It was a 7 hour flight from Zurich to Delhi. I met a Gujarati accountant who had survived the stock market for 20 years while waiting at Delhi airport. His wife didnt like him talking to a stranger about investments. Still we had time to pass and so he spoke. I would rather that he spoke because he took a paternal liking to me! One of the pearls was to exit at 20-30% profit and try to profit recursively and diversify risk. It vindicated me as I took lower risk. I didnt make 5 times the money but twice the invested money in the boom time between 2004-2007. I sold my 2000 shares of ICICI @ Rs 74 booking a profit of Rs 24. Today ICICI trades somewhere near Rs 900. Sometimes I look back and wonder if took the right decision by selling. Reading Nassim Taleb doesnt make me feel better. The subject matter of the book is on profiting from increased uncertainity and volatility (The black swan). Make small losses and a huge infrequent profit. The mirror image is making small gains and a huge infrequent loss. Are there zones which are in between ?
Fooled by randomness is a non-fiction book on probability in markets and profiting from uncertainity and volatility. Nassim Taleb gives illustrations of the boom and bust cycles(wrong choice of word) to illustrate that the past is not neccesarily a predictor of the future. Its a must read for those who want to preserve capital . It is also for those who are watching agog as the newspapers extoll readers that sensex will reach 25,000.
I was amazed at the insights presented by Nassim Nicholas Taleb. These were illustrated in class at IIM like birthday coincidences and non symmetric distributions. Some concepts were beyond my understanding in class :(. In his book Nassim brings probability concepts to life.
I decided to order the book on exotic derivatives by Nassim from Amazon.com. The irony is that the publisher is charging $110 for a book in India which costs $70 in the US!
Back to Nassim, there is intellectual arrogance in the book which makes me confront my own subconscious thoughts on knowing it all which results in rigidity of thought. I had frequent arguments with my father where I would ask him to back up loose statements with intellectual rigour. Reflecting at myself, I realized that seldom had I subject my ideas to internal censure before blurting them out from the tip of my tongue.
