Jiun Ting Yong's Key Ideas from Fooled by Randomness
by Nassim Nicholas Taleb

The notion of path, as opposed to outcome, indicates that it is not a mere MBA-style scenario analysis, but the examination of a sequence of scenarios along the course of time.

We are not concerned with what the investor's worth would be in, say, a year, but rather of the heart-wrenching ride she may experience during that period.

For an idea to have survived so long across so many cycles is indicative of its relative fitness. Noise, at least some noise,was filtered out.

People tend to infer that because some inventions have revolutionized our lives that inventions are good to endorse and we should favor the new over the old.

It is frequently said in the markets, Bad trades catch up with you.

Mathematicians of probability give that a fancy name: ergodicity. It means, roughly, that (under certain conditions), very long sample paths would end up resembling each other.

Over a short time increment, one observes the variability of the portfolio (variance), not the returns. Our emotions are not designed to understand the point. We think with our emotions and there is no way around it.

It serves better to check portfolios at sufficiently large intervals to avoid letting your emotions take the driving seat.

A negative pang is not offset by a positive one (some behavioral economists estimate the negative effect to be up to 2.5 the magnitude of a positive one). It leads to an emotional deficit.

I can use data to disprove a proposition, never to prove one. I can use history to refute a conjecture, never to affirm it.

There are only two types of theories

1. Theories that are known to be wrong, as they were tested and adequately rejected.

2. Theories that have not yet been known to be wrong, not falsified yet,but are exposed to be proved wrong.

There is no rational reason to keep a painting you would not buy at its current market rate.