Fooled by Randomness...

This is a post about a book that i am reading at present called as "Fooled by Randomness". While the book is about the role of randomness in our everyday lives, particularly in the financial markets it is a book littered with nuggets of smart thoughts.... Irreverent to the core, the author has used words very intelligently to convey a thought... Some of the following are excerpts which I felt like sharing with someone upon reading... and so, on a cloudy evening, stuck in the lab, I take recourse to the book and pick out the pieces, i liked the most... These are not the ones I agree with completely but they were entertaining and sometimes insightful nonetheless... "This book is about luck disguised and perceived as nonluck (that is, skills) and, more generally, randomness disguised and perceived as non-randomness (that is, determinism). It manifests itself in the shape of the lucky fool, defined as a person who benefited from a disproportionate share of luck but attributes his success to some other, generally very precise, reason." "At the cost of appearing biased, I have to say that the literary mind can be intentionally prone to confusion between noise and meaning, that is, between a randomly constructed arrangement and a precisely intended message. However, this causes little harm; few claim that art is tool of investigation of the truth - rather than an attempt to escape it or make it more palatable." "All my life, I have suffered the conflict between my love for literature and poetry and my profound allergy to most teachers of literature and "critics". The french thinker and poet Paul Valery was surprised to listen to a commentary of his poems that found meanings that had until then escaped him (of course, it was pointed out to him that these were intended by his subconscious)." "I start with the platitude that one cannot judge a performance in any given field (war, politics, medicine, investments) by the results, but by the costs of the alternative (i.e., if history played out in a different way). Such substitute courses of events are called alternative histories. Clearly, the quality of a decision cannot be solely judged based on its outcome, but such a point seems to be voiced only by people who fail (those who succeed attribute their success to the quality of their decision)." "Beware the confusion between correctness and intelligibility. Part of conventional wisdom favours things that can be explained rather instantly and in a nutshell - in many circles it is considered a law. What is easy to conceive is clear to express / words to say it would come effortlessly. ----------------- Borrowed wisdom can be vicious. I need to make a huge effort not to be swayed by well sounding remarks. I remind myself of Einstein's remark that common sense is nothing but a collection of misconceptions acquired by age eighteen." "The poetry and language lover in me was initially depressed by the account of 'exquisite cadavers' poetic exercise, where interesting and poetic sentences are randomly constructed. By throwing enough words together, some unusual and magical sounding metaphor is bound to emerge according to the laws of combinatorics. Yet one cannot deny that some these poems are of ravishing beauty. Who cares about their origin if they manage to please out aesthetic senses? The story of the exquisite cadavers is as follows. In the aftermath of the first world war, a collection of surrealist poets - which included Andre Breton, their pope, Paul Eluard, and others - got together in cafes and tried the following exercise (modern literary critics attribute the exercise to the depressed mood after the war and the need to escape reality). On a folded piece of paper, in turn, each one of them would write a predetermined part of a sentence, not knowing the others' choice. The first would pick an adjective, the second a noun, the third a verb, the fourth an adjective, and the fifth a noun. The first publicized exercise of such random (and collective) arrangement produced the following poetic sentence: The exquisite cadavers shall drink the new wine. Impressive ? It sounds even more impressive in the native french. Quite impressive poetry has been produced in such a manner, sometimes with the aid of a computer." "In his Treatise on Human Nature, the scots philosopher David Hume posed the issue in the following way (as rephrased in the now famous black swan problem by John Stuart Mill): No amount of observations if white swans can allow the inference that all swans are white, but the observation of a single black swan is sufficient to refute that conclusion." "No man has ever influenced the way scientists do science more than sir Karl - in spite of the fact that many of his fellow professional philosophers find him quite naive (to his credit, in my opinion). Popper's idea is that science is not to be taken as seriously as it sounds (Popper when meeting Einstein did not take him as the demigod he thought he was). There are only two types of theories: 1) Theories that are known to be wrong, as they were tested and adequately rejected (he calls them falsified). 2) Theories that have not yet been known to be wrong, not falsified yet, but are exposed to be proved wrong. Why is a theory never right ? Because we will never know if all the swans are white. The testing mechanism may be faulty. However, the statement that there is a black swan is possible to make. A theory cannot be verified." "Popper's falsification is intimately connected to the notion of an open society. An open society is one in which no permanent truth is held to exist; this would allow counter ideas to emerge. ------- Popper believed that any idea of utopia is necessarily closed owing to the fact that it chokes its own refutations. The simple notion of a good model for society that cannot be left open for falsification is totalitarian. I learned from Popper, in addition to the difference between an open and closed society, that between an open and a closed mind." "How much can past performance, be relevant to forecasting future performance ?"