The Physics of Wall Street

Author: James Owen Weatherall
Publisher: HMH
ISBN: 0547618298
Format: PDF, ePub
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A look inside the world of “quants” and how science can (and can’t) predict financial markets: “Entertaining and enlightening” (The New York Times). After the economic meltdown of 2008, Warren Buffett famously warned, “beware of geeks bearing formulas.” But 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, James Owen 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. This book reveals the people and ideas on the cusp of a new era in finance, from a geophysicist using a model designed for earthquakes to predict a massive stock market crash to a physicist-run hedge fund earning 2,478.6% over the course of the 1990s. Weatherall shows how an obscure idea from quantum theory might soon be used to create a far more accurate Consumer Price Index. The Physics of Wall Street will change how we think about our economic future. “Fascinating history . . . Happily, the author has a gift for making complex concepts clear to lay readers.” —Booklist

The Physics of Wall Street

Author: James Owen Weatherall
Publisher: Houghton Mifflin Harcourt
ISBN: 0547317271
Format: PDF, ePub, Mobi
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A Harvard scholar argues that mathematical models can provide solutions to current economic challenges, explaining that the economic meltdown of 2008 was based on a misunderstanding of scientific models rather than on the models themselves.

The Physics of Wall Street

Author: James Owen Weatherall
Publisher: Houghton Mifflin Harcourt
ISBN:
Format: PDF, ePub
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After the economic meltdown of 2008, many pundits placed the blame on “complex financial instruments” and the physicists and mathematicians who dreamed them up. But how is it that physicists came to drive Wall Street? And were their ideas really the cause of the collapse?In The Physics of Wall Street, the physicist James Weatherall answers both of these questions. He tells the story of how physicists first moved to finance, bringing science to bear on some of the thorniest problems in economics, from bubbles to options pricing. The problem isn’t simply that economic models have limitations and can break down under certain conditions, but that at the time of the meltdown those models were in the hands of people who either didn’t understand their purpose or didn’t care. It was a catastrophic misuse of science. However, Weatherall argues that the solution is not to give up on the models but to make them better. Both persuasive and accessible, The Physics of Wall Street is riveting history that will change how we think about our economic future. “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 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.

The Physics of Finance

Author: James Owen Weatherall
Publisher:
ISBN: 9781780720876
Format: PDF, ePub
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"He takes us on a lively journey from fin-de-siècle Paris to Rat Pack-era Las Vegas, from wartime government labs to Yippie communes, showing how some of the finest scientific minds of the last century came to construct the sophisticated models on which modern securities trading is based"--Back cover.

Void

Author: James Owen Weatherall
Publisher: Yale University Press
ISBN: 0300209983
Format: PDF, ePub, Docs
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The rising star author of "The Physics of Wall Street" explores why nothing may hold the key to the next era of theoretical physics"

Heraclitean Fire

Author: Erwin Chargaff
Publisher: Paul & Company Pub Consortium
ISBN:
Format: PDF, ePub, Docs
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The eminent biochemist reflects on his life and work in Vienna and in America, shedding light on his DNA research and the work and opinions that led to his reputation as a maverick

Genius

Author: James Gleick
Publisher: Open Road Media
ISBN: 1453210431
Format: PDF, ePub, Mobi
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New York Times Bestseller: This life story of the quirky physicist is “a thorough and masterful portrait of one of the great minds of the century” (The New York Review of Books). Raised in Depression-era Rockaway Beach, physicist Richard Feynman was irreverent, eccentric, and childishly enthusiastic—a new kind of scientist in a field that was in its infancy. His quick mastery of quantum mechanics earned him a place at Los Alamos working on the Manhattan Project under J. Robert Oppenheimer, where the giddy young man held his own among the nation’s greatest minds. There, Feynman turned theory into practice, culminating in the Trinity test, on July 16, 1945, when the Atomic Age was born. He was only twenty-seven. And he was just getting started. In this sweeping biography, James Gleick captures the forceful personality of a great man, integrating Feynman’s work and life in a way that is accessible to laymen and fascinating for the scientists who follow in his footsteps.

Pricing the Future

Author: George Szpiro
Publisher:
ISBN: 0465022480
Format: PDF, ePub, Docs
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Financial economist Szpiro tells the fascinating stories of the pioneers of mathematical finance who conducted the search for the elusive options pricing formula. "Pricing the Future" retraces the historical and intellectual developments that ultimately led to the widespread use of mathematical models to drive investment strategies on Wall Street.

Models Behaving Badly

Author: Emanuel Derman
Publisher: Simon and Schuster
ISBN: 1439165017
Format: PDF, ePub
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Now in paperback, “a compelling, accessible, and provocative piece of work that forces us to question many of our assumptions” (Gillian Tett, author of Fool’s Gold). Quants, physicists working on Wall Street as quantitative analysts, have been widely blamed for triggering financial crises with their complex mathematical models. Their formulas were meant to allow Wall Street to prosper without risk. But in this penetrating insider’s look at the recent economic collapse, Emanuel Derman—former head quant at Goldman Sachs—explains the collision between mathematical modeling and economics and what makes financial models so dangerous. Though such models imitate the style of physics and employ the language of mathematics, theories in physics aim for a description of reality—but in finance, models can shoot only for a very limited approximation of reality. Derman uses his firsthand experience in financial theory and practice to explain the complicated tangles that have paralyzed the economy. Models.Behaving.Badly. exposes Wall Street’s love affair with models, and shows us why nobody will ever be able to write a model that can encapsulate human behavior.

How I Became a Quant

Author: Richard R. Lindsey
Publisher: John Wiley & Sons
ISBN: 9781118044759
Format: PDF, Mobi
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Praise for How I Became a Quant "Led by two top-notch quants, Richard R. Lindsey and Barry Schachter, How I Became a Quant details the quirky world of quantitative analysis through stories told by some of today's most successful quants. For anyone who might have thought otherwise, there are engaging personalities behind all that number crunching!" --Ira Kawaller, Kawaller & Co. and the Kawaller Fund "A fun and fascinating read. This book tells the story of how academics, physicists, mathematicians, and other scientists became professional investors managing billions." --David A. Krell, President and CEO, International Securities Exchange "How I Became a Quant should be must reading for all students with a quantitative aptitude. It provides fascinating examples of the dynamic career opportunities potentially open to anyone with the skills and passion for quantitative analysis." --Roy D. Henriksson, Chief Investment Officer, Advanced Portfolio Management "Quants"--those who design and implement mathematical models for the pricing of derivatives, assessment of risk, or prediction of market movements--are the backbone of today's investment industry. As the greater volatility of current financial markets has driven investors to seek shelter from increasing uncertainty, the quant revolution has given people the opportunity to avoid unwanted financial risk by literally trading it away, or more specifically, paying someone else to take on the unwanted risk. How I Became a Quant reveals the faces behind the quant revolution, offering you?the?chance to learn firsthand what it's like to be a?quant today. In this fascinating collection of Wall Street war stories, more than two dozen quants detail their roots, roles, and contributions, explaining what they do and how they do it, as well as outlining the sometimes unexpected paths they have followed from the halls of academia to the front lines of an investment revolution.