Review by Choice Review
In a work perhaps more aptly titled "The Physicists of Wall Street," physicist, mathematician, and philosopher Weatherall (Univ. of California, Irvine) ably traces the story of the discoveries leading to today's "legions of quants: physicists and mathematicians who [came] to Wall Street and changed it forever." The author provides a nontechnical account of the mathematics of financial markets--basically a sophisticated branch of probability theory. There is not one equation in the book, and only a few graphs that clarify explanations. Thus, readers will not become successful traders simply by consulting the book. However, the extended cameo portraits of the major contributors to the field are riveting. These include Louis Bachelier, whose pathfinder thesis of 1900, Theory of Speculation, properly recognized only long after his death, began the quest; M. F. M. Osborne, who refined the theory; Edward Thorp, master of the short sell; Benoit Mandelbrot, the discoverer of fractals; and Fischer Black, of Black-Scholes modeling. Yet the markets continue to rise and fall unpredictably, and even "quants," by their educated choices, almost caused the entire world economy to come crashing down (and would have without a government bailout), as the 1998 case of Long-Term Capital Management illustrated. Summing Up: Highly recommended. General readers; upper-division undergraduates through researchers/faculty. M. Schiff CUNY College of Staten Island
Copyright American Library Association, used with permission.
Review by Booklist Review
Wall Street has long attracted talented business-school graduates; only in recent years has it also drawn analysts with doctorates in physics, mathematics, and statistics. That change is the focus of this fascinating history by a young University of California, Irvine, professor. Weatherall's narrative mixes familiar names (Blaise Pascal, Pierre de Fermat, Paul Samuelson, Fischer Black, Myron Scholes) with more obscure figures like Gerolamo Cardano, Louis Bachelier, and Didier Sornette. Many key concepts will be familiar from the financial press: e.g., random walk theory, delta hedging, dynamic hedging, and black box models. Happily, the author has a gift for making complex concepts clear to lay readers. Weatherall understands the temptation to blame the quants for the 2008 market crash but urges that the danger comes when we use ideas from physics, but we stop thinking like physicists. Thinking like physicists means recognizing that every model is based on simplifying assumptions and that model building requires a constant iterative process of testing and improvement. Using that process, Weatherall argues, quants can offer useful insights and tools for both economic policymakers and financial speculators.--Carroll, Mary Copyright 2010 Booklist
From Booklist, Copyright (c) American Library Association. Used with permission.
Review by Publisher's Weekly Review
UC-Irvine professor Weatherall looks at the role played by physicists and their ideas in financial markets, and argues persuasively that their contributions should be more widely used and recognized. Himself a physicist, philosopher, and mathematician, Weatherall suggests that the profession's essential contribution to finance is to develop models of how financial markets operate using insights from science. Answering the concerns of skeptics like Warren Buffett, he cautions that physicists approach their models simply as useful tools, and that the 2008 Wall Street crisis partly reflects financiers' difficulty in appreciating that models offer only a simplified representation of reality. Though this book is hardly beach reading, even laymen can enjoy Weatherall's sketches of eccentric theoreticians and his examples of unexpected patterns gleaned from such unrelated fields as the study of migratory salmon and the discovery of nylon. Weatherall also adeptly simplifies information for the uninitiated, for example, illustrating chaos theory by discussing the behavior of gas particles and ants. Finally, Weatherall acknowledges that no single unified law can fully cover the ever-evolving nature of markets. While all attempts to divine the future smack a little of the Delphic oracle, anyone interested in how markets work will appreciate this serious hypothesis. Agent: Zoe Pagnamenta, Zoe Pagnamenta Agency. (Jan.) (c) Copyright PWxyz, LLC. All rights reserved.
(c) Copyright PWxyz, LLC. All rights reserved
Review by Library Journal Review
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 (c) Copyright 2012. Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
(c) Copyright Library Journals LLC, a wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
Review by Kirkus Book Review
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.]] Copyright Kirkus Reviews, used with permission.
Copyright (c) Kirkus Reviews, used with permission.
Review by Choice Review
Review by Booklist Review
Review by Publisher's Weekly Review
Review by Library Journal Review
Review by Kirkus Book Review