- Hardcover: 448 pages
- Publisher: Princeton University Press (18 Nov 2002)
- Language English
- ISBN-10: 0691096309
- ISBN-13: 978-0691096308
- Product Dimensions: 22.9 x 15.7 x 3.8 cm
- Average Customer Review: 4.0 out of 5 stars See all reviews (1 customer review)
- Amazon Bestsellers Rank: 1,077,006 in Books (See Top 100 in Books)
- See Complete Table of Contents
Why Stock Markets Crash
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Product Description
Review
Sornette is both a statistical physicist and a member of a new breed of scientist: the econophysicist. . . . But Sornette's book is not just about finance and economics; it is also a mesmerizing introduction to game theory, fractals, catastrophe theory, critical phenomena, and much more. No prior knowledge of finance or economics is needed to understand the book. . . . Throughout the book, Sornette makes numerous, vivid comparisons with many other fields in which the various mathematical tools he describes can be applied.
(Frank Cuypers Physics Today )
The book is written in a readable style and does not require technical knowledge. Any reader interested in a serious approach to the origin and possible prediction of financial bubbles will enjoy reading it.
(Josep M. Porra Journal of Statistical Physics )
A highly recommended, enjoyable, well-researched, and thought-provoking book for anyone interested in stock markets and the modeling of financial processes.
(Rick Gorvett Journal of Risk and Insurance )
(Frank Cuypers Physics Today )
The book is written in a readable style and does not require technical knowledge. Any reader interested in a serious approach to the origin and possible prediction of financial bubbles will enjoy reading it.
(Josep M. Porra Journal of Statistical Physics )
A highly recommended, enjoyable, well-researched, and thought-provoking book for anyone interested in stock markets and the modeling of financial processes.
(Rick Gorvett Journal of Risk and Insurance )
Review
Sornette is both a statistical physicist and a member of a new breed of scientist: the econophysicist... But Sornette's book is not just about finance and economics; it is also a mesmerizing introduction to game theory, fractals, catastrophe theory, critical phenomena, and much more. No prior knowledge of finance or economics is needed to understand the book... Throughout the book, Sornette makes numerous, vivid comparisons with many other fields in which the various mathematical tools he describes can be applied. -- Frank Cuypers Physics Today The book is written in a readable style and does not require technical knowledge. Any reader interested in a serious approach to the origin and possible prediction of financial bubbles will enjoy reading it. -- Josep M. Porra Journal of Statistical Physics A highly recommended, enjoyable, well-researched, and thought-provoking book for anyone interested in stock markets and the modeling of financial processes. -- Rick Gorvett Journal of Risk and Insurance
Inside This Book
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First Sentence
Stock market crashes are momentous financial events that are fascinating to academics and practitioners alike. Read the first page
Front Cover | Copyright | Table of Contents | Excerpt | Index
Stock market crashes are momentous financial events that are fascinating to academics and practitioners alike. Read the first page
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Concordance
Browse Sample PagesConcordance
Front Cover | Copyright | Table of Contents | Excerpt | Index
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Customer Reviews
Most Helpful Customer Reviews
3 of 3 people found the following review helpful
Format:Hardcover
The word crash strikes fear into any investor's heart. Fear not, writes scientist Didier Sornette, who has crunched the numbers (not to mention the probabilities and log periodicities) and has determined that crashes are, in fact, quite normal and predictable. If prices are soaring and everyone you know says profits are guaranteed, get ready. Sornette backs up his argument with countless charts, formulas and phrases such as "spontaneous symmetry-breaking regime." Still, there's enough plain English here to enlighten the lay reader. We suggest this book to traders and investors looking for a unique analysis of market crashes.
Most Helpful Customer Reviews on Amazon.com (beta)
Amazon.com:
32 reviews
19 of 20 people found the following review helpful
An Engaging and Thought-Provoking Work
6 Nov 2003
Format:Hardcover
If you love to read works on economics, math and physics and love to assemble models of the world, I cannot recommend this book highly enough. Indeed, if economic models were this much fun when I was an undergraduate, I might have become an economist.
Funny thing though, this was not written by an economist, but by a geophysicist.
It seems physicists and psychologists in particular are writing more interesting economics books these days than economists themselves.
The core focus of the book is a derivation of a market model that includes value investors, momentum investors and the herding effect of individual economic agents acting in a world of partial information. The final model is stunning.
Sornette points out the main problem with predicting bubbles: even if all the signs say "yes," there is still a pretty good chance that the bubble will be self-correcting. Turns out chasing market bubbles is a little like chasing soap bubbles - they may simply disappear at any moment. Thus, the book and the model are of limited use in any type of market timing. Indeed, the model suggests that the market should now be in the tank, and yet it continues to hover on the higher side of its expected range.
As much as I loved the book, there was a slight aftertaste that this was all nothing but a very mathematical and high-minded type of technical analysis. That at base, when all was said and done, this was not all that different from the various "tools" in the chartist's handbook, e.g. MACD, RSI and OBV, etc., etc., etc. The difference may be solely that Sornette knows his statistics and would easily and readily dismiss any model which did not perform significantly different from chance.
Finally, this book will have you trotting out your old high school calculus book. It brought back memories of just how much fun mathematics can be.
All in all - I give it 5 stars.
73 of 88 people found the following review helpful
WARNING: Get two Ph.D.'s before opening this book
23 Jan 2003
Format:Hardcover
Ever since I bought gold at $800 an ounce (the very top) 20 years or so ago, I have been fascinated by financial markets and their tendencies to produce bubbles that fool the majority. I know that complex systems and positive feedback and other phenomenons are at play and I wanted to find a book that covered the topic with enough depth. I thought Sornette's book was the one and some other reviews might make you think it is. Not for me though. Granted, it is extremely well researched with more than 460 references. It covers all the possible theories for stock markets price fluctuations and crashes. But its merit for me stops here.
The author warns the reader at the outset that mathematical explanations in smaller characters could be skipped in a first reading. The problem is that 90% of the book should be in smaller characters. The main text will be as hermetic to most readers than the small characters sections. Unless you have a graduate degree in a mathematics or physics and an extended experience in the disciplines that Sornette covers you'll be lost (BTW I do have one and I was lost). Here is an example of the kind of explanations you will find:
"The novel insight is that the arbitrary bubble component X, of an asset price plays a role analogous to the so-called 'Golstoine mode' in nuclear particle and condensed physics. Goldstone modes are the zero energy infinite-wavelength mode fluctuations that attempt to restore broken symetry."
Did you get it? I didn't.
This book might be of interest to researchers and acdemics in the field but it is way beyond the level of the educated general public. It is regreatble that Mr. Sornette
has chosen such a complex and esoteric way to treat the topic and has not made the slighest attempt to make it understandable to a wider public.
So I will keep looking for the book that will explain the fractal nature of stock markets in a documented but simple and interesting way.
10 of 11 people found the following review helpful
You can skip the math and still learn a lot.
13 Feb 2003
Format:Hardcover|Amazon Verified Purchase
Why Stock Markets Crash by Didier Sornette is an interesting book. He is a geophysicist who specializes in predicting failures in complex systems.
The book contains some rigorous mathematical proofs for a 'popular' book which means it probably won't be popular. But even if one merely glances the math, which again is mostly for proofs and for those with an analytical inclination, the overall text and thoughts and analysis are extremely thought provoking and insightful.
Its really good. You should read it if you have a background in stats or finance and are interested in the theory of efficient markets and the occurence of 'secular' events.
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