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Physics of Wall Street: A Brief History of Predicting the Unpredictableby James Owen Weatherall
Synopses & Reviews
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.
James Owen Weatherall tells the story of the physicists and mathematicians who created the models that have become the basis of modern finance and argues that these models are the "solution" to—not the source of—our current economic woes.
About the Author
James Owen Weatherall is a physicist, philosopher, and mathematician. He is currently an assistant professor of logic and philosophy of science at the University of California, Irvine, where he is also a member of the Institute for Mathematical Behavioral Science. He has served as managing editor of Philosophy of Science, the official journal of the Philosophy of Science Association. James lives in Irvine, California, with his wife and two daughters. Kaleo Griffith is a classically trained, multiple award-winning voice artist and actor living in Los Angeles. He has been called "powerful, with the presence of a young Timothy Dalton" by the Hollywood Reporter. Kaleo graduated cum laude from Franklin Pierce University with a BA in Theatre, holds an MFA in acting from Rutgers University, and is a graduate of The American Academy of Dramatic Arts. He has also lived and trained classically in the U.K. through Roger Williams University. His film and television credits include Oliver Stone's Talk Radio, Law and Order, Law and Order SVU, Diagnosis X, and All My Children, as well as hosting on HGTV. He has performed in over fifty professional theatrical productions across the country, including at the Pasadena Playhouse and South Coast Repertory Theatre, working with veterans like Richard Chamberlain, Jessica Walter, and Lois Nettleton. His voice work encompasses many commercial campaigns and audiobooks.Kaleo recently won two Audiofile Earphones Awards for his narration work on Pamela Clare's Extreme Exposure and Pulitzer Prize finalist Karen Russell's Vampires in the Lemon Grove.
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