You’ve probably seen that one guy on LinkedIn. You know the one—the "visionary" CEO or the day trader who hit it big and now posts 10-part threads about his "morning routine" and "unshakeable discipline." It’s easy to buy into it. We want to believe that if we just wake up at 4:00 AM and grind hard enough, we’ll get the same results.
But honestly? There’s a good chance he just got lucky.
That’s the uncomfortable truth at the heart of Nassim Nicholas Taleb’s breakout book, Fooled by Randomness. It’s a work that basically ruins your ability to look at a "successful" person without squinting suspiciously at their backstory. Taleb, a former trader who spent years watching people "blow up" in the markets, argues that we are biologically wired to see patterns where there is only noise. We mistake a lucky streak for a brilliant strategy. We see a "hot hand" when it’s really just a series of coin flips that happened to land on heads six times in a row.
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The Lucky Fool Problem
Taleb introduces us to a character called the "lucky fool." This is someone who benefited from a massive dose of luck but is totally convinced they earned it through sheer talent. They don’t know they’re a fool. That’s the dangerous part. Because they think they’ve "solved" the market or the industry, they double down. They take bigger risks. And eventually, the randomness that made them rich comes back to collect the debt.
In the world of finance, this happens all the time. A trader makes 20% returns for five years straight using a strategy that works great—until it doesn't. They’re called "geniuses" by the press. Then, a "Black Swan" event hits, something they never saw coming, and they lose everything in forty-eight hours.
Why we can't see the luck
The problem is something called survivorship bias. We only see the winners. We see the one guy who played Russian Roulette and walked away with a million dollars. We don't see the "probabilistic graveyard" of the thousands of other players who ended up with a bullet in their head.
If you put a million monkeys in front of typewriters, one of them is eventually going to type out a Shakespearean sonnet. Does that make the monkey a poet? No. But if that monkey then starts selling "how to write poetry" courses, he’s basically the modern equivalent of a lucky fund manager.
The Nonlinear Trap of Fooled by Randomness
Life isn't a straight line. Most of us are taught that if we work 10% harder, we get 10% better results. That’s linear thinking. It works for being a dentist or a plumber. If a dentist works more hours, they fix more teeth. Their success is "resistant to randomness."
But in "high-variance" fields—like startups, trading, or creative arts—it doesn't work like that. You can work for years and see zero progress. Then, suddenly, one tiny event, one random meeting, or one "grain of sand" causes a massive avalanche of success. This is nonlinearity.
Taleb uses the example of a sandpile. You keep adding grains of sand one by one. Nothing happens. Then, you add one more tiny grain—identical to all the others—and the whole pile collapses. Was it that specific grain's fault? Or was the system just waiting for a tipping point?
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- Mild success is usually about skills and hard work.
- Wild success is almost always about variance (luck).
If you’re the best cobbler in a small town, you’re skilled. If you’re the richest person on Earth, you’re skilled and you happened to be in the right place at the right time when a massive wave of randomness pushed you to the top.
Stop Reading the News
This is one of Taleb’s most controversial takes, but it makes total sense if you understand signal vs. noise. The news is almost entirely noise. It’s designed to give you a "reason" for every tiny wiggle in the stock market or every political shift.
Think about it this way:
If you check your stock portfolio every minute, you’re seeing mostly random fluctuations. The "pain" of seeing a small dip outweighs the "joy" of a small gain. You’re essentially torturing yourself with randomness. But if you only check it once a year? Most of that noise has canceled itself out, and you’re left with the actual trend—the signal.
He suggests being more like a Stoic. You can't control the "alternative histories"—the things that could have happened but didn't. You can only control your process.
How to Not Be a Victim of Chance
So, how do you actually use this? You can't stop randomness from existing. You can't "win" at luck. But you can change how you play the game.
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First, look for asymmetry. Taleb loves bets where the downside is small and the upside is huge. It’s better to be wrong 99 times and lose $1 each time, if on the 100th time you win $1,000. Most people do the opposite. They take "steady" wins of $1 for years, ignoring the 1% chance that they might lose $10,000 and go bankrupt.
Second, judge yourself by your process, not your results. If you made a reckless, stupid bet and won a million dollars, you’re still a bad bettor. You just got lucky. If you continue that behavior, the "alternative histories" will eventually catch up to you.
Actionable Takeaways for a Random World
- Build a "Barbell" Strategy: Put most of your resources (time, money, energy) into very safe, "boring" bets. Then, take a small portion—maybe 10%—and put it into high-risk, high-reward "lottery tickets." This protects you from ruin while keeping you open to positive luck.
- Ignore "Experts" who Predict the Future: Anyone who says "The market will hit X by 2027" is being fooled by randomness. They are fitting a narrative to a complex system they don't control.
- Value "Distilled" Knowledge: Read books that have been around for 50 years (the Lindy Effect). New information is mostly noise. Old information has survived the test of time and randomness.
- Focus on "Negative Knowledge": It's easier to know what is wrong than what is right. You can't prove all swans are white, but you only need to see one black swan to prove they aren't all white. Focus on avoiding the "big mistakes" that can wipe you out.
At the end of the day, being Fooled by Randomness is a human condition. We are meaning-making machines. We want the world to be fair and predictable. But it’s not. Recognizing that luck plays a massive role isn't an excuse to give up; it's a reason to be more humble when you win and more resilient when you lose. You didn't necessarily "fail" just because things went south, and you aren't necessarily a "genius" just because your bank account is full.
True wisdom is knowing the difference.
Next Steps for You
To start applying these concepts today, audit your current "big wins." Write down three times you succeeded in the last year and honestly ask yourself: "If I did the exact same thing in a slightly different world, would I have still won?" If the answer is "maybe not," you've identified a vulnerability to randomness. Use that insight to diversify your next move so that your survival doesn't depend on the same luck striking twice.