How to Handle the World’s Uncertainty – Fooled by Randomness
Successful people often treat luck as if it were a skill, while those who fail repeatedly prefer to blame their defeats on bad luck.
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets is the first installment of Nassim Nicholas Taleb’s Incerto series, examining how randomness and chance shape our lives and markets. Taleb argues that if you cannot afford to lose, don’t play—no matter how high the probability of success, the potential cost of failure renders the odds irrelevant.
Life’s Curve
Note: The following is the author’s own summary.
There is a saying: “If you earn money outside the realm of your knowledge, you will eventually lose it all back”. This refers to gains made purely by luck.
A person’s luck rises and falls unpredictably, but each of us has a personal threshold of loss we can tolerate; if fortune dips below that threshold, growth halts forever.
In contrast, your knowledge curve only ever rises as long as you keep learning.
Therefore, a person’s total wealth is the sum of luck and knowledge.
Returning to Taleb’s thesis:
In uncertain worlds, preserving a margin of safety is far more critical than merely maximizing success probability.
Fortunate Fools
Humans are naturally averse to uncertainty, so we study probability and statistics to impose certainty on randomness; in this pursuit, we become the “random-walking fool” of Taleb’s title. Among us will always be a few “lucky fools,” just as a troop of monkeys, given enough tries, will occasionally pick a winning stock—yet we rarely credit pure chance.
Taleb illustrates survivor bias: we idolize those few who succeed and attribute their rise to skill rather than luck, ignoring the countless others who failed under similar circumstances.
Reflections
The deepest insight from this book is that the world is fundamentally uncertain, and only by thinking in longer time horizons—learning from the sweep of history—can we glimpse true patterns. Short-term success may belong to chance, but long-term, wise observers leverage historical lessons while safeguarding against catastrophic loss.
Finally, a parting quote from the book to close today’s reading:
——Fooled by Randomness
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
- Author: Nassim Nicholas Taleb
- First published: 2001
- Category: Cognitive Growth
— From @不略
