Sometimes it is extremely fascinating where you can find strange parallels between two books that look like they should have no correlation with each other whatsoever.
One of my favourite books I read last year, being the mathematician that I am, is "Fooled By Randomness: The Hidden Role of Chance in Life and the Markets" by Nassim Nicholas Taleb. The book is about the role of chance and randomness in life (with a strong focus on the stock market itself). Essentially, the book theorizes that most successful/famous people in the stock market have made their money based on the luck of the draw and that the only real way to be successful when playing the markets is to control risk. (i.e Don't put all your eggs in one basket and don't risk more than you can afford to lose at one time). Taleb really focuses on the idea of the "Black Swan," which can be defined as an "outlier", or an event that one does not expect or has not planned for. These can be both good or bad. Winning the lottery or getting hit by lightning can be considered a "Black Swan." You will be successful if you can survive any "Black Swan" situation in the markets and possibly profit from them.
On mmurray's recommendation, I have just about finished the book "Blink" by Malcolm Gladwell. The book is essentially about the subconscious and its power in our daily lives. The beginning of the book focuses on the uncanny ability to lead us toward a solution before we are even conscious of the fact that we are making them.
At first glance, there doesn't seem to be a real correlation between them. In a stretch, you can consider them both to be business books. Fooled By Randomness with the focus on the stock market and Blink with the focus on the subconscious making quick decisions (e.g. First impressions when conducting an interview).
One of the examples given in Blink was an experiment conducted by the University of Iowa where the testers asked individuals to select cards from decks that differed in colour. If someone drew from one of the decks, they would either win or lose the amount on the card. Without giving too much away, one of the decks that an individual could choose from paid off handsomely, but was also very risky. One could not win by just picking cards from that deck. The other deck was more conservative. One would not win as much as choosing from the other deck, but one would lose even less. The conclusion was that the people taking the experiment could figure that one deck was safer than the other eventually. However, they would be able to determine this subconsciously way before they consciously knew it and would be drawn to the safer deck.
I thought about being "Fooled By Randomness" right after reading this section of "Blink". Taleb talks about how humans often see patterns in things (or believe they understand how things work) that are completely random. Taking the card example that is used in the Iowa Experiment (not exactly the same, they weren't drawing from a standard deck of cards, but using it as an example), if one is drawing from a deck of cards and get 12 red cards in a row, there is a strong chance that the next card will be black. However, even though the odds of getting a black card is much higher than getting a red one, you will be pushed into towards guessing that the next card is red. Even though you know it's a standard deck and logic will dictate that you should pick black, you'll stop for a second. What if this deck is different???
The same is true with flipping a coin. If you are able to flip heads 20 times in row, what are the odds of the next coin flip being heads? (As a note: The odds of anyone flipping heads 20 times in a row is ~1/1000000, or (1/2)^20).
As a math guy, this is messed. My background is numbers and logic. One source is telling you that your subconscious can lead you toward the right conclusion without you even knowing it. Another source is telling you that your subconscious can lie or lead you in the wrong direction depending on the input. (To be fair, Blink does talk about this in later chapters). So, in the end, I conclude this from both books. Trust your instincts, but only when they are not wrong. :)
But when is that? How do I ever know that my subconscious is not leading me in one direction based on a pattern that doesn't really exist?