A Mathematician Plays the Stock Market
- Basic Books, 2003
- Italian
Wending its way through the A Mathematician Plays the Market is the story of my disastrous love affair with WorldCom, but lest you dread a cloyingly personal account of how I lost my shirt (or at least had my sleeves shortened), I assure you that the book's primary purpose is to lay out, elucidate, and explore the basic conceptual mathematics of the market. I'll examine - largely via vignettes and stories rather than formulas and equations - various approaches to investing as well as a number of problems, paradoxes, and puzzles, some old, some new, that encapsulate issues associated with the market. Is it efficient? random? Is there anything to technical analysis, fundamental analysis, and other supposedly time-tested methods of picking stocks? How can one quantify risk? What is the role of cognitive illusion and pyschological foible (to which, alas, I am not immune)? What are the most common scams? What are options, portfolio theory, short-selling, the efficient market hypothesis? Does the normal bell-shaped curve really explain the market's occasionally extreme volatility? What about fractals, chaos, and other non-standard tools? In short, what can the tools of mathematics can tell us about the vagaries of the stock market?
Reviews
"The world's wittiest mathematician has done it again! Paulos' hilarious account of getting trampled while running with the bulls will leave you laughing-and more than a little wiser."
"Investors would do well to heed his entertaining, frequently counterintuitive, always useful bean-counting methodology. A first-rate exploration into the math of the market: heuristic numeracy at its best."
"A funny, insightful little volume" ... "Playful and informative, Paulos's book will be appreciated by investors with a sense of humor."
"Paulos is the real McCoy, and his newest offering, "A Mathematician Plays the S tock Market," is a double-chocolate nougat of a book - a rich, densely packed delight. It is also rueful, funny and disarmingly personal."
"Throughout this wide-ranging survey, the writing is spirited, funny and clear. Mr. Paulos is continually imaginative in finding apt metaphors and anecdotes for the mechanics he dissects..."
"John Allen Paulos is a genius at translating the arcane and complex for the rest of us in ways that go down as easily, and enjoyably, as vanilla ice cream. ... His tour of the literature takes in all the paradoxes, fallacies and theories about markets, skillfully blending the math and economics and, most important, the psychology of it all. You won't come away with any surefire investment strategy, but you will understand why anyone who purports to have one almost certainly doesn't. This book should be required reading for anyone opening a brokerage account."
"Popularizers of mathematics often rely on a standard collection of tried and trusted tales to illustrate particular topics painlessly, and anyone who regularly reads books on the subject will have had the experience of encountering the same old stories again and again. These stories are often so delightful that we do not mind being reminded of them, but one of Paulos's great strengths is his ability to invent new stories or at least new twists to old ones."
