People tend to justify random outcomes as non-random and rationalize chance outcomes as results of deliberate actions. As much as we want to “keep it simple, stupid” … It is precisely the simplification of issues that are actually very complex, which can be dangerous.

1. SOPHY JERARD_81
SOURAV MAJUMDER_82
SUBHASIS MONDAL_83

2. NASSIM NICHOLASTALEB
■ Born in 1960 in Amioun, Lebanon.
■ Masters in science from the University of Paris, MBA from theWharton School at the
University of Pennsylvania and a Ph.D. in Management Science from the University of
Paris- Dauphine.
■ A researcher, essayist, trader, practitioner of mathematical finance, hedge fund
manager
■ Other Works -The Black Swan (2007, N.Y.Times Bestseller),The Bed of Procrustes:
Philosophical and PracticalAphorisms (2010),Antifragile:ThingsThat Gain From
Disorder (2012), Skin in the Game: Hidden Asymmetries in Daily Life (2018)

3. Extracted points Related to this book
■ “it's more random than we think, not it is all random.” Chance favors
preparedness, but it is not caused by preparedness (same for hard work,
skills, etc.)
■ Things that happen with little help from luck are more resistant to
randomness.
■ “Mild success can be explainable by skills and labor.Wild success is
attributable to variance.”

4. If you're so rich, why aren’t you so
smart?
John Nero
(A conventional trader ) (specialized in quant. Finance product)
Take high risk so, returns are high. Investing inT-bills, trading safely
Low risk low return
Focusing on only profit conservative in taking risk
■ But in blowing up situation the profit seeker get affected more than the risk
manager.

5. A bizarre accounting method
■ Alternative history : Quality of decision cannot be solely jugged based on its
outcome.
■ Denigration of history : Uncertainty of the incidents.
■ In Russian roulette :
■ The result achieved but the cost of alternatives.
■ Reality is far more vicious (it delivers fatal bullet
infrequently)
■ After a few dozen tries , one forgets about the existence
of the bullet.

6. A mathematical meditation on history
■ Monte Carlo methods consist of creating artificial history.
■ A sample path can be either deterministic or random.
■ Monte Carlo Simulation : “ hindsight bias.”

7. THE MEDIAN IS NOTTHE MESSAGE
• Writer and Scientist Steven Jay Gould noticed that expected outcome and median do
not mean the same thing at all.
• SOTHERE IS ANASYMETTRY
• In the event of dying early in an event(say cancer disease) those dying early fall in the
region of negative skewness.
• And those dying early surviving fall in the region of positive skewness.
• Gould after discovering the concept of skewness wrote his “heartfelt piece”,
“THE MEDIAN IS NOTTHE MESSAGE”

8. THE AUTHOR’S CONCEPT OF MEAN(ALSO
CALLED EXPECTATION) BY USING AN
EXAMPLE OF GAMBLING
 Here expectation for event A is $0.999 and the expectation for event B is $-10. So there is a
total expectation of a loss of $9.001 i.e. close to $9.
 Here it can be seen that the frequency or probability of loss is totally irrelevant and it
needs to be judged in connection with the magnitude of the outcome.

9. THE BULLAND BEAR ZOOLOGY
■ Dr.Nassim argues that the notion “bullish” or “bearish” are often hollow words with no
application in a world of randomness.
 Here the expectation for market going up is 0.7 and the expectation for market going
down is 3. So,in total there is a total expectation of market going down is 2.3
 It is not HOW LIKELY an event is to happen that matters,but it is HOW MUCH is made
when it happens that should be the consideration.
 Similarly, how frequent is the profit is irrelevant, it is the magnitude of the outcome
that counts.

10. SURVIVORSHIP BIAS
(aka Monkeys onTypewriters)
■ Survivorship Bias is the logical error of concentrating on the people or things that
made it past some selection process and overlooking those that did not , because
many of their lack of visibility.
■ Survivorship Bias leads to false conclusion in various ways.
■ If one puts an infinite number of monkeys in front of typewriters there is a certainty
that one of them would come out with an exact version of the ILIAD(one of the two
Greek Epics)
■ Now would anyone bet their life savings that the same monkey would write the
ODYSSEY(the other of the two Greek Epics) next?

11. SURVIVORSHIP BIAS(aka Monkeys onTypewriters)
……….Continued
■ The author don’t deny that if someone performed better than the crowd
in the past , there is a presumption of this ability to do better in the
future.
■ But the presumption may be very weak.
■ It depends on two factors.They are:-
 The randomness content of the profession(for example investment
market volatility)
 The number of monkeys (for example the number of investment
managers)

12. SOMETHOUGHTSABOUT SUCCESS
AND LOSS IN LIFE
■ Construct a cohort of 10,000 managers with 50% per annum probability of success.
■ Eventually after 5 years we will be with 313 managers who made money each year.
■ We can sometime judge the success of people by their raw performance and personal
wealth but not always.
■ A large section of businessmen with outstanding track record will be no better than
randomly thrown darts --- they will fail to make an allowance for the role of luck in
their performance.

13. RANDOMNESS MAKESTHINGS
INTERESTING
■ Dr.Nassim was of the view that things become interesting when randomness enters
the game.
■ Th example of selection of winners from a room full of talented actors queueing for an
audition(off course the winners will be much smaller in number than the entire crowd
who participated)
■ The winner may had some acting skills or talents which catapulted him into fame but
so do all of others , otherwise they would not have come for audition.

14. Randomness in Human Life
 People tend to behave emotionally even in small activities of life
 Developing gambler’s ticks- behavioral distortions- association between betting
outcome and some physical move
 Cigarette smoking- being rational in perception of risk and probability and in the
same time acting foolishly
 Unintelligent behavior does not cover probability and randomness
 Emotional behavior provides a different set of calculation from rational behavior

15. Human BehaviorAnd Skepticism
 Not able to view things independent of each other
 Emotionally harder to reject a hypothesis than to accept it(type 1 error and type 2 error)
 Human bias to establish casual links
 Probability- not odds- but existence of alternative outcomes
 Skepticism-nothing with certainty, various degrees of conclusions formed
■ Against the concept of existence of single truth

16. Self Contradiction And Stoicism
 Self contradiction a way of contradicting oneself in changing circumstances
 Stoicism- used as a tool to be even with probability
 Randomness and personal elegance

17. T
H AN K
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