A Brief History of Predicting the Unpredictable - The Physics of Wall Street

This is a book written in a journalistic style. Some of the historical information, for example related to Bachelier and his work conflicts with the information I have. Frankly, I am not sure which is right, but that is not so important.

My problem with the book is that it may be confusing to many who are not versed in the subject of economics and math. The author spends half of the book writing about the limitations of math, and the other half about how great has math been for economics. It seems he believes in reality that math has been great and decisive but wants to hedge by writing about the limitations (I've seen this strategy before). He also uses the concept of complex systems and chaotic systems interchangeably something I don't agree with, as one is essentially deterministic while the other is random.

The reality is -shall we say- different: Math has set economics on the wrong path for many years. We have one "theory" after the other discredited, still these charlatans are rarely held accountable....on the contrary, they are given tenure at universities and accolades.. The author tells us about Mr Black working on CAPM and creating a new macroeconomics theory "...which he called general equilibrium..." Give me a break!! All this is charlatanism! We know that CAPM and the Efficient Market Theory is an unmitigated fraud. Why not call it as such?

The author tells us about Merton and other "luminaries" who in reality have actively been involved in monumental debacles such as LTCM by applying their "Theories" full of math. He also mentions a certain Emanuel Derman (the name was familiar..) who wrote one of the most ridiculous books I have read in a long time, "Models behaving badly", which I read and reviewed, but that is another story....

The author wants us to be impressed with the predictive capacity of Didier Sornette telling us in a novelistic fashion about his great success.......he should enlighten us about his great failures also, which he had. This is of course to be expected.

I have serious doubts that the author understands properly the difference between natural sciences and complex systems.

In short, the book contains hardly anything new about the subject, and can be seriously misleading to those wanting to learn about it. Caveat Emptor!

Coming with Big Data is proliferation of multidisciplinary talents and their ability to synthesize across, distill and provide fresh insights. This book is written by one such scholar, a very young one.

Pages before 75 present best intellectual value and information value. The connection between Savage and Paul S, the string through Zipf, Pareto and all the way to Levy distribution is among the best I have ever seen in recent writing history. The presentation is coherent, lucid, reflecting clear stream of thinking and logic efficiency.

Pages after 75, though, overlap much with common knowledge. Lack of computation converage is understandable given the writer's lineage in philosophy. The book does not smell much of arrogance, as some claim it does. If somebody has reached certain height, it is not avoidable part of what he sets sights on is under him, not above. If that sounds disrespectful to you, then raise youself or just be it.

I have worked in the securities industry for over 20 years and consider myself a pretty well read student of the markets and this book is like no other. I really struggled with the first half of the book and it's stories about claims to "unlock" the mysteries of the markets. I think the stories are very entertaining and if true, amazing. I simply have too much faith in greed and fear to believe that physics and natural laws can reliably predict market movements. The book is pretty sophisticated so I would not recommend it to those new to the stock market. Interesting side note, I found his explanation of the markets from 2008+ to be way too simplistic and not well written. I think the author does better telling other people's stories than giving his own opinion about the roots of the more recent stock market history. In summary, a good book worth reading.

I would have expected the author to distinguish mathematics from physics; they are not identical. As a science, physics is experimental as well as mathematical. Mathematical equations are merely logical runes; they do not have to move. Physics is a science of forces -- what forces are there in economics besides "motivation", "subjectivity", and ultimately greed? Motivations are not physical forces!
At profitandentropy.com (our website will be up again shortly) we discuss currency flow as analogous to heat flow, and profit production as analogous to the production of increasing entropy in non-zero-sum transactions. We compare economic motivation to temperature, which we can do because any temperature scale arising from absolute zero is valid in thermodynamics, even one we imagine.

I am a professor of finance, familiar with almost all of the content in the book before I read it. I found it very superficial. It said some models in finance are based on models borrowed from physics. It gave some biographical information on some of the physicists and finance people that could be found in lots of other places. It explained very little about the models. I don't think it is a book that would help a novice understand anything nor would it help a knowledgeable person get any more depth.

This book has given me confidence that an approach to prediction in many fields using underlying physical models - instead of statistical curve fitting - is the way to succeed. The author's style is interesting and illuminating, even if his characterisations are a little exaggerated. Strongly recommended.

mostly nonsense that was debunked in detail - see for instance this multi-part rebuttal by a real trader of most of the claims in this book at http://www.minyanville.com/business-news/editors-pick/articles/2527The-Physics-of-Wall-Street2527253A-The/2/4/2013/id/47671?refresh=1

This is rather easy reading with some interesting insights into the history of use of physics and math in finance.

I've deducted 2 stars from the rating due to author's constant tendency to digress from the main theme to some barely related storylines from scientists' lives which I feel is a waste of time and pages but someone else could welcome that addition.

This was not quite what I expected. The subtitle "A Brief History of Predicting the Unpredictable" should have been the primary title. There is no actual physics in this book - so I was disappointed. However the book is a well written rehearsing of the history of physicists on wall street and is a decent read. I wish the author had not listened to the publisher's rule about equations reducing sales and got more into the meat of the work product of physicists. Dropped a couple of stars for the misleading headline title.

I had never heard of Didier Sornette or Pia Malaney before.
The Weinberg I knew was associated with weak force not
sociology and economics. That Mandelbrot's ideas
could be applied to markets wasn't new to me,
but that an application Per Bak's self-organization had successfully predicted the 1997
market crash was new to me as were dragon kings.
So I have some catching up to do!
The last point in the book that the Federal Reserve and the World Bank
should have the benefit of this new technology is right on.

Weatherall writes a challenging but engaging book for the non-science major who wants to understand the roles of physicists, economists and mathematicians on Wall Street. He carefully and thoroughly traces the evolution of the scientific approach to stock market analysis from Bachelier to Osborne to Mandelbrot to Black - Scholes to Simons and on. With insight and tact, he describes the interplay between pure science and applied science, and introduces the reader to the thinking behind the random walk concept of stock market forecasting, the chaos theory, the gauge theory; he counters Taleb's "Black Swan" thinking, all with perspective, fascinating asides, all done with the gentle reason of an intelligent careful scientific mind and pen. Some of the analysis was opaque to the reviewer's non scientific sensibilities but the challenge was worth it as the book was concise, readable and understandable for the most part.