Wednesday, December 10, 2008

Fooled By Randomness: Chapter 1

The following summary was written by Frank Voisin, who regularly writes for Frankly Speaking. Recently, Frank sold four restaurants and returned to school to complete a combined LLB/MBA.

Part One: Solon’s Warning
Solon’s warning is “The uncertain future has yet to come, with all variety of future; and him only to whom the divinity has guaranteed continued happiness until the end we may call happy.” In other words, “it ain’t over til it’s over.”

Part one of the book discusses how the things which we have received by luck may be taken away by luck just as easily.

Chapter One: If You’re So Rich, Why Aren’t You So Smart?
Taleb introduces, by way of parable, the argument that we cannot judge a person’s success by their performance and wealth because of Solon’s warning: it ain’t over till it’s over. Just because you are successful now doesn’t mean that success wasn’t generated in an incredibly risky manner that is inherently inconsistent and will come crashing down at any moment.

Conclusion: Don’t let someone’s current success fool you into thinking they must be skilled at what they do. There is a decent chance they are the beneficiary of dumb luck, in which case their success is just as likely to disappear due to dumb luck! If you work hard and are consistent in your growth, be confident in what you do, even as others temporarily exceed you.

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