#050 - Fooled by Randomness: Nassim Taleb (Incerto Series)

rational vc

Key Takeaways  People often underestimate the role of chance in their achievementsMild success can be explainable by skill, but wild success is attributable to variance In the long run, the “lucky” regress to the mean Understand Power Laws when investing; the wins of a few investments make up for the losses on many investments, and then some Survivorship Bias: the tendency to focus on successful individuals without considering those who failed due to random factors The probability of the loss must be judged in connection with the magnitude of the outcome; it is not the likelihood of an event that matters, but the magnitude of the outcome in connection with the likelihood of the event that does  Maximizing the probability of winning does not maximize the expected value from the game The confidence in which you make your decision is more important than the expected value that comes from that decision A mistake is not something to be determined after the fact, but in the light of the information until that point 

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Timestamps:

(00:00) Intro / chit-chat
(20:11) Randomness & Luck
(24:46) Monte Carlo Simulation
(31:09) Ergodicity
(31:39) Hindsight Bias
(38:00) Survivorship Bias
(39:50) Asymmetric Bets / John & Nero
(49:53) Skewness & Asymmetry
(57:19) Pascal's Wager
(1:00:53) Induction & Chaos Theory
(1:03:22) Chapter 11
(1:08:45) System-1 vs System-2 Thinking
(1:10:03) Satisficing
(1:20:08) Normative vs Positive Thinking
(1:25:52) Signal vs Noise
(1:28:20) Heuristics
(1:33:45) Final Part of Book (Part 3's Importance)
(1:44:41) Favourite Quotes / Our Lives
(2:06:11) Final Thoughts

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