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

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

by James Owen Weatherall
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Overview

The Physics of Wall Street: A Brief History of Predicting the Unpredictable by James Owen Weatherall

After the economic meltdown of 2008, Warren Buffett famously warned, “beware of geeks bearing formulas.” But as James Weatherall demonstrates, not all geeks are created equal. While many of the mathematicians and software engineers on Wall Street failed when their abstractions turned ugly in practice, a special breed of physicists has a much deeper history of revolutionizing finance. Taking us from fin-de-siècle Paris to Rat Pack-era Las Vegas, from wartime government labs to Yippie communes on the Pacific coast, Weatherall shows how physicists successfully brought their science to bear on some of the thorniest problems in economics, from options pricing to bubbles.

The crisis was partly a failure of mathematical modeling. But even more, it was a failure of some very sophisticated financial institutions to think like physicists. Models—whether in science or finance—have limitations; they break down under certain conditions. And in 2008, sophisticated models fell into the hands of people who didn’t understand their purpose, and didn’t care. It was a catastrophic misuse of science.

The solution, however, is not to give up on models; it's to make them better. Weatherall reveals the people and ideas on the cusp of a new era in finance. We see a geophysicist use a model designed for earthquakes to predict a massive stock market crash. We discover a physicist-run hedge fund that earned 2,478.6% over the course of the 1990s. And we see how an obscure idea from quantum theory might soon be used to create a far more accurate Consumer Price Index.
Both persuasive and accessible, The Physics of Wall Street is riveting history that will change how we think about our economic future.

Product Details

ISBN-13: 9780547317274
Publisher: Houghton Mifflin Harcourt
Publication date: 01/02/2013
Pages: 304
Product dimensions: 6.36(w) x 9.08(h) x 1.08(d)

About the Author

JAMES OWEN WEATHERALL is a physicist, philosopher, and mathematician. He holds graduate degrees from Harvard, the Stevens Institute of Technology, and the University of California, Irvine, where is presently an assistant professor of logic and philosophy of science. He has written for Slate and Scientific American.

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The Physics of Wall Street: A Brief History of Predicting the Unpredictable 5 out of 5 based on 0 ratings. 1 reviews.
pontiac_98072 More than 1 year ago
I had heard about some of the connections between physics and finance in school, and this book helped to fill in a lot of the blank spots. It was easy to read. It focused on the history of these connections, which is OK, because you can get the technical details in other places, some of which are listed in the book. Also, could someone from B&N check out the functionality of this recommendation part of the web page? I couldn't simply write a recommendation and submit it; I had to work to shoehorn this recommendation into the system.