His books include Fractals: He has also been on the cutting edge some would say fringe, but he’s thinking and questioning in multiple disciplines, as his curiosity seem to know no bounds. From the gyrations of IBM’s stock price and the Dow, to cotton trading, and the dollar-Euro exchange rate–Mandelbrot shows that the world of finance can be understood in more accurate, and volatile, terms than the tired theories of yesteryear. The criticisms of standard financial theory seem perfectly sound. On many parts of Mandelbrot’s analysis, I just had to take him at his word that a certain analysis produced the conclusion he claims, despite his admissions at the end that scholars disagree over metrics like H. Today does, in fact, influence tomorrow.
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Just admit that the earth isn’t the center of the universe and get on with it Feb 08, Ivan Idris rated it it was amazing. As the author of “Black Swan” wrote, the worst thing to happen to economists was when they were awarded the Nobel Prize.
But if you’re scared of math, this is a great glimpse into fractals and it starts the misbehavior of markets a fractal view of financial turbulence show glimpses of how they may be used in the future to assist in market theory but he does not actually go into market theory in this book.
His view is based on his assertion of reality; namely that the world of finance is turbulent as indeed, the world is turbulentand linear tools relying on reliability and rational man will never tell the full story. Lists with This Book. Mandelbrot’s account of this work is extremely fascinating, any other writer would have simply lavished praise on Mandelbrot for his ideas; Mandelbrot in turn told a wonderful story of how these ideas came to fruition.
Hurst’s analysis of Nile River floods lead to insight into market trends useful to trend-followers. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work out a non-Euclidean geometry. The antidote to poor science is reminding ourselves of the scientific method: Nevertheless, it provides a foundation and introduction to new methods that many may find useful, with enough detail to begin incorporating same into quantitative models.
The refutation of this one assumption of modern financial theory has in the past twenty-five years created a fertile new field of inquiry, called behavioral economics. This Will Make You Smarter. Rather than something for advanced-level traders, I think it is the first book for anyone interested in investing or trading. Markets are riskier, than we thought. Would you like us to take another look at this review?
I am, of course, a true believer in the power of probability. I’m not a huge fan of this genera though, so it was good for what it was.
Mandelbrot shows that the data just does not bear out the milder swings the normal distribution anticipates that actual price data exhibit fatter tails than the normal distribution. He doesn’t offer any evidence to show that they cannot have done so, and his call at the end shows that he thinks there may be such patterns.
The math that was telling us this has been around since the s arguably prior, but well-formulated in the s. Page 1 of 1 Start over Page 1 of 1. As far back as the early s, Mandelbrot did extensive study on Cotton markets. Inside the Doomsday Machine. I Mandelbrot is one of the fathers of the theory of chaos.
The Misbehavior of Markets : Richard L. Hudson :
Famous as “the father of fractal geometry,” Mandelbrot is less well-known for his contributions to financial market theory. Full stop, this is the point where investors usually lose interest. Share your thoughts with other customers. Whereas before, whenever I went for a walk and looked up into the sky I would just see chaotic assemblies of clouds and leaf growth, now I am seeing some of the haunting images in this book being expressed by the growth and distribution in nature.
It will open your eyes like no other, and inject a dose of realism and humility about fihancial and markets that otherwise might cost a lot more than this book’s price. On the last page, he calls for a “coordinated search for patterns in the financial markets. Only flag comments that clearly need our attention.
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Econometric modeling is guilty of the same sins. He claims to have written this book to bring his case directly to the public. There was a problem filtering reviews right now.