"Fooled by Randomness" is a 2001 book by Nassim Nicholas Taleb that explores how luck and chance often carry the day in life and in financial markets, frequently being mistaken for talent. Taleb’s book was written during a different technological epoch, but we are arguably even more at risk of being fooled by randomness today, thanks to the emergence of tools that are built on top of uncertainty. Understanding how to manage that uncertainty is a modern survival skill.

Hot off the press! NPR is serving up a collection of anecdotes about prediction markets. NPR’s article and our analysis complement each other. NPR shows what prediction markets look like: e.g., energetic, narrative-driven, and volatile. Our article explains what that activity means. Prediction markets are not just places where answers are revealed and contracts settle for dollars and cents. They are places where beliefs are formed; quantifying that process can provide its

Predicting the future isn't the best part of prediction markets. They are much more useful to ascertain how beliefs evolve in real-time. Understanding the dispersion of beliefs allows investors to budget risk more effectively.

We are still in the early innings of the AI revolution in finance (and even less in investment management), but as wild and wonderful as those applications are, they are more quantum leaps than a new way of looking at the world. Quantum computing may be even more profound—a veritable paradigm shift.