The Physics of Wall Street
James Owen Weatherall
Uncover the surprising scientific history behind modern finance and see how physicists traded laboratories for trading floors to revolutionize the way we measure risk. You will learn to navigate the complex relationship between mathematical models and market reality, gaining the critical insight needed to understand the hidden forces driving today’s global economy.
The French Connection: Louis Bachelier
Explores the origins of quantitative finance through Louis Bachelier's discovery that stock price movements mirror the random motion of particles in physics.
The Drunkard's Walk on the Bourse
The Mathematical Eye for Value
Forgotten Genius and Rediscovery
The Bell Curve and Its Discontents
Introduces Maury Osborne and Benoit Mandelbrot, contrasting the neat 'Normal' distribution with the messy reality of wild randomness.
Osborne's Log-Normal Law
Mandelbrot's Fractal Markets
The Cotton Price Mystery
The Mathematician Who Beat the Dealer
Follows Ed Thorp's journey from card counting in Vegas to creating the first successful quantitative hedge fund.
Counting Cards and Calculating Odds
The Secret Formula for Warrants
Convertible Arbitrage
The Alchemy of Risk-Free Profit
The story of Black, Scholes, and Merton and the formula that created the trillion-dollar derivatives market.
The Black-Scholes Breakthrough
The Magic of Dynamic Hedging
The Volatility Smile
When the Formulas Failed
Analyzes the 1987 crash and the LTCM collapse to show how blind faith in models can lead to catastrophe.
Black Monday and Portfolio Insurance
The Collapse of LTCM
Model Error vs. Human Error
Chaos Theory and the Prediction Company
Doyne Farmer and Norman Packard apply chaos theory to find hidden patterns in market noise.
Finding Order in Complexity
The Physics of Data Mining
The Evolution of Quants
The Gauges of Finance
Explores advanced concepts like Gauge Theory and how they might provide a more stable foundation for economics.
Symmetry in the Markets
The Black-Litterman Model
The Physics of Money
A New Manhattan Project for Econ?
Weatherall's concluding argument for why we need more physics in finance, not less, to prevent future crashes.
Models as Maps, Not Reality
The Ethics of Engineering Finance
Building a Better Financial Science
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Interactive Socratic dialogue, level by level