"Fascinating history...Happily, the author has a gift for making complex concepts clear to lay readers."
"A lively account of physicists in finance...An enjoyable debut appropriate for both specialists and general readers."
"Anyone interested in how markets work will appreciate this serious hypothesis."
"A compelling case for models in economics and an important book for anyone who embraces the scientific method for improving the lot of mankind."
—Michael Brown, former CFO of Microsoft Corporation, past chairman of NASDAQ
"Weatherall probes an epochal shift in financial strategizing with lucidity, explaining how it occurred and what it means for modern finance."
—Peter Galison, author of Einstein’s Clocks, Poincare’s Maps
"Weatherall’s rollicking tale of science and profit has relevance to us all. He goes beyond the ‘Frankenstein’s monster’ cliché to argue that mathematical models are an essential foundation of a saner future."
—William Poundstone, author of Fortune's Formula
"This book will lead you to reexamine what you thought you knew about the financial markets, and why it is so important for the economists to actually listen to what the physicists have been trying to tell them."
—Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion, University of California, Irvine
"Weatherall has a rare talent for making the complex comprehensible, and he puts it to excellent use explaining the role of physics and mathematics in financial markets. This is a book anyone concerned with the unforeseen consequences of financial innovations will want to read."
—Lee Smolin, author of The Trouble with Physics
"Beautifully written, with clarity, understanding, and a broad view that is rare in these domains. Even those of us who are unconvinced physics has played an important role in finance will be carried along and learn from this engaging book."
—Stephen M. Stigler, Ernest DeWitt Burton Distinguished Service Professor of Statistics, University of Chicago
"James Weatherall channels the sheer intellectual excitement of unlocking the secrets of nature, whether they relate to fundamental particles or financial markets."
—Hans Halvorson, professor of philosophy, Princeton University
"With The Physics of Wall Street, James Weatherall has announced his arrival as one of our leading young science writers. This smart, fast-paced history of ideaswhich is packed with vivid portraits of brainiacs famous and obscure and offers a provocative analysis of our current economic woesshould appeal to a broad range of readers, from hard-core science junkies to business folks trying to make sense of modern finance."
—John Horgan, Director, Center for Science Writings, Stevens Institute of Technology
As promised in his title, Weatherall (logic & philosophy of science, Univ. of California, Irvine) charts here the relationship between physics and financial markets. Inspired by coverage of the 2008 financial crisis and the failure of Wall Street's complex mathematical models to predict it, Weatherall, a physicist and mathematician by training, researched the history of financial modeling to explore how and why physicists came to the forefront of financial theory. Beyond the history lesson, Weatherall seeks to convince his readers not to blame the physicist creators for the failure of their models but instead to understand that the problem is the models' misuse by nonscientists who do not fully understand them. Beyond this absolution, he suggests that the economic powers that be support the idea (proposed by one of these Wall Street scientists) of the creation of an "economic Manhattan Project" to predict and perhaps avert future crises. VERDICT Dense but highly readable, this book will appeal to those interested in the inner workings of Wall Street.—Sara Holder, McGill Univ. Lib., Montreal
A lively account of physicists in finance. A young physicist and contributor to Slate and Scientific American, Weatherall (Logic and Philosophy of Science/Univ. of California, Irvine) was puzzled when experts began blaming the 2008 economic collapse on physicists who created complex financial instruments for Wall Street. He wondered: What do physicists have to do with the economy? The author explains how physicists have been predicting the unpredictable on Wall Street for 30 years, accounting for such hedge-fund successes as Jim Simons' Renaissance Technologies, whose staff, loaded with physics and math doctorates, produced a remarkable 2,478.6 percent return in the decade from 1988 to 1998. The story begins in 19th-century Paris with Louis Bachelier, an aspiring young physicist who worked at the Bourse and viewed trading as an elaborate game of chance. In his dissertation, he explained how probability theory could be used to understand financial markets. "In a just world, Bachelier would be to finance what Newton is to physics," writes Weatherall. Bachelier was dismissed as a fringe figure in his lifetime, only to be rediscovered and championed years later by economist Paul Samuelson. Others trained in physics, including Maury Osborne of the U.S. Naval Research Lab, and Benoit Mandelbrot, who studied cotton markets, further refined the idea that markets can be understood in terms of a random walk. In a series of bright portraits, Weatherall describes the many subsequent figures who spurred the further evolution of financial modeling, including Edward Thorp, who developed a winning system for blackjack in 1960s Las Vegas and went on to invent the modern hedge fund; party-going wild man and Bell Labs scientist John Kelly Jr., who applied information theory to gambling; and the anti-establishment yippies Doyne Farmer and Norman Packard, who built their Prediction Company using tools developed to anticipate how a turbulent fluid would behave in a narrow pipe. An enjoyable debut appropriate for both specialists and general readers.