Need to get up to speed on the complex, inner workings of financial markets?
We’ve got the book for you. Check out The Misbehavior of Markets by deceased mathematician and deep-thinker Benoit Mandelbrot.
“Read this one slowly,” says Hedgeye CEO Keith McCullough.
Mandelbrot is the father of fractal geometry (a field of mathematics that attempts to define how complex systems change as they get larger in scale). His theories applied to markets tries to make sense of states of seeming randomness.
If all of this sounds daunting don’t worry, Mandelbrot’s style is accessible and laden with insight. He also dissects what works and doesn’t work in financial markets. And Mandelbrot never shies away from taking to task current Wall Street orthodoxy. Take this excerpt for instance:
“The financial industry has developed other tools. The second-oldest form of analysis, after fundamental, is “technical.” This is a craft of recognizing patterns, real or spurious – of studying reams of price, volume, and indicator charts in search of clues to buy or sell. The language of the chartists is rich: head and shoulders, flags and pennants, triangles (symmetrical, ascending, or descending. The discipline, in disfavor during the 1980s, expanded in the 1990s as thousands of neophytes took to the internet to trade stocks.” -The (Mis)Behavior of Markets (pg 8)
McCullough calls The Misbehavior of Markets the “bible for understanding fractal math and non-linearity” in financial markets. It’s definitely worth checking out.