Fooled by Randomness

Some ideas that I liked from the book:

• Taleb’s critique of post-hoc financial analysis. 2008 crisis “explanations” ignored the role of black swan events, similar to explaining lightning strikes as Zeus’s anger.

• Weight vs. wealth distributions. No human will weigh 1,000kg, but tech billionaires can exceed GDPs of nations. Yet we apply Mediocristan statistics to stock markets.

• The narrative fallacy in action. Cuban Missile Crisis “resolution skills” vs. probabilistic luck - remove 3mm of missile fuel pipe corrosion and we praise diplomacy.

• Survivorship bias in tech: 1,000 failed startups birthed Zoom, but we only study the winner. Like crediting lottery winners’ “strategies”.

• 92% of day traders quit within 2 years, yet financial media interviews the 8% “geniuses”. Compare to 17th century alchemists documenting only successful experiments.