Against the Gods: The Remarkable Story of Risk Hardcover – Sep 7 1996
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With the stock market breaking records almost daily, leaving longtime market analysts shaking their heads and revising their forecasts, a study of the concept of risk seems quite timely. Peter Bernstein has written a comprehensive history of man's efforts to understand risk and probability, beginning with early gamblers in ancient Greece, continuing through the 17th-century French mathematicians Pascal and Fermat and up to modern chaos theory. Along the way he demonstrates that understanding risk underlies everything from game theory to bridge-building to winemaking.
From Publishers Weekly
Risk management, which assumes that future risks can be understood, measured and to some extent predicted, is the focus of this solid, thoroughgoing history. Probability theory, pioneered by 17th-century French mathematicians Blaise Pascal and Pierre de Fermat, has made possible the design of great bridges, electric power utilities and insurance policies. The statistical sampling methods invented by dour Swiss scientist Jacob Bernoulli undergird diverse activities such as the testing of new drugs, stock-picking and wine tasting. Bernstein (Capital Ideas) animates his narrative with a colorful cast of risk-analyzers, including gambling addict Girolamo Cardano, 16th-century Italian physician to the Pope; and John Maynard Keynes, whose concerns over economic uncertainty compelled him to recommend an active, interventionist role for government. Bernstein also traces the development of business forecasting, game theory, insurance and derivatives, and surveys recent advances in risk forecasting made possible through chaos theory and by the development of neural networks.
Copyright 1996 Reed Business Information, Inc.
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Top Customer Reviews
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.Read more ›
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.
After an interesting overview of the history of risk and its measurement, particularly regarding gambling, the author gradually steers his efforts towards analyzing human behaviour in the face of the risks involved in investing. There is much in this regard predominantly concerning the later quarter of the twentieth century (the book was published in 1996). From my limited perspective, he seems very thorough in this analysis by including the often (seemingly) contradictory psychological aspects of gains and losses involved in investing mainly in the stock market. Stock market tools, products and behaviour are extensively discussed.
Overall, I found the historical parts of this book to be quite interesting, particularly the mini-biographies of the pioneers and the development of probability and statistics. However, I was much less engrossed by the detailed stock market discussions which dominate in roughly the second half of the book. The prose is clear, lively and authoritative, but, in my view, overly detailed on investing-related matters. Readers with a passion for investing and the associated risk (and its history) would likely be those who would enjoy this book the most.
Most recent customer reviews
Excellent book, full of history, a good book for the investor of todayPublished 5 months ago by Y Lincoln
Recently there have been extensive improvements in the analyses of data and prediction methods which the author may not know.Published on Dec 9 2012 by Merv Palmer
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... Read morePublished on Sept. 12 2008 by Thomas Byrd
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... Read more
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... Read morePublished on Jan. 9 2004 by N. Tsafos
I bought this book because it was suggested after I ordered other books relating to the stock market and investing. Read morePublished on Dec 1 2003
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. Read morePublished on Nov. 4 2003 by Ronald Williams
As I went through the book, one thing I realized was that we seem to attribute pathbreaking ideas to people without realizing the history behind it all. Read morePublished on Sept. 22 2003 by Ganesh V Jois
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