Nassim Nicholas Taleb

Maximizing the probability of winning does not lead to maximizing the expectation from the game when one's strategy may include , i.e., a small chance of a large loss and a large chance of a small win. If you engaged in a Russian Roulette-type strategy... you are likely to show up as the winner in almost all samples—except in the year when you are dead.

Don't cross a river if it is four feet deep on average.

What is easier to remember, a collection of facts glued together, or a story, something that offers a series of logical links? Causality is easier to commit to memory. ...What is induction exactly? ...It is very handy, as the general takes much less room in onel's memory than a collection of particulars. The effect of such compression is the reduction in the degree of detected randomness.

Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks — when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crisis less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur... I shiver at the thought.

At no point during his ordeal did Nero think of himself as 72% alive and 28% dead.

Why do [people] confuse probability and expectation, that is, probability [vs.] probability times payoff? Mainly because much... schooling comes from examples in symmetric environments... the... bell curve... is entirely symmetric.

Optimism, it is said, is predictive of success. ...It can also be predictive of failure. Optimistic people... take more risks as they are overconfident of the about the odds; those who win show up among the rich and famous, others fail and disappear from the analysis.

I will use statistics and inductive methods to make aggressive bets, but I will not use them to manage my risks and exposure. ...[A]ll the surviving traders I know seem to have done the same. ...[T]hey make sure the cost of being wrong is limited ...they know ...which events would prove their conjecture wrong and allow for it ...They would then terminate their trade. This is called a stop loss ...I find it rarely practiced.

Just as an animal could have survived because its sample path was lucky... free of the evolutionary rare event, the "best" operators in a given business can... One vicious attribute is that the longer these... can go without encountering the rare event, the more vulnerable they will be to it. ...[S]hould one extend time to infinity, then by , that event will happen with certainty—the species will be wiped out! For evolution means fitness to... only one time series, not the average of all possible environments.

Probability is not about the odds, but about the belief in the existence of an alternative outcome, cause, or motive.

I have organized my career and business in such a way as to... benefit... I am profiting from the rare event, with asymmetric bets.

One cannot assert authority by accepting one's own fallibility. Simply, people need to be blinded by knowledge - we are made to follow leaders who can gather people together because the advantages of being in groups trump the disadvantages of being alone. It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.