The Misbehavior of Markets: A Fractal View of Financial Turbulence: A Fractal View of Risk, Ruin, and Reward Paperback – 7 Mar. 2006
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"The deepest and most realistic finance book ever published."
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Meldebrot initially states that technical analysis of prices and ‘charting’ is redundent as the technique is basically useseless (which I agree with) then proceeds to back up all his ideas with charts himself which is exactly the technique he dismisses initially. If your theories and arguments don’t hold in logic, since they need ficticious charts to back them up, do they actually hold in practice?
The financial knowledge is basic and nothing of any actual use really gets discussed.
While I expect most of the typing was done by RL Hudson, there is enough personal history and (at times) unadulterated bitterness to convince me that Mandelbrot played a strong hand in the writing of the book. He is honest about the controversy and mistrust of his pet theories, but also presents strong arguments of how and why they can be applied (wasting no time on modesty).
Overall, I'd recommend this book for outsiders interested in economics theory. Mandelbrot stresses that this is no investment guide and will not make you rich, but it's an enjoyable insight and if you own or would like to own any Mandelbrot set merchandise, this is probably the book for you.
The way Mandelbrot describes fractal modelling it seems a promising basis for all sorts of further research. Very interesting concluding chapter on practical applications of his theory and its derivatives ('In the Lab').
As another reviewer says, this is essentially a 'single point' book, with the point being made repeatedly and in a number of ways. For me, however, that did not detract: the point has sufficient depth to warrant the analysis and exploration undertaken.
Top international reviews
Senti que me faltou um pouco de conhecimento sobre a matemática fractal para aproveitar um pouco mais.
Es un libro interesante y divulgativo que no apabulla con matemáticas sino que cuenta el proceso de descubrimiento del autor. Aunque, eso sí, suelta dos o tres perlas que hay que grabarse a fuego si uno quiere llegar a entender los mercados. Recomendadísimo.
- gauss distribution of price changes
- non-correlation of events
are not at all true. Taking some similies from the Bible he calls them
- Noah effect (existence of extremely large outliers; e.g.rainfall)
- Joseph effect (7 good years followed by 7 bad ones)
The book contains some explanations about fractals and a lot of history. Most chapters are humorously worded and real fun to read.
However, while conceptually very original, at some point the detailed description of his new model gets a little diffuse. Maybe this is part of the fractal legacy: interesting but by nature chaotic.