PHYSICS OF WALL STREET

I enjoyed listening and reading all about these talented Physicists and Mathematicians and how they helped Wall Street become how great it is today. It showed a great history and provided many notations and references to back up the great research contained in this book. There was so much to learn that it could be read again to retain the wonderful knowledge. It is definitely a very worthwhile read. I am so glad I listened and read.

The story of the rise of the quants, unemployed physicists who migrate to Wall Street, is both fascinating and depressing. The book takes what could be a dry topic and makes it come alive and readable for the non-quant. The book gives the reader some insights into the complicated nature of investment behavior and the quest to somehow quantify it and makes reasonable predictions of future behavior. The possibility of this prediction is called into question by the book and the book is a must read for those who read "Fooled by Randomness" and "The Black Swan." Though I've recommended this book I'd further recommend an earlier book dealing with the same issues but in more depth and somewhat better written: "Fortunes Formula.."

This very readable book might better be called "The Physicists of Wall Street," as it tells about the geniuses who have given us improved understanding of the casino called "the stock market." French physicist Louis Bachelier over a century ago modeled the market as being a random walk, a drunken lurching, with steps that followed a normal [Gaussian] distribution. The equations and implications implications he deduced went nearly unnoticed for five decades, when the great M.I.T. economist Paul Samuelson was alerted to them, only to find that much of his own recent work had been scooped by Bachelier, whom Weatherall considers the Isaac Newton of economics.Who cares? Those who invest daringly in the market, beyond my own favorite, the "buy and hold" strategy, which has worked well for Warren Buffett. Options, futures, warrants...these derivatives based on stock prices are much more sensitive than the stocks themselves to changes in the environment and changes in the traders' world-views. Fortunes have been made and fortunes lost, some of the latter due to the bubbles that the fizz of the physicists helped create. The normal distribution was not quite right. Physicist Maury Osborne found the log-normal made more sense: it never went negative, fit the data better, had larger [and more accurate] probabilities for some extreme events. Eventually, Benoit Mandelbrot showed that distributions that gave even larger probabilities for extreme events [had longer, fatter "tails'] were needed and still could under-predict market collapses. Nassim Taleb in "The Black Swan" and "Antifragile" maintained that the truly unusual cannot be predicted, only hedged against.Some physicists in the market have become billionaires, so they know things most of us do not. One strategy has been to use computers and sophisticated algorithms, usually closely held secrets, to move a bit faster than the market to get in ahead of the ups and out ahead of the downs. This works when in the normal trading regime. Clever hedging with stocks and warrants etc. can also deliver nice returns in normal times. There may be clues that warn of impending crises, as physicist Didier Sornette has shown, but most of us may be wise to follow Prof. Taleb's injunction to put the bulk of our investments in safe, conventional alternatives, speculating with a small fraction...and generally betting that disaster has been under-estimated.Economists tend to be skeptical of physicists in their playground. Some humility is appropriate on both sides. Still, it was Nobel-prize-winning economists who rode Long-Term Capital Management into bankruptcy, apparently partly due to relying on the normal distribution, rather than something a little more complicated and closer to reality.Weatherall's book has extensive notes and references and a couple of figures, but no equations. The stories are well-told, with a mix of interesting personal and technical information. Lots can be learned, just don't bet the farm.I really liked this book, but I am a retired physicist. We transcend humility.

I guess the gold star for books like this is Scott Patterson's The Quants, so I found myself making constant comparisons. This one is good but comes up a little short. It is broken up into chapters in which each more or less highlights a person or persons who played a critical role in bringing quantitative analysis to Wall Street. So we get chapters on Bachelier, Osborne, Mandelbrot, Thorp, Black, Farmer & Packard, and Sornette. Who we don't get chapters on are Ito and Merton, among others. It's difficult to conceive of omitting these two. Then at the end we get an extremely misplaced chapter on Eric Weinstein and Pia Malaney, who are researching index numbers. What this has to do with the subject and why it was chosen for discussion in light of all of the other quantitative economics and finance research that goes on is not clear. The author indicates that it's an example of how quantitative analysis could revolutionize the way we do things in the economy. But I suspect there are better examples, and probably some that are further along toward making contributions. Drop this chapter and write one on Ito as well as one on Merton and you've got a much better book.Nonetheless, it is an enjoyable read if you are into this subject (and why else would you read it?). I'm fairly knowledgeable on this subject and found only one error (the author mentions that the Department of Energy was loaded with money for jobs and research in the 60s, but the DOE was not created until the Carter administration - a minor problem but a bit of a sloppy assumption by the author). I do strongly recommend that you read this book. I don't regret my time spent on it even in light of the fact that I already knew much of what was in it. Nonetheless, don't fail to read Patterson's book as well. And I do hope the author will continue to write in this area.

This is a perfect assessment and presentation of the history of using advanced mathematical procedures,s used in physics originally, to explain and open the door to a more sophisticated and predictive modelling of financial markets. Well presented, easy to follow, historically cogent and extremely interesting at times. There are other books covering individuals mentioned in it, but this a good beginning.

Highly recommended to someone who has a foundation on statistical and financial education. Easy to read.

Très intéressant si tu est un physicien sans connaissance en économie. C'est dommage que le livre ne va pas plus loin.

This book is wonderfully written and extremely enlightening. Anyone with any sort of interest in this topic area should read this book - you will not be disappointed.

A great read.The mathematicians and physicists have received a bit of a kicking during the most recent financial meltdown and this book does something to redress the balance.Its fundamental message is that physics is good for the financial market so long as you remember that physics is all about modelling and these models vary in imperfection.What is pointed out is that this was what was lost.Because the latest model seemed to work and everyone was getting richer the model kept on being pushed until it did finally break.I love it when authors directly take on other authors and James doe this (albeit briefly) when pushing back against Nassim Talebs "Black Swan" approach...which is distinctly anti modelling at its extremes.If reading about finance is your thing I would definitely add this book to your library

Irrilevante. Dalla prima all'ultima pagina.Un'accozzaglia cronologica di scienziati applicatisi all'analisi tecnica.Raschiatura di fondi di barile.Insieme di curiosità note e risapute