p. ix This book is the synthesis of, on one hand, the no-nonsense practitioner of uncertainty who spent his professional life trying to resist being fooled by randomness and trick the emotions associated with probabilistic outcomes and, on the other, the aesthetically obsessed, literature-loving human being willing to be fooled by any form of nonsense that is polished, refined, original, and tasteful. I am not capable of avoiding being the fool of randomness; what I can do is confine it to where it brings some aesthetic gratification.
p. xi I believe that the principal asset I need to protect and cultivate is my deep-seated intellectual insecurity. My motto is "my principal activity is to tease those who take themselves and the quality of their knowledge too seriously."
p. xviii Most journalists do not take things to seriously: After all, this business of journalism is about pure entertainment, not a search for truth, particularly when it comes to radio and television.
p. xxi There seems to be some evidence that conversations and correspondence with intelligent people is a better engine for personal edification that plain library-ratting (human warmth: Something in our nature may help us grow ideas while dealing and socializing with other people).
p. 30 The interesting thing about these physicists did not lie in their ability to discuss fluid dynamics; it is that they were naturally interested in a variety of intellectual subjects and provided pleasant conversation.
p. 58 The applicability of Solon's warning to a life in randomness, in contrast with the exact opposite message delivered by the prevailing media-soaked culture, reinforces my instinct to value distilled thought over newer thinking, regardless of its apparent sophistication - another reason to accumulate the hoary volumes by my bedside (I confess that the only news items I currently read are the far more interesting upscale social gossip stories found in Tatler, Paris Match, and Vanity Fair - in addition to The Economist). Aside from the decorum of ancient thought as opposed to the coarseness of fresh ink, I have spent some time phrasing the idea in the mathematics of evolutionary arguments and conditional probability. 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.
p. 67 Finally, I reckon that I am not immune to such an emotional defect [of monitoring seemingly important (but really meaningless) information real-time]. But I deal with it by having no access to information, except in rare circumstance. Again, I prefer to read poetry. If an event is important enough, it will find its way to my ears. I will return to this point in time.
p. 68 My problem is that I am not rational and I am extremely prone to drown in randomness and to incur emotional torture. I am aware of my need to ruminate on park benches and in cafes away form information, but I can only do so if I am somewhat deprived of it. My sole advantage in life is that I know some of my weaknesses, mostly that I am incapable of taming my emotions facing news and incapable of seeing a performance with a clear head. Silence is far better.
p. 71 One conceivable way to discriminate between a scientific intellectual and a literary intellectual is by considering that a scientific intellectual can usually recognize the writing of another but that the literary intellectual would not be able to tell the difference between lines jotted down by a scientist and those by a glib nonscientist.
p. 77 We do not need to be rational and scientific when it comes to the details of our daily life - only in those that can harm us and threaten our survival. Modern life seems to invite us to do the exact opposite; become extremely realistic and intellectual when it comes to such matters as religion and personal behavior, yet as irrational as possible when it comes to matters ruled by randomness.
p. 85 Veteran trader Marty O'Connell calls this the firehouse effect. He had observed that firemen with much downtime who talk to each other for too long come to agree on many things that an outside, impartial observer would find ludicrous (they develop political ideas that are very similar).
p. 92 There is a saying that bad traders divorce their spouse sooner than abandon their positions. Loyalty to ideas is not a good thing for traders, scientists - or anyone.
p. 102 Accordingly, it is not how likely an event is to happen that matters, it is how much is made when it happens that should be the consideration. How frequent the profit is irrelevant; it is the magnitude of the outcome that counts.
p. 122 I do not know if it applies to other people, but, in spite of my being a voracious reader, I have rarely been truly affected in my behavior (in any durable manner) by anything I have read. A book can make a strong impression, but such an impression tends to wane after some newer impression replaces it in my brain (a new book). I have to discover things by myself (…the "Stove is Hot"…). These self-discoveries last.
p. 124 I was at the age [teens and early twenties] when one felt like one needed to read everything, which prevented one from making contemplative stops.
p. 144 I will set aside the point that I see no special heroism in accumulating money, particularly if, in addition, there person is foolish enough to not even try to derive any tangible benefit from the wealth (aside from the pleasure of regularly counting the beans). I have no large desire to sacrifice much of my personal habits, intellectual pleasures, and personal standards in order to become a billionaire like Warren Buffett, and I certainly do not see the point of becoming one if I were to adopt Spartan (even miserly) habits and live in my starter house. Something about the praise lavished upon him for living in austerity while being so rich escapes me; if austerity is the end, he should become a monk or a social worker - we should remember that becoming rich is a purely selfish act, not a social one. The virtue of capitalism is that society can take advantage of people's greed rather than their benevolence, but there is no need to, in addition, extol such greed as a moral (or intellectual) accomplishment (the reader can easily see that, aside from very few exceptions like George Soros, I am not impressed by people with money).
p. 151 I will probably lecture him that Machiavelli ascribed to luck at least a 50% role in life (the rest was cunning and bravura), and that was before the creation of modern markets.
p. 175 It is obvious that the information age, by homogenizing our tastes, is causing the unfairness to be even more acute - those who win capture almost all the customers.
p. 198 What used to strike me as a child upon visiting museums is that ancient Greek statues exhibit men with traits indistinguishable from ours (only more harmonious and aristocratic). I was so wrong to believe that 2,200 years was a long time. Proust wrote frequently about the surprise people have when coming across emotions in Homeric heroes that are similar to those we experience today.
p. 231 For it is harder to act as if one were ignorant than as if one were smart; scientists know that it is emotionally harder to reject a hypothesis than to accept it (what are called type I and type II errors) - quite a difficult matter when we have such sayings as felix qui po'tuit cognoscere causas (happy is he who understands what is behind things). It is very hard for us to just shut up. We are not cut out for it.
p. 244 I conclude with the following saddening remark about scientists in the soft sciences. People confuse science and scientists. Science is great, but individual scientists are dangerous. They are human; they are marred by the biases humans have. Perhaps even more. For most scientists are hard-headed, otherwise they would not derive the patience and energy to perform the Herculean tasks asked of them, like spending eighteen hours a day perfecting their doctoral thesis. A scientist may be forced to act like a cheap defense lawyer rather than a pure seeker of the truth. A doctoral thesis is "defended" by the applicant; it would be a rare situation to see the student change his mind upon being supplied with a convincing argument. But science is better than scientists. It was said that science evolves from funeral to funeral. After the LTCM collapse, a new financial economist will emerge, who will integrate such knowledge into his science. He will be resisted by the older ones, but, again, they will be much closer to their funeral date than he.
p. 258 ...research on happiness shows that those who live under a self-imposed pressure to be optimal in their enjoyment of things suffer a measure of distress.... We know that people of a happy disposition tend to be of the satisficing [a blend of satisfying and maximizing] kind, with a set of what they want in life and an ability to stop upon gaining satisfaction. Their goals and desires do not move along with the experiences.... An optimizer, by comparison, is the kind of person who will uproot himself and change his official residence just to reduce his tax bill by a few percentage points. (You would think that the entire point of a higher income is to be free to choose where to live; in fact it seems, for these people, wealth causes them to increase their dependence!) Getting rich results in his seeing flaws in the goods and services he buys. The coffee is not warm enough.... The table is too far from the window...
p. 260 I came to this conclusion when, about a decade ago, I stopped using an alarm clock. I still woke up around the same time, but I followed my own personal clock. A dozen minutes of fuzziness and variability in my schedule made a considerable difference.... Living like this, one can also go to bed early and not optimize one's schedule by squeezing every minute out of one's evening. At the limit, you can decide whether to be (relatively) poor, but free of your time, or rich but as dependent as a slave.
p. 262 It took me an entire lifetime to find out what my generator is. It is: We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong (Fooled by Randomness) with us seems to flow from it.
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