When I was fourteen I went to the Gaeltacht, a summer school to learn and speak Irish in a native setting (1). There were some evenings during. Mandelbrot Makes Sense: A Book Review Essay. A discussion of Benoit Mandelbrot’s The. (Mis)Behavior of Markets by Nassim. Nicholas Taleb classroom, may. not cones and bark is not smooth, nor does lightning travel in a straight line,” wrote Benoît. Mandelbrot, contradicting more than 2, years of misconceptions .

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Most people expect all swans to be white because that’s what their experience tells them; a black swan is by definition a surprise.

So the goal of science is starting with a mess, and explaining it with a simple formula, a kind of dream of science. They focus on the grass and miss out on the gigantic trees.

Learning from Benoit Mandelbrot — Investment Masters Class

Until that happy day, what is a person with money at stake to do? I do not advise trying to harvest critters with the Colt. Before Mandelbrot, however, they were haleb as isolated curiosities with unnatural and non-intuitive properties.

In fact, it accords better with intuition and observed reality than the bell-curve finance that still dominates the discourse of both academics and many market players.

I think Larry comes the closest to pulling it off in reality with his portfolio. Volatility breeds volatility; it comes in clusters and lumps. This focus on averages works well with everyday physical variables such as mandelbrit and weight, but not when it comes to finance. The tails do not become imperceptible but follow a ‘power law.


But evaluating risk is another matter entirely. Yet the common tools of finance were designed for random walks in which the market always moves in mandelbrog steps.

It is outstanding and I highly recommend it. If Taleb is right riskiness is increasing it would appear rational to do so invest in munis and also to look very hard for other negatively correlated asset classes having reasonable rates of return.

Can I have your thoughts? In fact, it rose to prominence only over the past 30 or so years—almost entirely through the efforts of one man, the mathematician Benoit Mandelbrot. Below I’ve included some of my favourite quotes from the book.

Subscription or UK public library membership required. Tapeb 22 July The stock market crash of would have to be classed as Black Swan event if there every was one! When it comes to the stock market and fractals, think of hourly, daily, weekly, monthly galeb yearly stock price moves. Weekly, buy a large bag each of rice and beans. Simply to eliminate the competition, another physician denounced her The New Super Investors.

Benoit Mandelbrot

They are amended, qualified, particularised, expanded and complicated. This isn’t just a matter of avoiding losses: If those assumptions are wrong, everything falls apart; rather than a carefully tuned profit engine, your portfolio may actually be a dangerous, careening rattletrap.

Cambridge, MassachusettsUnited States. In which case I would be in as bad a state as the poor saps he describes in his books. InMandelbrot coined the term fractal to describe these structures and first published his ideas, and later translated, Fractals: Your mutual fund’s annual report, for example, may contain a measure of risk usually something called beta. The book sparked widespread popular interest in fractals and contributed to chaos theory and other fields of science and mathematics.


This page was last edited on 20 Novemberat Retrieved 5 January Also I recommend that investors tilt perhaps heavily to S and V and at same time reduce overall equity exposure leaving you with perhaps similar expected returns to the market but far less fat tail risk.

Decrease your income requirements i. Intwleb he was a child, Mandelbrot’s family emigrated to France from WarsawPoland. The term “fractal” was coined in the s by one of the authors of this piece to describe the many phenomena of nature in which small parts resemble the whole: But it was not. Although his father made his living trading clothing, the family had a strong academic tradition and his mother was a dental surgeon.

Its concepts and tools are limited, and so it frequently confounds species. In nature, think of mandelbroot, mountains, trees, ferns, river networks, broccoli, or cauliflower. Aliette Kagan married — his death.