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I don't think "fooled by randomness" makes sense, because it presumes its conclusion. I do not believe that Warren Buffett is just a random guy who happens to

by nika 16y ago

I don't think "fooled by randomness" makes sense, because it presumes its conclusion. I do not believe that Warren Buffett is just a random guy who happens to always make the right stock picks. He makes the right stock picks not out of randomness but out of the opposite of randomness. (For instance he makes very few picks a decade.) While the competition to Buffett are often people who are much closer to "Random" (or would be better if they were random). The same thing can be said for a bunch of MBAs. It is not whether they are rich or not (which can be a factor of having been born into money or not) but whether they can make it rain. Sure, some will get lucky. But when you have a field of 100, and of those 100, 20 "got lucky" and made a pile of money once, and 1 of them might be poor, but made a small pile of money every quarter doing several different things... it is the consistency of the last guy-- the rainmaker-- that is appealing. Even if his net worth is smaller than the smallest of the 20 who "got lucky" or the dozens who may have started out rich. So, it is his actions as a process that speak to his qualities, not the size of his wallet. I think this is what the poster is saying.

seigenblues 16y ago
Yes, you're right. Esp your third paragraph -- having someone demonstrate that they can repeatedly succeed is the surest proof. On the other hand, you can try to analyze process, and guess at if that process can reasonably produce results -- but that's not really an easier problem. Let me paraphrase a story from the book that addresses Buffet. Taleb compares people playing the market to people flipping coins. If everyone in the US flipped a coin once a morning, after about four weeks, you'd expect to have maybe a thousand people who'd flipped all heads. You could go out and interview these people, find out what their 7 highly effective habits are, whatever, but you couldn't actually be sure to be learning anything about what's "really going on." On the other hand, if after four weeks, you found that all the people who flipped straight heads were clustered around Omaha, and all reported taking their coin-flipping-lessons from one guy in the town, then it might behoove one to look a bit closer. In both cases, you can study "process", but without an understanding of the phenomena, you might just be spinning your wheels, coming up with correlations rather than causations. TL;DR -- causal mechanisms are hard to find. You should read the book :)

by nika 16y ago

seigenblues 16y ago

Yes, you're right. Esp your third paragraph -- having someone demonstrate that they can repeatedly succeed is the surest proof. On the other hand, you can try to analyze process, and guess at if that process can reasonably produce results -- but that's not really an easier problem. Let me paraphrase a story from the book that addresses Buffet. Taleb compares people playing the market to people flipping coins. If everyone in the US flipped a coin once a morning, after about four weeks, you'd expect to have maybe a thousand people who'd flipped all heads. You could go out and interview these people, find out what their 7 highly effective habits are, whatever, but you couldn't actually be sure to be learning anything about what's "really going on." On the other hand, if after four weeks, you found that all the people who flipped straight heads were clustered around Omaha, and all reported taking their coin-flipping-lessons from one guy in the town, then it might behoove one to look a bit closer. In both cases, you can study "process", but without an understanding of the phenomena, you might just be spinning your wheels, coming up with correlations rather than causations. TL;DR -- causal mechanisms are hard to find. You should read the book :)