Benoit Mandelbrot is Sterling Professor of Mathematical Sciences at Yale University and a Fellow Emeritus at IBM's Thomas J. Watson Laboratory.Benoit Mandelbrot is Sterling Professor of Mathematical Sciences at Yale University and a Fellow Emeritus at IBM's Thomas J. Watson Laboratory. He is the inventor of fractal geometry, whose most famous example, the Mandelbrot Set, has been replicated on millions of posters, t-shirts, and albums. A leading figure in James Gleick's Chaos, he has received numerous awards in the United States and abroad, such as the Japan Prize in Science and Technology, and the Wolf Prize in Physics, which praised him for having "changed our view of nature." His books include the classic The Fractal Geometry of Nature. This is his first book for lay readers on finance, a subject he has studied since the 1960s. He lives in Scarsdale, New York. Richard L. Hudson was the managing editor of the Wall Street Journal's European edition for six years, and a Journal reporter and editor for twenty-five. He is a 1978 graduate of Harvard University and a 1991 Knight Fellow of MIT. He lives in Brussels, Belgium.With the invention of fractal geometry, mathematical superstar Benoit Mandelbrot forever changed the way we understand the mysteries of nature and influenced a host of modern fields, from chaos theory to computer animation. Now, together with science journalist and former Wall Street Journal editor Richard L. Hudson, Mandelbrot turns a fractal eye to the behavior of financial markets and overturns the "random walk" theory that is the underpinning of all contemporary financial analysis. Markets, we learn, are far riskier than we have wanted to believe. The ability to simplify the complex has made Mandelbrot one of the century's most influential mathematicians. With his fractal models, the (mis)behavior of the world's markets-from the gyrations of IBM's stock price and the Dow, to cotton trading, and the dollar-Euro exchange rate-can be understood in more accurate terms than the tired theories of yesteryear. For the past forty years, Mandelbrot has been studying the underlying mathematics of finance-and this book relates his personal voyage of discovery. From his father's wartime garment business, his research on the American cotton market, and his studies of the Nile River's floods, Mandelbrot draws many unusual insights-the insights of a maverick scientist. He has proven that many of the fundamental assumptions of financial theory are wrong, and in the past decade a growing number of financiers and economists have started listening. The models he has built faithfully replicate real-world price series, illustrate the manner in which market turbulence clusters, and show that no investment horizon is inherently better than another-volatility "scales" the same over hours or decades. Financial markets do not fluctuate according to a "random walk" mode; they operate with their own sense of "market time" that does not correspond to hours and minutes as the wall clock counts them. The (Mis)Behavior of Markets is a revolutionary reevaluation of the standard tools and models of modern financial theory. Mandelbrot's fresh insights explode the false assumptions that have caused millions of investors, traders, and managers to underestimate the real risk of the market. His genius ensures that investors will never see the market-or their portfolios-the same way again."Together with Richard L. Hudson, Benoit Mandelbrot turns a fractal eye to the behavior of financial markets and overturns the "random walk" theory that is the underpinning of all contemporary financial analysis. Markets, we learn, are far riskier than we have wanted to believe." "The ability to simplify the complex has made Mandelbrot one of the century's most influential mathematicians. With his fractal models, the (mis)behavior of the world's markets - from the gyrations of IMB's stock price and the Dow, to cotton trading, and the dollar-Euro exchange rate - can be understood in more accurate terms than the tired theories of yesteryear." "The (Mis)Behavior of Markets is a reevaluation of the standard tools and models of modern financial theory. Mandelbrot's fresh insights explode the false assumptions that have caused millions of investors, traders, and managers to underestimate the real risk, of the market."--BOOK JACKET. Title Summary field provided by Blackwell North America, Inc. All Rights ReservedIn his first book for a general audience, Mandelbrot, with co-author Hudson, shows how the dominant way of thinking about the behavior of markets--a set of mathematical assumptions a century old and still learned by every MBA and financer in the world--simply does not work.
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