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This book is about luck disguised and perceived as nonluck (that is, skills),
... disguised and perceived as nonrandomness (that is, determinism).
	[prologue, opening lines xxxix]

Politics:
a country's president discounting on the jobs that "he" created, "his"
recovery, "his predecessor's inflation".  xl

Economics:
we link economic prosperity to some rate cut by the Federal Reserve Board, or
the success of a company with the appointment of the new president "at the
helm".
Bookstores are full of biographies of successful men and women presenting
their specific explanation on how they made it big in life (we have an
expression, "the right time and the right place" to weaken whatever
conclusion can be inferred from them).

SYMBOLISM is the child of our inability and unwillingness to accept
randomness; we give meaning to all manner of shapes; we detect human figures
in inkblots. I saw mosques in the clouds announced Arthur Rimbaud the
19th-century French symbolic poet. This interpretation took him to "poetic"
Abyssinia (in East Africa), where he was brutalized by a Christian Lebanese
slave dealer, contracted syphilis, and lost a leg to gangrene. He gave up
poetry in disgust at the age of 19, and died anonymously in a Marseilles
hospital ward while still in his thirties. But it was too late. European
intellectual life developed what seems to be an irreversible taste for
symbolism—we are still paying its price, with psychoanalysis and other fads.

Literature:
the literature professor invests a deep meaning into a mere coincidental
occurrence of word patterns, while the financial statistician proudly
detects "regularities" and "anomalies" in data that are plain random.  The
French poet Paul Valery was surprised to listen to a commentary of his
poems that found meanings that had until then escaped him (of course, it
was pointed out to him that these were intended by his subconscious).

We have been reading lengthy and complex messages in just about any
manifestation of nature that presents jaggedness (such as the palm of a hand,
the residues at the bottom of Turkish coffee cups, etc.).

Optimists, [espousing an] Utopian Vision, associated with Rousseau, Godwin,
   Condorcet, Thomas Paine, and conventional normative economists, 
   (rational choices are what is deemed good for you)

Pessimists: (more realistic): Tragic Vision of humankind that believes in
   the existence of inherent limitations and flaws in the way we think and
   act," [associated with] Karl Popper (falsification and distrust of
   intellectiual "answers", actually of anyone who is confident he knows
   anything with certainty), Friedrich Hayek [AM: fatal conceit of big
   governments] and Milton Friedman (also suspicion of govts), Adam Smith
   (intention of man), Herbert Simon (bounded rationality), Amos Tversky
   and Daniel Kahneman (heuristics and biases), the speculator George
   Soros, etc.  The most neglected one is the misunderstood philosopher
   Charles Saunders Peirce, who was born a hundred years too early [he
   coined the term scientific "fallibilism" as opp to papal infallibility.)

Needless to say the ideas in this book fall squarely into the tragic
category:  We are faulty and there is no need to bother trying to correct our
flaws.  We are so defective and so mismatched to our environment that we can
just work around these flaws.
my brain (not Fooled by R) is in a fierce fight w my emotions (completely
F by R).  xlv

As an empiricist (actually a skeptical empiricist) I despise the moralizers
beyond anything on this planet.

Croesus was so irked by the manifest lack of impression on the part of this
illustrious visitor [Solon] that he attempted to extract from him some
acknowledgment He asked him if he had known a happier man than him.
Solon: cabt't tell - may change in course of time. 3

The modern equivalent has been no less eloquently voiced by the baseball
coach Yogi Berra, who seems to have translated Solon’s outburst from the pure
Attic Greek into no less pure Brooklyn English with “it ain’t over until it’s
over,” or, in a less dignified manner, with “it ain’t over until the fat lady
sings.” 4

Yet the story of Croesus has another twist. Having lost a battle to the
redoubtable Persian king Cyrus, he was about to be burned alive when he
called Solon’s name and shouted (something like) “Solon, you were right”
(again this is legend). Cyrus asked about the nature of such unusual
invocations, and he told him about Solon’s warning. This impressed Cyrus so
much that he decided to spare Croesus’ life, as he reflected on the
possibilities as far as his own fate was concerned. People were thoughtful at
that time.

Russian roulette is more than intellectual to me - I lost a comrade to this
"game" during the Lebanese war, when we were in our teens. 24

Alternative history

I start with the platitude that one cannot judge a performance in any given
field (war, politics, medicine, investment) by the results,
but by the costs of the alternative (i.e., if history played out in a
different way, [called] alternative histories).   Those who fail agree, but
those who succeed attribute their success to the quality of their decision.
22

[Wealth of a man should be measured not by his actual wealth, but by how he
would have done if things had turned out in some alternative ways.  The
lottery winner who becomes richer than a dentist is really not rich.]

Possible Worlds 24

alternative histories appear in many disciplines.

Philosophy: Leibniz's possible worlds:
God's mind includes an infinity of possible worlds, of which he selected just
one.  These nonselected worlds are worlds of possibilities...
Philosophers have a branch of logic - whether some property holds
across all possible worlds --> related to notions in Phil of Lg, Paul
Kripke's possible world semantics.

Economics:
Kenneth Arrow and Gerard Debreu : "states of nature"
   --> "state space" method - cornerstone of neoclassical econ theory and
	mathematical finance.
  	simplified version called "scenario analysis" or "what-ifs"

Reality is far more visious than Russian roulette. First, it delivers the
fatal bullet rather infreq [say 1/1000s].

BLACK SWAN PROBLEM:
After a few dozen tries, one forgets about the existence of a bullet, under a
numbing false sense of security. 26

Any reading of the history of science would show that almost all the smart
things that have been proven by science appeared like lunacies at the time
they were first discovered.
[AM: I would use different words for "proven" and "discovered" in this
sentence, esp given Taleb's Popperian p.o.v.]
Try to explain relativity to a journalist. 39-40

From the standpoint of an institurion, the existence of a risk manager has
less to do with actual risk reduction than it has to do with the impression
of risk reduction.
EPIPHENOMENALISM: does the compass move the boat?  By "watching" your risks,
you may have an impression that you are reducing them.

IMPLICIT AND EXPLICIT MEMORY:
Swiss doctor [Edouard] Claparède had an amnesic patient completely
crippled... he would have to reintroduce himself once every 15 min for her to
remember who he was.  One day he [hid] a pin in his hand before shaking
hers. The next day she quickly withdrew here hand as he tried to greet her,
but still she did not recognize him.

  [from Daniel L. Schacter
  Implicit Memory: History and Current Status [Critical Review]
  J Experimental Psychology: Learning, Memory, and Cognition
  1987, Vol. 13, No. 3. 501-518

  Claparede ( 1911 / 1951) reported observations that were similar to
  Korsakoff's, although they are somewhat better known today. Clapar~de
  described the now famous example of an amnesic woman who refused to shake
  hands with him after he pricked her with a pin, even though she did not
  explicitly remember that Clapar~de had done so. Clapar~de interpreted this
  implicit expression of memory in terms of a disconnection between the ego
  and the memory trace. At about the same time, Schneider ( 1912, cited in
  Parkin, 1982) reported experiments in which he demonstrated that amnesic
  patients required progressively less information across learning trials to
  identify fragmented pictures, even though patients did not explicitly
  remember having seen the pictures before.

Implicit memory in Hysterical amnesiacs

Pierre Janet (1893) described a case in which a woman became amnesic after
being mistakenly informed by a man who appeared suddenly in her doorway that
her husband had died.  Even though she subsequently could not consciously
remember this incident, she "froze with terror" whenever she passed the door
that the man had entered.  Janet concluded that hysterical amnesia consists
of two key factors: "1. the inability of the subject to evoke memories
consciously and voluntarily, and 2. the automatic, compelling, and untimely
activation of these same memories" ( 1904, p. 24).

Freud's observations on hysteria were similar to Janet's insofar as he
emphasized that traumatic memories, inaccessible to consciousness, were
expressed unconsciously by the patient as hysterical symptoms (see Freud &
Breuer, 1966, for relevant cases). Although Freud later changed this view
(Ellenberger, 1970), he never abandoned the idea that unconscious memories
exert powerful influences on behavior.

The American psychiatrist Morton Prince clearly delineated the importance of
implicit memory for normal cognitive function.  ... concluded that " . . . a
conscious experience that has passed out of mind may not only recur again as
conscious memory, but may recur subconsciously below the threshold of
awareness" (p. 8). These observations, Prince argued, demonstrate that
experiences that are not available to conscious or voluntary recall
nevertheless influence cognition and behavior in everyday life:

   In normal life ideas of buried experiences of which we have no
   recollection intrude themselves from time to time and shape our judgments
   and the current of our thoughts without our realizing what has determined
   our mental processes. We have forgotten the source of our judgments, but
   this forgetfulness does not affect the mechanism of the process. (p. 68)

Contents

Preface and Acknowledgments
Chapter Summaries
Prologue                                                      1
Solon's Warning - Skewness, Asymmetry, Induction              7
  1           If You're So Rich Why Aren't You So Smart?      11
  2   A Bizarre Accounting Method                             26
  3   A Mathematical Meditation on History                    40
  4   Randomness, Nonsense, and the Scientific Intellectual   60
  5   Survival of the Least Fit - Can Evolution Be Fooled by Randomness?      68
  6   Skewness and Asymmetry                                  84
  7   The Problem of Induction                                99
Monkeys on Typewriters - Survivorship and Other Biases        111
  8   Too Many Millionaires Next Door                         117
  9   It Is Easier To Buy and Sell Than Fry an Egg            125
  10  Loser Takes All - On the Nonlinearities of Life         142
  11  Randomness and Our Brain: We Are Probability Blind      149
Wax in my Ears - Living With Randomitis                       169
  12  Gamblers' Ticks and Pigeons in a Box                    175
  13  Carneades Comes to Rome: On Probability and Skepticism  182
  14  Bacchus Abandons Antony                                 191
      Epilogue: Solon Told You So                             196
      Notes                                                   197
      Index                                                   198
      About Texere                                            204

---
Fooled By Randomness is to conventional Wall Street wisdom approximately
what Martin Luther's ninety-nine theses were to the Catholic Church.
Malcolm Gladwell, in The New Yorker
Finally in paperback, the word-of-mouth sensation that will change the way
you think about the markets and the world.This book is about luck: more
precisely how we perceive luck in our personal and professional
experiences.

Set against the backdrop of the most conspicuous forum in which luck is
mistaken for skill -- the world of business -- Fooled by Randomness
is an irreverent, iconoclastic, eye-opening, and endlessly entertaining
exploration of one of the least understood forces in all of our lives.