Fooled by randomness…
by Philip
One of my new year resolutions this year was to read more. One of the books I have recently read is Fooled by Randomness by Nasseem Taleb. The author was (and is) a highly succesful options trader. In essence he recognises that there is a high degree of chance in his work, luck is very important. He is succesful at options trading because he recognises that most traders under estimate the role of luck. His strategy is therefore to trade options that are under water, ie highly unlikely to hit the strike price by the time of expiry. His strategy is to lose small amounts regularly, but to win big when an underwater option comes to life. He then extrapolates this strategy into a book, the premise of which is that much of life is governed by luck and chance, which we should recognise and accept.
The book invites the reader to look back at key events in their life (in my case meeting a partner, having children, starting a business, winning or losing a big case) and see which of the key events were managed and planned and which just happened by chance. In short the book illustrates John Lennon’s famous saying that “life is what happens when you are busy making plans.”
To illustrate the role of chance, at PJH law we decided to have a re-brand and update our publicity and website. We chose 4 firms to come in and pitch for the business. After the first pitch Sarah said we should ask a fifth firm in to pitch. We struggled to come up with anyone and then Sarah remembered the name of a firm,Titman Firth, that was based in Peterborough that she had done work for in the past. She had no knowledge of their work. They were very much a late entry but secured the bid to do the work. They were invited in, purely by chance, as Sarah thought that 5 was a good number. I was in favour of 3 tenderers, and 4 had been a compromise.
The fact that Titman Firth were invited in, over anyone else, was a random event, a chance remark leading to Sarah dragging up the name from the deep recess of her memory. Their selection, however, was based on merit.
If you have managed to get to the end of the post, well done, and I would like to take this opportunity of thanking Gary and Leigh for their magnificent work on the re-brand. I can highly reccommend Titman Firth for succesfully combining the ying of Leigh’s artistic and design flair with the yang of Gary’s technical IT geekery. In the web 2 era, a business needs that combination.
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