# Fooled by Randomness  ## Metadata - Author: [[Nassim Nicholas Taleb]] - Full Title: Fooled by Randomness - Category: #books ## Highlights - Bad trades catch up with you, it is frequently said in the markets. 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, not the returns. In other words, one sees the variance, little else. I always remind myself that what one observes is at best a combination of variance and returns, not just returns (but my emotions do not care about what I tell myself). Our emotions are not designed to understand the point. The dentist did better when he dealt with monthly statements rather than more frequent ones. Perhaps it would be even better for him if he limited himself to yearly statements. (If you think that you can control your emotions, think that some people also believe that they can control their heartbeat or hair growth.) - Extreme empiricism, competitiveness, and an absence of logical structure to one’s inference can be a quite explosive combination - Survivorship bias implies that highest performing realization will be the most visible.