Random wealth

Author: (American) Taleb, translated by Sheng Fengshi
Publisher:
Publish Date: 2007-01-01
Features: When Taleb was still a novice trader in the stock market, he managed to survive a stock market crash, studying the storm for six months. He believed his survival was not due to any superiority over others but entirely due to luck—the role of luck in financial markets. However, people often underestimate the impact of randomness. They can’t help but seek explanations for things, which leads to various superstitions. This is why he wrote a book about luck—randomness. Taleb points out that genetically, we are still very close to uncivilized indigenous people. The formation of our beliefs is filled with superstition—even today (perhaps it must be said, especially today). One day, a person in a primitive tribe pinched their nose and soon after, it started raining. They then painstakingly developed a method of pinching their nose to pray for rain. Similarly, we attribute economic prosperity to the Federal Reserve lowering interest rates or attribute a company’s success to the new CEO’s arrival. We often draw connections between unrelated events, leading to mistakes in important life decisions and missing opportunities. Randomness is everywhere in life. Even professional mathematicians, skilled in probability calculations, are often fooled by randomness. Taleb concludes that while we cannot avoid randomness, we can learn to accept it. This is also a practical book. The randomness in the stock market is particularly typical—major fluctuations can occur in the blink of an eye. By learning from Taleb’s operational methods (which many traders are already doing), you can effectively avoid risks and even make huge profits when a black swan appears. It is absolutely reasonable to say that every stock trader should have a copy of this book.