, and the Scientific Intellectual 69

20260823 - Five: Survival of the Least Fit - Can Evolution Be Fooled by Randomness? 77

What is randomness? There are two types of randomness.

1. based on maths, which is pure probability, and is not related to reality.
   Such as throwing a dice.

2. based on reality.
   For example, if there 1% of chance for some stock to drop more than 2% in a day, doesn't mean it's (1%)^1000 chance for 1000 stocks to drop more than 2% in a day.

The second one is much more important to us.

Darwinian fitness applies to species developing over a very long time, not observed over a short term. p95
It was said that nature does not make jumps. p95

In short period of time, or to some specific individual, "jump" is normal.

20260823 - Six: Skewness and Asymmetry 93

Only professionals can do asymmetry investment.
For normal people, the best way is to buy Nasdaq index fund, and $5M short term US treasury bill as insurance. :-)

20260823 - Seven: The Problem of Induction 109

to recreate a low-information, more deterministic ancient time, say in the nineteenth century, all the while benefiting from some of the technical gains(such as the Monte Carlo engine), all the medical breakthroughs, and all the gains of social justice of our age. p131
This is attractive to me. The key is "low-information".
Monte Carlo engine is quite faraway from reality. Need to be careful about it.

20260825 - PART II: MONKEYS ON TYPEWRITERS - SURVIVORSHIP AND OTHER SURVIVORSHIP AND OTHER BIASES 123

20260825 - Eight: Too Many Millionaires Next Door 129

1. Survival ship bias;
2. Trend changes.

20260826 - Nine: It Is Easier To Buy and Sell Than Fry an Egg 138

20260827 - Ten: Loser Takes All - On the Nonlinearities of Life 159

20260827 - Eleven: Randomness and Our Brain: We Are

"Our brains are made for fitness not for truth" by Steven Pinker. p197
This is the root of the problems.

Now let us push the point further; what if you were going to a planet where the expectation is also going to be around 60 degrees, but plus or minus 500 degrees? What would you pack? p217
Good question. In that case, the average temperature doesn't matter anymore. We need to avoid any leverage in that case.

Most of the information is meaningless noise. Because they represent fluctuations.

20260830 - PART III: WAX IN MY EARS - LIVING WITH RANDOMITIS 201

20260830 - Twelve: Gamblers' Ticks and Pigeons in a Box 226

20260830 - Thirteen: Carneades Comes to Rome: On Probability 234

If you owned no painting, would you still acquire it at the current price? If you would not, then you are said to be married to your position. p240
If you don't want to buy more stock at the current price, you may need to sell some.
"Hold" means doing nothing, which could be a trap.

20260830 - Fourteen: Bacchus Abandons Antony 226

The only article Lady Fortuna has no control over is your behavior. p249
All forms are temporary. This, too, will pass. A New Earth

20260830 - Epilogue: Solon Told You So 250

20260831 - Postscript 254

The inverse skills problem. p254
How to measure the skills of a CEO? A general?
He/she understand the reality well, and has high probability of finding the right direction, and can unite people in the team.

Some additional benefits of randomness. p257
At psychology level, this make us easier to live in the present.
Fluctuation is normal. If we want to offset it, then we need to pay for it. That's not necessary.

Standing on one leg. p262
We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. p262
This more about the understanding of the world. Most of people embrace wrong abstract concepts, and forget to verify/adjust them.