The (Mis)behavior of Markets ~ Mandelbrot / Hudson

The (Mis)behavior of Markets ~ Mandelbrot / Hudson

Large soft cover
Excellent condition
328 pages

This book challenges conventional financial theories by revealing the unpredictable and chaotic nature of financial markets. Mandelbrot, a renowned mathematician, uses fractal geometry to explain market behaviors, advocating for a new understanding of risk and volatility.

It critiques mainstream financial models, such as the efficient market hypothesis, and demonstrates that markets are more chaotic and sensitive to historical events than traditionally assumed. Mandelbrot's exploration of fractals shows that price patterns resemble complex, self-similar designs found in nature, reshaping the way readers understand market fluctuations.

By analyzing price movements in various markets, Mandelbrot exposes the dangers of relying solely on traditional metrics like variance or standard deviation. He highlights that significant market events, like the Black Monday crash of 1987, occur far more frequently than traditional theories would predict.

The book also emphasizes the irreplaceable role of human emotion in market dynamics, showing how emotional responses to economic events lead to irrational decision-making.