Disinformation and Fooled by Randomness

[@huberhg]

Excellent explanation. Nitpicking the emotional, the salient, the particular, the anecdotal, the sensational, an unrepresentative sample, a tiny fraction, one element in a system, one node in a network, one ant or one bee, the noise, the specific... over the general, the abstract, the ensemble, the whole, the totality... The worst part, I'm human and I fall for it.

[@xntumrfo9ivrnwf]

"one node in a network"... reminds me a vol node

[@theromanmarcus]

So how do you navigate the media? How do you distinguish between signal and noise, i.e. what news to trust and what to ignore?

[@huberhg]

@@theromanmarcus Don't watch the news. It's mostly noise, (only watch and read the news from one month ago and you'll see how much of it was noise and it's useless by now), you'll get the big news some way or another. I'd recommend to read books, especially old ones, those that have stood the test of time. A much better answer to your question is inside the books of prof. Taleb, I can't recommend them enough.

[@thamalones]

Thank you maestro Taleb for always sharing helpful ideas that I myself couldn’t have thought of, yet you manage to graciously shed light on them. Thank you once again.

[@theboogie_monsta]

This phenomenon also applies with culture - i.e. books, music, film etc. It is easy to identify significant trends and works of art from a distance of time, whereas the contemporary situation is very 'noisy' and there is a huge amount of statistical instability which it takes great expertise to navigate.

[@HomegrownJoan]

Nailed it, again! This is also the social media strategy of the debunking- science based - pseudoscience crowd.

[@ihave3heads]

Daniel Kahneman's and your books are the only ones I've found found useful (besides math textbooks) lately. Here's how I think of it: 1. Overconfident predictions are mistaken as information. 2. When someone's overconfident predictions (randomly) become true, they are mistaken for experts.

[@vend96etta]

This has led me to believe that in the financial markets investors and traders tend to treat famous investors like prophets. (f. e. if Michael Burry bought a stock) . NN Taleb tells us that this is just survivorship bias. If the 2008 crash had happend a few years later Burry would have been broke because the short premiums would have kicked in.

[@klam77]

I'm very often an expert

[@robbiesands166]

What math textbook would you recommend starting with. Last math class i took was calc 201, 6 years ago. I know algebra is prob the most important.

[@Belapp-i5c]

@@robbiesands166 Undergrad Probability and Statistics (Free MIT Online) - Along with a prob book with real life examples. Daniel Kahneman's book. Honestly start with that - it'll change the way your perceive a lot of info. If you let it.

[@heinzheinz1650]

His first Argument is one of the techniques discussed in Schopenhauer's "Eristic Dialectic". But Taleb reshapes it nicely to todays information system, rather a disputation of 2 persons. Great!!!

[@doctorangry3227]

Thank you for calling me a friend at the beginning of the video. I'm glad to have you as a friend.

[@mrpaolorossetto]

Good morning Nassim! Cheers from Italy 🇮🇹

[@argirisdarzentas2865]

I am currently reading fooled by randomness. Thanks for your books and efforts to educate

[@hrishikeshhardikar4383]

Maestro, please keep making more of these non-technical and easy to understand videos

[@nichobarton]

Phenomenal in its simplicity

[@NicholasEymann]

this was the best one yet!

[@heinzheinz1650]

An interesting cross ref on such statistics has been made by David Spiegelhalter at EFSA Symposium 2018. Easy to find here.

[@imadmoujahid3431]

Thank you, Maestro.

[@gordongordon98]

Focus on the quality of information you are inputting into your mind Focus on the quality of information you are outputting to the world

[@Senecamarcus]

Thank you maestro for all that you do. If I was wealthy like you I wouldn’t educate a lot of people that are unappreciative. Thanks once again!!

[@ytflix776]

Reminds me of this connections made by Marshall McLuhan in The Gutenberg Galaxy: "Chapter 18 of J. Huizinga's The Waning of the Middle Ages is devoted to this theme of how in an oral society, ancient or modern, ... every event, every case, fictitious or historic, tends to crystallize, to become a parable, an example, a proof, in order to be applied as a standing instance of a general moral truth. In the same way every utterance becomes a dictum, a maxim, a text. For every question of conduct Scripture, legends, history, literature, furnish a crowd of examples or of types, together making up a sort of moral clan, to which the matter in question belongs." and "Terror is the normal state of any oral society, for in it everything affects everything all the time." Twitter (along with other media and technologies) is nudging us towards "pre-literate" ways of thinking.

[@alexplotkin3368]

A deficit in our understanding of reality. Excellent expression sir!

[@75Yoshua]

One of the best lesson of the series.

[@RichardKinch]

"Most days, 99.9 pct of the news is noise. The last few days, it's all signal." -- NNT earlier this month

[@WillN2Go1]

'The salient.' Excellent point. I've repeatedly witnessed more experienced investors and financial people interrupting with specific anecdotes and 'telling details,' that merely by their emphasis (perhaps also the suit they are wearing) attaches critical importance to. Ah, so I'm supposed to sell off my stake in Apple because Samsung is about to release blahblahblah. (No one at Samsung is making the same claim. They have a good idea and hope it will increase sales.) I'd certainly be more impressed and influenced if I hadn't consistently beaten them in investing for over a dozen years. Also while growing up I couldn't help but notice that the more important the person, the more uncomfortable the suit or business outfit looked the more likely they were wrong. They had to wear the suit or no one would pay any attention. I was just a kid, but it also seemed even they didn't believe what they were saying. (I used to teach 15 year olds, almost all of whom were failing. I'd read them the memos from superintendent of schools and every time they'd be laughing by the second or third paragraph. I just couldn't get across to them that if they added a little science and math to their basic intelligence they could conquer the world.) The alternative is not that I have a better understanding or better anecdotes or details, but that I'm willing to take risks based on my flawed understanding. It's better to venture into a dark room without a flashlight, than to attempt it with a flashlight pointing in the wrong direction. I was desperate to invest in Tesla in 2016 because I believed in what they were doing. A year later I read Skin in the Game and then confabulated having read it first. No, I had just already done what Taleb wrote. He also wrote that likely no one becomes a stoic because they learn about it, likely they're already thinking in that way. That was my experience. My favorite vaccination nonsense statistic is: All the people who were vaccinated against the small pox in the 19th century are dead - every single one of them. So for investing I asked the question: if this were 50, 100, 150 years ago what would be the best investment? There may be now forgotten companies that had 10,000 percent gains in a matter of months, but over time it was the major innovative companies. So I bet on Apple, now I'm betting on Tesla. I'm not betting on crypto, I won't hire a financial planner. (I did buy a couple of suits. That's from Seneca.) I was also surprised to learn that the stock market had more green days than red. My experience of guessing up or down before checking stock prices was that I seemed to be wrong at least 80% of the time. (I don't even know how that could even be possible.) I've done things where I've repeatedly just guessed at some outcome and over time I've gotten better and better at it (positive feedback loops) Not stocks. I figured out that if you actively trade the 'best investment of the past century' Apple - you'll probably go broke. If you hold it for a long time - you'll get rich. But for how long? I compared Apple's annual market cap for twenty years. (Apple stock has actually done better than this because they've bought back a lot of shares.) Apple had 3 years of negative gains and one flat year. How about over two years? Only one two year period was negative. Three year periods? All winners. In fact what I was able to figure out was that if at any time over that twenty years you bought Apple at any price and then waited three years - you beat S&P hands down. It was a dent to my ego as I just learned not that I was smart, but that I wasn't stupid. I've since been saying that it's a lot harder to become a good carpenter than a successful investor. I'm not sure if I was ever really good at carpentry, but my net worth supports the other. The most difficult parts of investing are: the first $100,000 and patience (or not doing too many stupid things). That's it - you don't actually have to be smart. This probably why I've met so many frightened, idiotic, small minded people with lots of money.

[@EmissaryOfSmeagol]

Very succinct and clear.

[@johann5924]

Seems reasonable, but how does it invalidate Greenwald? His claims are more complex than "Detail A is representative of the whole".

[@TamerTSalameh]

Thank you so much, outstanding discourse.

[@eaomaya]

Thanks for the video! 🙂 Take Care!

[@imadmoujahid3431]

thank you again maestro, i still get fooled easily... . and when i get panic i make stupid mistakes, i need more videos like this, i must develop a filter.

[@KevinFlowersJr]

While your books are phenomenal, it's great to see you producing more bit-sized video content like this. For better or worse, this is the way you reach the next generation. "A man has made a start on discovering the meaning of human life when he plants shade trees under which he knows full well he will never sit." -Elton Trueblood Keep on planting, Dr. Taleb. ✊

[@jobob47]

great quote from trueblood.

[@DB-su5qp]

Anyone who has actually planted a tree rather than just read quotes about them will know that it takes about 15 year max to get appreciable shade from it. So this quote so beloved of the armchair intellectuals is like saying "why would I have a child when I will never be alive to see him using a zimmer frame"

[@ImmanuelCan]

Rewatching that every 1-2 weeks. It's my disinformation vaccine :D

[@kajet666]

Very well explained, and in layman's terms.

[@danapeck5382]

Fighting Bernays technique, invaluable

[@m.m.2208]

Mr Taleb, You have a very respected an unique view of the world and markets. Another Gentleman who is equally interesting is Hugh Hendry. He has started a very interesting weekly program where he offers his interpretations of current events. It would be a delight if you could structure such an offering should you care to engage your fans. The investor class would greatly benefit from your balanced and unbiased insights. Thank you for sharing your wisdom for the seekers.

[@nandopelusi7699]

Yes, and those vulnerabilities are common causes of psychological neuroses and self-defeating behaviors.

[@golchha_J]

Indeed, our minds HATE randomness - we always look for the why, the reason behind an occurrence. That search is often futile, and also painful.

[@malakai0321]

Hello Mr Taleb , I enjoyed this video however I was wondering when we could expect part 2 of “Why we never use black scholes” . According to one of your replies in the last video , you were going to explain other ways traders priced options before the formula was “invented” and I’m eager to learn how they did it.

[@nntalebproba]

Soon!

[@biomedicalit]

Thank you!

[@sjouanny]

Really enjoyed this Nassim, thanks.

[@russramsey4509]

Can you give your opinion on seasonality? Is there any amount of data that would provide statistical significance to a trading system that buys on the historically lowest day of the month and sells on the highest? Do all system traders have apophenia?

[@jankorecky151]

Great info. Maybe a higher resolution camera in 2022 would be appropriate :)

[@nntalebproba]

Please go watch someone else.

[@oiausdlkasuldhflaksjdhoiausydo]

Iraq, Afganistan and Palestine are nitpicking. You’re so right maestro.

[@xuxu6974]

Hi, I have one question about the last minute of the video, which is in the book FBR. As my understanding, if using gaussian distribution to describe the return of the dentist, with 10% as the average and 15% as one sigma, I can get 93% of success for one year. But I don't understand how to get 77% for the quarter observation. Thanks.

[@giudb2876]

Grazie Maestro

[@zpettigrew]

Good stuff Nicolas. I kinda wish you'd have explained this to the public before COVID though. Not sure if people are even capable of critical thought now.

[@ldv1452]

Is there any mathematical procedure (or even heuristic) to determine the ideal observational scale given the nature of the problem?

[@F--B]

I think this is where wisdom and experience come in...

[@klam77]

Very nicely explained! Nice 🙂. I enjoy videos that can be made into fortune cookies!

[@williamwization]

Super/sub-linear details could be signals masquerading as noise.

[@stoic-999]

Can you please explain as what's sub linear details with the help of an example ?

[@williamwization]

​@@stoic-999 Energy metabolism increases nonlinearly with size, thereby giving the impression of laziness..

[@jouzta]

When it comes to the far-right in Ukraine, we're less interested in finding a representativeness heuristic but rather understanding the extent of their power and influence. eg. intimidation of elected officials and their own positions within the political class, also access to NATO weapons and training etc. The POTUS doesn't qualify as a representative heuristic of the US population either. How do statisticians derive numeric value measurements for influence anyway?

[@romymaranesi4907]

What!?

[@mitchelllang4396]

Loved how you were holding the chalk like a cigarette

[@michaeljjan6344]

Kind of off-topic, but do you think that the US market will crash?

[@binkding]

is that a chalkboard? i haven't heard that sound in 20 years.

[@oakmeal53]

Love this guy

[@RighteousUncle]

CNN, BBC and the likes seem to be pretty good at it since some people are still watching them.

[@F--B]

We need to be taught how to live life at large-scale.

[@stephaniebarron52]

All things considered, I'd say Taleb has been going pretty easy on Ivermectin Boy. Is it because he's friends his brother?

[@jesusmtz29]

Nicely done

[@Omkar3324]

what a GOAT!

[@mak529]

We need to get Mr. Taleb a new camera.

[@ikbo]

The bigger the brain the harder it is to upload high resolution video on KZbin. Sad 😭

[@hareeshscifi13]

Source for the Stalin quote?

[@anonymousturtle8562]

Variants are famously attributed to Stalin. Best specific source on Wikiquote is a claim that Stalin said something about "thousands" being a statistic to Churchill in Tehran 1943.

[@Glowbetraveler]

Nice job.

[@carlosnunes3701]

The black board looks nice but the noise made by the chalk annoyed !

[@consumablecorner150]

Beautiful

[@유성준-f9c]

Mr. Taleb thanks 😊 i respect you I think the next financial tsunami is coming What do you think 🤔

[@zkz85]

Mr Taleb , gamechanging info , why ? Because is no b***s***t , and because it works , his info ( books ) are like the red pill from Matrix movie ;) . Thank you sir !

[@samdeamer4535]

Man the chalk makes the hair on the back of my neck stand up. Hopefully it helps with retention and understanding 😜

[@wilsonpaulooliveirajunior4458]

My love!

[@khaledarja9239]

FRIENDS !

[@DisfigurmentOfUs]

Thanks a lot!

[@dodomarek]

People who don't read Nassim Nicholas Taleb's books should read Nassim Nicholas Taleb's books.

[@ClaimClam]

💯💯💯

[@synapseproduction1]

Good morning friends

[@chukwuemekasmba]

Legend!

[@anonymousee716]

details are alive to more of us than numbers are. sadly, that's how our brains tend to work. most fail to comprehend things otherwise. the real thing is knowing when to seek out and apply both/either forms of knowledge to extract value in the appropriate situation. the salient detail re: nazis in Ukraine is that they have been given some measure of political and military power there, not that they exist.

[@pablomarianogodoy9973]

I go for the chaotic

[@robertdale001]

excellent

[@elementaltamago1297]

If I wanted to convince you that stock market returns were disinformation, I would look at the second scale. Look, at least 99.99% of movements seem to be Brownian noise. If you think markets have positive returns, you're nit picking: Any bullish signal is a rare anecdote! The ensemble is pure volatility ;)

[@ToddHoff]

Interesting: how much bad news is anecdotal and good news is statistical. -- Steward Brand

[@wilsonpaulooliveirajunior4458]

My love

[@wilsonpaulooliveirajunior4458]

Foram campeões da Champion 😂😂😂😂😂😂😂😂😂😂😂

[@wilsonpaulooliveirajunior4458]

O esporte te fingou!

[@asdf8asdf8asdf8asdf]

"...data is not the plural of anecdote..." A good thing people are raised under RCT conditions, vs learning by generalizing from anecdotes, otherwise the human race would be a real mess.

[@pablomarianogodoy9973]

Aulo Gelio

[@lowspeed2000]

Plot twist, the dentist is not really a dentist. (see what i did? :-) )

[@matthewkinder6910]

I think the seeds, food and water crisis coming our way is a black swam. The war in ukraine has nothing to do with de-nazification. But more a battle of superpower on the most fertile farmland available on earth as well as energy ressource in the three region in the east. The Healthcare then Oil Crisis is nothing compare to what's coming our way to my opinion. The monoculture system is extremely fragile and the few who control the seeds bank will rule the world to my humble opinion may this monoculture fail voluntarily or unvoluntarily.

[@nope817]

please mr Taleb buy a decent new phone or just some nice camera, the video quality is disappointing

[@Scottlp2]

Info is good, does quality of image really matter?

[@alfredthepatientxcvi]

@@Scottlp2 even though the information is great, it may be that he is much more visual (thinks with schemes and pictures) than you, the people who liked your comment and myself. I am auditive (tend to think in words and noises rather than pictures). You might also be.

[@rasik3880]

please improve video quality

[@nntalebproba]

Please don't watch.

[@rasik3880]

I will. Content is good. Video quality is Circa 1932.

[@wyrdbrew]

Didn't you write an essay about how a small intolerant minority can push a whole society toward a behavior that the majority are willing to go along with. There are neo-Nazis in Ukraine. They are a minority but is it possible that they are large enough? >3%

[@nntalebproba]

You didn't get my point at all.

[@wyrdbrew]

@@nntalebproba I understand it well. We cannot get a good grasp on reality from a few emotionally stimulating images put out in the media. By discounting the influence of the Azov movement as a real issue in Ukraine, it seems you have fallen prey to the exact error you are pointing out in the video.

[@dallaswood4117]

I guess blowing up maternity hospitals they’re just getting those neo nazis in their larval stages then lol you’d have to be crazy to actually believe that Putin is on some righteous crusade against nazis

[@back2d_lobby]

Atlanta is the worst

[@Sachinrenjal]

With 50% probability it's break even he didn't make any good.. 15% 93% all are just bluffs .. Last one sentence sum it all..So no extraordinary things like depicted in that above story..