Against the Gods: The Remarkable Story of Risk Paperback – 29 Sep 1998
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About the Author
PETER L. BERNSTEIN is President of Peter L. Bernstein, Inc., economic consultants to institutional advisors and corporations. His semimonthly analysis of the capital markets and the real economy, Economics and Portfolio Strategy, is read by managers and owners of investments totaling over one trillion dollars. Mr. Bernstein is the author of many articles in the professional and popular press, as well as six books in economics and finance, including the bestselling Capital Ideas: The Improbable Origins of Modern Wall Street. He is the coeditor of Investment Management (Wiley), and was the first editor of The Journal of Portfolio Management.
From the Back Cover
A Business Week, New York Times Business, and USA Today Bestseller
"Ambitious and readable . . . an engaging introduction to the oddsmakers, whom Bernstein regards as true humanists helping to release mankind from the choke holds of superstition and fatalism."
The New York Times
"An extraordinarily entertaining and informative book."
The Wall Street Journal
"A lively panoramic book . . . Against the Gods sets up an ambitious premise and then delivers on it."
"Deserves to be, and surely will be, widely read."
"[A] challenging book, one that may change forever the way people think about the world."
"No one else could have written a book of such central importance with so much charm and excitement."
author, The Worldly Philosophers
"With his wonderful knowledge of the history and current manifestations of risk, Peter Bernstein brings us Against the Gods. Nothing like it will come out of the financial world this year or ever. I speak carefully: no one should miss it."
John Kenneth Galbraith
Professor of Economics Emeritus, Harvard University
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Top Customer Reviews
It is difficult to argue with the excellent summary of risk management during the course of this century, and anyone looking for a thought-provoking introduction to Markowitz and all that need look no further.
However, to get there you need to get past a broad swipe at the History of Ideas which attempts to show you how clever we are compared to the ancients. The author's basic premise is that in The Olden Days when we were unable to accurately measure risk, people cheerfully put their faith in the lap of the gods, blindly setting to sea during storms, building their houses next to flood-prone rivers, all the while serenely unaware of how the odds stacked up against them. Then, as we became increasingly aware of the beauty of zeroes, Arabic numerals and standard deviation, we were increasingly able to measure what was going on and therefore control it. Well, that assumes that you cannot control risk without first being able to accurately measure it. I just don't believe that the Greeks never spotted that their unevenly-shaped dice fell more often on one side than the other - kids in playgrounds spot that kind of thing easily. I also rubbed my eyes in disbelief at the idea that the period of Columbus was the first time in history that wealth was created by mutually beneficial trade, rather than by conquest and pillage - is this a commonly held belief? And while we're being pedantic, Pascal's Pensées are not his "autobiography", nor is it safe to make assumptions that the fragments in them are all expressions of his own beliefs.
Nevertheless, an enjoyable read that is satisfyingly thought-provoking.
The author clearly considers his subject the most important in history, and in 330 pages identifies every significant step in the development of *thinking about* risk. In some ways though, the focus is too narrow. It becomes clear towards the end of the book that he has been building up the strands of probability theory as precursors to the 'taming of risk' in modern financial theory. I was hoping that an ambitious work on the history of probability would include the discovery that all of reality is based on chance, but you can search the index for 'Quantum Mechanics' in vain. (However 'Quant' is there - Bernstein himself was once a financial mathematician.)
In a subject as huge as risk there will always be more to say, and what is included here makes a cohesive whole whilst being important or interesting in it parts. Ok, maybe you don't love chance as much as me - what you need to know about portfolio theory is in Chapter 12 onwards - you'll still have 140 pages of important results. It's even topical, Kahneman's Prospect Theory is covered in detail (and he won the Nobel last year).
You get good little potted histories of several mathematicians at the start, and you tend to forgive his naive attempts to explain away historical attitudes to risk even though he seems to be embarking on a historical journey.
Then he starts getting onto the real mathematics. Bernstein is clearly one of those people who think "it's better that I'm not an expert in this as it will make me more able to explain it to a lay audience". Peter, Peter, Peter... you can't explain something if you don't understand it. Bernstein is all at sea from the moment he references the earliest and simplest writings on probability and risk, but when it comes to more subtle stuff he is terrible. For example, he is happy to go on and on about the normal distribution when he clearly does not understand what produces a normal distribution and when and where it is applicable, and then later he goes on at even greater length about regression to the mean, which he fundamentally does not understand either.
This book contains numerous boring digressions including his own tedious and naive numerical experiment, some of his irrelevant experiences in investing, and a foggily-understood political hobby horse.
Eventually you slog through to what this book is really about. He believed that risk had been banished from the stock markets. He has a good few examples that demonstrate palpably that this is not the case, and yet he fails to come to his own conclusion; no - risk is dead. Long live everlasting prosperity!Read more ›
Most Recent Customer Reviews
Great introduction to the history of risk.
Bernstein is certainly guilty of a degree of chronological snobbery, especially in the early chapters, and oversimplification... Read more
Interesting book about Risk, mixes historical concepts with risk practical ones. Recommended!Published 7 months ago by Carlo Bal
Fantastic book that explains much of the background to the foundations of a complex, interrelated, modern economy.Published 12 months ago by Twist Barbie
A very good book, covering the mathematics of risk but written in a clear manner that can be understood by the layman.
Well worth the money.
It is both an entertaining and a highly interesting story of the development of the effort to calculate future risk in general and of the theories of stock market risk.Published 21 months ago by René Schmid
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