4 of 4 people found the following review helpful
Fortune's a jade,
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This review is from: Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street (Paperback)
William Poundstone, for my money, is the best science writer operating today. If you can bear Malcolm Gladwell, you'll appreciate the quality when you make the switch to Poundstone. And he rarely does that sketch portrait schtick about the bearded researcher in the Hawaian shirt at an untidy desk in a cramped office on a leafy campus either, thanks.
This book, I'm sorry to say, is not his best. In fact it's two books. One is about how to beat the system, by fair ways or mostly foul. Hence the crime stories. The second book is an examination of Efficient Market Theory. EFT is the notion that since all public information is already in the price, you can't beat the stock market.
You can see why the two stories overlap. But they are, or should be, separate.
Beating the stock market is, however, what some people routinely do. And anyone who has owned shares has already been baffled how share prices can ignore great events but yo-yo on trivialities. From Bachelier to Samuelson, EFT has ignored these obvious problems. But it's very difficult to confound EFT, because you have to design a scientific way of beating the market. The Kelly system got most of the way to being scientific. Ah, but science is replicable. And once there are more than a few Kelly betters in the market the scientific advantage disappears.
Many of the great names, from Bernoulli (utility) to Shannon (information) get name checks here, useful if you're going to interview with an investment bank. I'd give the book 4 stars if it was by anyone else, and I really don't quarrel with previous critics who've given it five. It's just that I have got used to having very high expectations of this author.
Try Against the Gods: The Remarkable Story of Risk or A Random Walk Down Wall Street: A Time-Tested Strategy for Successful Investing instead or - alright - as well on this subject. And anything else by Poundstone if you have any curiosity about anything.