Taleb pointed out in Random Walk for Fools: "Your success is not necessarily because you are better than others, but probably the result of luck." He tells us the law and operation mode of this random world from a profound and unique perspective. This book is the basic work of black swan theory and a must-read classic to deal with the uncertainty of financial investment. This is not only a business investment book, but also a philosophy book full of life wisdom.
First, the randomness of making money.
In the financial and commercial society, one of the most common mistakes people make is that all business and investment achievements come from hard work, diligence and wisdom. However, what people don't realize is that many of these achievements actually come from randomness.
Taleb summed up this phenomenon in one sentence: "We often think that traders can make money because they are good traders. Maybe we should take the result as the reason: we think they are good traders just because they make money. It is possible for a person to make money in the financial market (short-term) by relying entirely on random phenomena. "
If Taleb's words only describe the phenomenon, then an example given by Warren Buffett clearly shows what "making money can come from randomness". Using Monte Carlo generator, the author fictionalizes 10000 investment managers, assuming that each of them has equal profit and loss probability: at the end of the year, each person has a 50% probability of earning $654.38 +00000 and a 50% probability of losing $654.38 +00000. Once a manager's performance is poor in a certain year, he will be eliminated from the sample. The Monte Carlo generator will flip a coin. If it is positive, a manager's income in that year is $6,543,800+0,000. If there are tails, it will pay $65,438+$00,000. At the end of the first year, it is estimated that each of the 5,000 managers will receive $65,438+$0,000, and each of the 5,000 managers will lose $65,438+$0,000. Then simulate the second year. Similarly, 2,500 managers are expected to make profits for the second year in a row. The second year is 1250, the fourth year is 625, and the fifth year is only 3 13. In the 50-50 game, 3 13 managers have made profits for five consecutive years. This "earning power" is purely luck.
Second, beware of "black swan"
The biggest risk is not the risk you think, but the huge risk you never dreamed of. History shows that the biggest risk is often the "black swan incident". The "black swan incident" has four characteristics: it is very rare; The impact is very huge; Although there are many explanations afterwards, it is impossible to predict beforehand; You can take precautions in advance.
In probability theory, if the result of a thing is too heavy, it doesn't matter how high the probability of success is and how much the reward is after success, and it doesn't make any sense. For example, suppose there is an eccentric and boring tycoon who takes out $654.38+million to play Russian roulette with you. He prepares a revolver, a six-bullet magazine can only hold one bullet, and then pulls the trigger on your head. Every time you pull the trigger, it is called a period of history, so there are six periods of history, and the probability of each period is the same. Five of them will make you rich, and the other one will lead to a statistic, that is, an embarrassing but creative obituary of death. No matter how many opportunities there are to get rich, it is not worth earning, because no one can bear the worst result.
Therefore, we should be very careful about black swans. Even if we can make a lot of money, we must not risk losing everything if we fail. To put it more bluntly, you can afford not to be taunted. This is the biggest inspiration from Taleb's two books and Buffett's life-long investment experience.
Buffett's secret of success can be summarized into two basic points: one is to achieve great success, and the other is to avoid big risks. Only by making great achievements can we make a lot of money, but it is more important to avoid big risks. Many people made great achievements at first, but later failed to avoid big risks and died miserably. Only a few people live to the end, earn to the end and laugh to the end.
Third, control random phenomena.
A poor man with good skills will eventually climb up, while a lucky fool may rely on some good luck in life for a short time, but in the long run, his situation will gradually approach a fool who is not so lucky.
Therefore, a truly successful investor must have the ability to control random phenomena and avoid random errors. The author talked about two technologies:
1. Avoid path dependence
We cling to an idea only because we spend more time on it. Because we invest more, we will find it more valuable and don't want to give up easily. This preconceived idea is the nature of most of us. This unconventional trait is really rare among humans, just like treating your own children. We spend a lot of food and time on them and love them all our lives. However, not sticking to your own ideas is a sign of confidence.
The author cited the example of financial tycoon Soros. One of his advantages is that he overturns his previous views with a flick of his finger and corrects his own views at a fairly fast speed, and he is not embarrassed at all. Once, Soros and his friends said in a conversation that they were very bad for the market outlook and told a series of complicated truths. Soros obviously shorted in the market. A few days later, the market soared to a new high. A friend worried that Soros might lose money on the position he established and asked him if he had lost money. "We made a lot of money," Soros said. "I changed my mind, not only covering my position, but also building a big bull." It is this trait that dares to subvert his inherent cognition that makes everyone want to know what Soros will do next.
Real speculators like Soros are different from others because their behavior lacks path dependence. They completely got rid of their past behavior, and every day is a blank sheet of paper.
2. Learn to block noise
The author thinks that the price changes in the stock market are very random, and most of them are insignificant small fluctuations. In this random event, every time we observe non-noise in a year, there will be 0.7 times noise; In a month's time, every time you observe non-noise, there will be about 2.32 noises; One hour, every time there is no noise, there will be 30 noises; One second, every time there is no noise, there are 1796 noises.
Therefore, after choosing a good stock, try not to watch real-time stock price fluctuations. People who stare at the market all day feel as if they have mastered a certain rhythm, but I think it is actually a waste of time. Similarly, the author thinks that the news with short time scale is full of noise, while the noise in the history with long time scale has been eliminated. This can explain why people who pay too much attention to randomness will be burned because they have experienced a series of pains and are emotionally exhausted.
There are many possibilities in history. Don't be confused by the short historical process, but look at everything in a larger historical scope. Only by deeply realizing that we live in a random world can you face life better. I hope each of us can walk and dance freely in this random world.