Customer Reviews

Against the Gods: The Remarkable Story of Risk

5 star:		(48)
4 star:		(32)
3 star:		(20)
2 star:		(10)
1 star:		(4)

 

 

History is a deep subject. Probability theory is a deep subject. History of probability theory, and its applications to risk management is a very deep, if not murky, subject that deserves expert treatment. The author is commended for being the first to tackle such a thorny topic and to make serious effort to educate the lay reader. But the book is full of mistakes.

Other reviewers have already commented on mistakes in history and in mathematics. Let me comment on mistakes in physics. Page 200, Einstein did not discover the motion of electrons. In 1905, Einstein wrote a paper on Brownian motion of particles that could be observed using an optical microscope. Page 216: Einstein did not demonstrate than an imperfection lurked below the surface of Euclidean geometry. Einstein used Riemannian geometry to describe gravitatonal effects. Page 232: von Neumann was not instrumental in discovering Quantum Mechanics in Berlin during the 20's. von Neumann worked on mathematical aspects of Quantum Mechanics that are far removed from anything like discovering the subject. The problem with mistakes like that, is that they make one very suspicious of any other statement on a topic that one is not familiar with.

One more comment but this time on a historical matter: On page 200, the author labels Poincare' as "Bachelier's nemesis". I recently read a biography of Bachelier, that unfortunately I cannot locate, and my recollection is that Poincare' tried to help him obtain an academic position. I'm afraid the author took rather drastic poetic license here, and it would be interesting if someone clarifies this point.

I think the book suffers from lack of serious editing on behalf of the publisher. A non-academic author should not be expected to cover such a subject all on his own and get it all perfectly correct. If the above points are too technical for an editor, how about at least making sure that all names mentioned are correct? Page 245: is there a Nobel prize winner named "Henry Simon"? Do you mean the 1978 Economics Nobel winner Herbert Simon?

Recently there have been extensive improvements in the analyses of data and prediction methods which the author may not know.

Against the Gods draws you through a vast time span. Peter Bernstein begins with the conception of the Arabic numbeting system, up through present time super speed computers. Although, the history found in this book is interesting, the title leads you to believe it is all about investment risks, however it is more of a history text book than a manual. This book is a story of theories and how they developed. You will learn quite a bit about ancient times and how things evolved into the way that they are now, but do not expect any great help or advice on how to deal with risks in the investment world. Once you get into this book, Bernstein's writing sytle draws you in. The book is interesting enough, Bernstein's knowledge of hisotry is astounding. History Buffs: here ya go!

"Against the Gods" is a book outlining the history of risk. The book provides an outline of all the key players and their contribution to risk theory and management. Chronologically, the book begins in ancient times and stretches all the way to the present, where Bernstein delves into the works of modern day risk luminaries. The book is well written and the style is engaging, with the author always managing to find a way to keep the reader entertained as well as informed.

The book does not pretend to be a "how to" guide for risk management, nor should readers treat it as such. Although the book does discuss modern risk management tools such as derivatives, it is devoid of complex technical analysis and its treatment of such devices is limited to outlining their place in the history of risk. Those looking for technical trading analysis should seek elsewhere.

One of the key questions a potential reader of this book should be asking is "Does this book have any practical applications with regards to modern day risk management?" Whilst as mentioned above the book is not a step by step guide, I firmly believe the book is useful insofar as it enables the reader to avoid the pitfalls of the past. For example, capital markets are continually surprising those who hold an unwavering belief in "regression to the mean". The books provides an explanation of what this theory states, how it has been applied and where overzealous disciples have misused this principle in the past. Overall I would recommend this book as an informative and enjoyable read.

It was hard to finish this book. I couldn't put it down though, as I kept hoping the author would get to the point. He posed many good questions, but it didn't seem like he answered many. He lost credibility with me because of numerous logical errors.
A technical person should not read this book, maybe it's more for psychiatrists, sociologists, or some other "ists".

Against The Gods is a popular account of the history of financial risk management. The author takes us through a journey of discovery spanning almost a thousand years, from the introduction of Arabic numerals and the concept of zero, to the most sophisticated derivative instruments of modern finance. At each point in history when a great leap forward was made, the personalities involved are introduced, and the advances they are credited with are explained. All throughout, mankind's age-old struggle to measure and control uncertainty is seen to stumble time and again against the same, seemingly insurmountable problem: There is no guarantee that what happened in the past will continue to happen in the future.

The book is highly recommended for anyone seeking to understand the origins of modern risk management and what the concept of risk really means.

I am going to give you a short review and to the point.

I read this book because it was recommended on "Money Talk" the national radio show on every weekend for 6 hours on investing - Bob Brinker hosting. He is an excellent market timer and gives solid advice. Follow his (diversified investment) advice and you will make lots of money and unlike mutual funds do better than the S&P 500 with low expense ratios.

He had a recommended reading list and he named this book. The book is a disappointment. It is light weight stuff. Only part is on the markets. Frankly I cannot recommend the book.

The point of the book is that the market carries risk. Most people know that and never put more than 4% in one stock. Even Bill Gates knows that and has quietly converted some of his Microsoft stock into other areas. So skip the book and just invest in government backed instruments or follow the golden rule, no more than 4% in one stock.

Jack in Toronto

Great book on risk and on the history of risk.

Any reader who picks up "Against the Gods" for mathematical amusement will be surprised to find out that "the revolutionary idea that defines the boundary between modern times and the past is the mastery of risk." This claim, in the introduction, should be evidence enough that this book is no brainteaser, but rather the chronicle of a concept that has transformed how society thinks about the future.

Peter Bernstein, author and consultant, begins with the ancient civilizations that came close but never actually thought specifically about risk. The reasons are many-for one, absent Arabic numerals, computational mathematics were impossible. More importantly, conceiving of risk required a profound metamorphosis of the way people thought about the future: mathematicians and philosophers could only develop risk mathematics once people were convinced that the future was unpredictable and depended on their choices more so than the whims of any particular deity.

Most of the advances in the field came from the seventeenth to the nineteenth century. Often, the impetus was gambling; in fact, most of the puzzles that mathematicians tried to solve by developing probability mathematics were related to card games or craps. After that came the actuarial science, with mathematicians gripping with questions of life expectancies and illnesses.

Only in the second half of the twentieth century does risk become highly mathematical, as it enters into economics and finance, where precision and quantitative data overtake rough estimations and qualitative analysis. But with the emergence of precision have also come severe criticisms-on one end from psychologists who have cast doubt on the robustness of the rational behavior hypothesis, and on the other, from chaos mathematicians who prefer non-linear and complex explanations that go against the intellectual tradition of statisticians.

The history of risk, readers will find out, is more interesting than expected. It is a story of gamblers, philosophers, mathematicians, economists, psychologists and many others. Most of all, it is a chronicle of an ever ending dream: to anticipate or even predict the future. Whether people will ever be able to do that is doubtful; but there is no better account of that quest than Mr. Bernstein's "Against the Gods."

Bernstein is a true historian that writes in a very easy to read and engaging style. I had a hard time putting this book down. He takes you through the rise of mankind's understanding of risk from the intervention of gods to gambling with bones to game theory and beyond. This will also get you a quick diploma in the history of mathmatics along the way. Berstein also writes The Power of Gold: The History of an Obsession which anyone who likes Against the Gods will also want to read (or anyone who wants to learn about the history of Gold and money).