TIP609: Fooled by Randomness by Nassim Taleb

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 23 February 2024

⏱️ 66 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Clay reviews Nassim Taleb’s book – Fooled by Randomness. Nassim Taleb is a Lebanon-born American mathematician and statistician whose work concerns problems of randomness, probability, and uncertainty. He’s very well known for his popular books, including The Black Swan, Antifragile, Skin in the Game, and Fooled by Randomness. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro. 01:37 - The role of luck in investing. 04:51 - Biases that get investors into trouble, such as the survivorship bias and the endowment effect. 10:09 - Why we should develop a sense of skepticism and humility. 15:52 - Why it’s so important to understand alternative histories. 30:47 - Why humans are more prone to make investment decisions based on emotions rather than facts and probabilities. 37:31 - What the firehouse effect is. 39:33 - The story of a trader who got married to his positions which ended up being a value trap. 48:08 - What chaos theory is. 58:54 - How Taleb’s investment strategy capitalizes on asymmetric opportunities. 62:06 - Distinguishing a good process from a good outcome. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Nassim Taleb’s books: Fooled by Randomness, Antifragile, The Black Swan, & Skin in the Game. Episode Mentioned: TIP558: How Ackman & Taleb Profited Billions During Market Crashes w/ Scott Patterson | YouTube Video. Episode Mentioned: TIP597: Darwin's Investing Lessons w/ Kyle Grieve | YouTube Video. Episode Mentioned: TIP579: Big Mistakes by Michael Batnick | YouTube Video. Follow Clay on Twitter. Learn more about the Berkshire Summit by clicking here or emailing Clay at [email protected]. Check out all the books mentioned and discussed in our podcast episodes here. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: River Toyota NetSuite TurboTax Fidelity Linkedin Marketing Solutions Wise Fundrise NDTCO Vacasa NerdWallet BiOptimizers - Nootopia Babbel Efani Shopify HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	You're listening to TIP.
0:02.0	Hey everyone, welcome to the investors podcast.
0:05.0	I'm your host, Clay Fink, and today I'm so excited to share what I learned from reading
0:10.0	this wonderful book called Fooled by Randomness by Niseim Tlem.
0:13.8	Tileb is a well-known author and options trader and we actually discussed his
0:17.9	investment approach in detail with Scott Patterson back on episode 558.
0:22.4	Tileb is also fairly well known for his Patterson back on episode 558.
0:22.6	Taleb is also fairly well known for his books titled The Black Swan,
0:26.7	Anti Fragile, and Skin in the Game.
0:29.4	And Taleb, he's really essentially devoted his entire life to immersing himself in these problems of luck,
0:36.6	uncertainty, probability, and knowledge.
0:39.9	So during this episode, I'll be touching on the role of luck in investing.
0:44.0	Biocese that get investors into trouble such as survivorship bias in the endowment effect.
0:49.1	Why we should develop a sense of skepticism and humility, the need to understand alternative histories,
0:54.5	Tuleb's personal trading strategy, distinguishing a good process from a good outcome
0:59.7	and much more. I really enjoyed going through this book and I'm so excited to share these
1:04.2	lessons with you today. With that I hope you enjoy today's episode. Celebrating 10 years. You are listening to the Investors Podcast Network.
1:16.4	Since 2014, we studied the financial markets and read the books that influenced
1:21.4	self-made billionaires the most. We keep you informed
1:24.6	and prepared for the amount of
1:45.2	randomness in financial markets and how markets might be a little bit noisier than we might realize.
1:51.8	It's also a great read to really better understand
	...

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