“Black Swan” author Nassim Nicholas Taleb used Tesla Inc TSLA CEO Elon Musk as an illustration of how people are fooled by randomness.

What Happened: Taleb said that while “solid financial success” is a result of skills, hard work, and wisdom, “wild success” is more likely the result of reckless betting, extreme luck, and folly.

The mathematical statistician and risk analyst said that for most classes of probability distributions, you get to the tail by increasing variance or the scale instead of raising expectations. 

Taleb pointed to the number of times Tesla was on the brink of going bust as an example. The tail refers to the part of the distribution which is far from the mean.

A Twitter user asked Taleb if his commentary holds for Amazon.com, Inc AMZN CEO Jeff Bezos as well, to which Taleb said it did not.

See Also: How To Buy Tesla (TSLA) Shares

Why It Matters: “Fooled by Randomness: The Hidden Role Of Chance In Life And In The Markets” is a 2001 book written by Taleb. It is the first part of the series that includes “The Black Swan.”

In the book, he theorizes that people tend to look at winners and try to learn from them instead of taking into account that the vast numbers are losers.

In April, Taleb cited an example of people getting “fooled by randomness.” He said people with mental imbalance very rarely get rich but when they do get rich, they get very rich, adding that it is rarely good news.

Last year, Taleb highlighted the irrationality of anti-vaccine conspiracy theorists and said they had been fooled by randomness as well.

At the beginning of the COVID-19 pandemic, Taleb had called out Musk for calling the coronavirus panic dumb.

Read Next: Why ‘The Black Swan’ Author Thinks Its A Good Idea To Be Rich, But A Bad One To Be ‘Too Rich’

 


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