Misbehavior of MarketsBenoit B. Mandelbrot, one of the century's most influential mathematicians, is worldfamous for making mathematical sense of a fact everybody knows but that geometers from Euclid on down had never assimilated: Clouds are not round, mountains are not cones, coastlines are not smooth. To these classic lines we can now add another example: Markets are not the safe bet your broker may claim. In his first book for a general audience, Mandelbrot, with coauthor Richard L. Hudson, shows how the dominant way of thinking about the behavior of marketsa set of mathematical assumptions a century old and still learned by every MBA and financier in the worldsimply does not work. As he did for the physical world in his classic The Fractal Geometry of Nature, Mandelbrot here uses fractal geometry to propose a new, more accurate way of describing market behavior. The complex gyrations of IBM's stock price and the dollareuro exchange rate can now be reduced to straightforward formulae that yield a far better model of how risky they are. With his fractal tools, Mandelbrot has gotten to the bottom of how financial markets really work, and in doing so, he describes the volatile, dangerous (and strangely beautiful) properties that financial experts have never before accounted for. The result is no less than the foundation for a new science of finance. 
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LibraryThing Review
User Review  justindtapp  LibraryThingMandelbrot is the "father of fractal geometry." He's a mathematician who has spent much of his career looking at prices and markets. He argues pretty forcefully that any of the risk management ... Read full review
LibraryThing Review
User Review  IvanIdris  LibraryThingIn these turbulent economy we seem to be victims of the financial markets. Benoit Mandelbrot, famous mathematician and inventor of fractal geometry, joined forces with Richard Hudson, to write a book ... Read full review
Contents
Risk Ruin and Reward  3 
By the Toss of a Coin or the Flight of an Arrow  25 
Bachelier and His Legacy  43 
The House of Modern Finace  59 
The Case Against the Modern Theory of Finance  79 
Images of the Abnormal  88 
The New Way  109 
Turbulent Markets A Preview  111 
Long Memory from the Nile to the Marketplace  173 
Noah Joseph and Market Bubbles  197 
The Multifractal Nature of Trading Time  207 
The Way Ahead  223 
Ten Heresies of Finance  225 
In the Lab  253 
Notes  277 
303  
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analysis appear assume assumptions average Bachelier bell curve Black Brownian calculate called century chance changes Chapter chart common continue cotton course dependence described developed deviation diagram distribution economics economists effect equation exchange expect fact fall financial markets follow formula fractal fund geometry happens ideas important industry instance investment investors kind later look Mandelbrot math mathematical mathematician mean measure move multifractal nature observed odds options pattern percent portfolio predict price changes probability problem profit published random range records rise risk scale shows simple standard start starts statistical suggests theory trading turbulence variation vary volatility Wall Street wild