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Tag Archive: Fooled by Randomness


Market Efficiency

I dare to write on this topic as it is the most intense and debatable topic in the financial markets over the years.blog

The author of “Fooled by Randomness” and “The Black Swan” Nassim Taleb became the anti-theorist in finance arguing that the Nobel committee should be sued for awarding Harry Markowitz, Bill Sharpe and Merton Miller http://www.bloomberg.com/news/2010-10-08/taleb-says-crisis-makes-nobel-panel-liable-for-legitimizing-economists.html

But the Guru of Corporate finance Aswath Damodaran did a posting replying to him on the market efficiency models. http://aswathdamodaran.blogspot.com/2010/10/nassim-taleb-and-nobel-committee.html Continue reading

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Nassim Taleb’s contribution to the world of finance are two fascinating concepts — essays really — subsequently expanded into book length. 813530The first is Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets, which describes the tendency of investors to find patterns where none exist, and to attribute to skill that which might be better credited to luck.

In one of his interview to Financial Times Taleb talks about how fragile we are. Five years on from the Lehman Brothers collapse, political and regulatory errors have made the world’s financial system even more fragile.This alarming line of thought comes from Nassim Nicholas Taleb, best known for The Black Swan, which explained markets’ difficulties in pricing extreme events for which they had no precedent.

He argues first that natural systems work by allowing things that do not work to break. This did not happen after the Lehman bankruptcy. True, letting Lehman fail was an attempt to instil discipline in the banking system, but it came too late.   Continue reading

Nassim Taleb’s contribution to the world of finance are two fascinating concepts — essays really — subsequently expanded into book length. The imagesfirst is Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets, which describes the tendency of investors to find patterns where none exist, and to attribute to skill that which might be better credited to luck.

His second book is a corollary of sorts, almost the inverse to Fooled by Randomness: The Black Swan:

He’s vocal about his displeasure with most economists, academics and journalists. He’s usually wearing black. And he’s usually seen not smiling.

His latest status fascinated most of the people tricks to have a great day :

1) Smile at a stranger,  Continue reading

Antifragile

Side view of mature adult showing characterist...

In economic life and history more generally, just about everything of consequence comes from black swans; ordinary events have paltry effects in the long term.” –Nassim Nicholas Taleb

Nassim Taleb’s contribution to the world of finance are two fascinating concepts — essays really — subsequently expanded into book length. The first is Fooled By Randomness: The Hidden Role of Chance in Life and in the Markets, which describes the tendency of investors to find patterns where none exist, and to attribute to skill that which might be better credited to luck. Continue reading

From The Bed of Procrustes

Theseus and Procrustes. Side A from an Attic r...

I still believe Fooled by Randomness is the best work by Nassim Nicolas Taleb and then he add n over it by Black Swan followed by The Bed of Procrustes. Here are some thing which I found Philosophical and Practical Aphorisms :-

  • The three most harmful addictions are heroin, carbohydrates and a monthly salary.
  • To bankrupt a fool give him information.
  • Education makes the wise slightly wiser, but it makes the fool vastly more dangerous
  • The best revenge for a Liar is to convince him that you believe what he said. Continue reading
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