Nassim Taleb's book pulls the curtain back on our brain's inability to sort out brilliant performance from random luck. He points out that if you follow 5000 people who pick stocks for a living by pure chance 150 of them will outperform the stock market for 5 straight years. They will be thought of as brilliant and they can write books on how they did it. Next year when half of them fail to out perform the market people will say they became to comfortable with their success and lost their edge.
Nassim does recognize that some talent like the learned ability to play a musical instrument is not random.
He does point out that this randomness must also be applied to alternative medicine. When we can get a placebo cure rate 30 to 40% above background the bar is set fairly high for alternative medicine. He is even more blunt stating there is medicine and there are things that are not medicine.
Nassim Taleb - Fooled by Randomness - 7 min.
I'll be reading more of his books in the future. Of particular interest is his latest book Antifragile: Things That Gain from Disorder.
Nassim Taleb's book, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets is available from Amazon.com.
Nassim Taleb - Criticizes Summers, Bernanke and Obama
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