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Title: Why Stock Markets Crash : Critical Events in Complex Financial Systems by Didier Sornette ISBN: 0-691-09630-9 Publisher: Princeton Univ Pr Pub. Date: 18 November, 2002 Format: Hardcover Volumes: 1 List Price(USD): $45.00 |
Average Customer Rating: 4.28 (18 reviews)
Rating: 5
Summary: An Engaging and Thought-Provoking Work
Comment: If you love to read works on economics, math and physics and love to assemble models of the world, I cannot recommend this book highly enough. Indeed, if economic models were this much fun when I was an undergraduate, I might have become an economist.
Funny thing though, this was not written by an economist, but by a geophysicist.
It seems physicists and psychologists in particular are writing more interesting economics books these days than economists themselves.
The core focus of the book is a derivation of a market model that includes value investors, momentum investors and the herding effect of individual economic agents acting in a world of partial information. The final model is stunning.
Sornette points out the main problem with predicting bubbles: even if all the signs say "yes," there is still a pretty good chance that the bubble will be self-correcting. Turns out chasing market bubbles is a little like chasing soap bubbles - they may simply disappear at any moment. Thus, the book and the model are of limited use in any type of market timing. Indeed, the model suggests that the market should now be in the tank, and yet it continues to hover on the higher side of its expected range.
As much as I loved the book, there was a slight aftertaste that this was all nothing but a very mathematical and high-minded type of technical analysis. That at base, when all was said and done, this was not all that different from the various "tools" in the chartist's handbook, e.g. MACD, RSI and OBV, etc., etc., etc. The difference may be solely that Sornette knows his statistics and would easily and readily dismiss any model which did not perform significantly different from chance.
Finally, this book will have you trotting out your old high school calculus book. It brought back memories of just how much fun mathematics can be.
All in all - I give it 5 stars.
Rating: 5
Summary: Best Explanation Yet
Comment: Of all of the books that I have read about the market (and I have read a bunch), this book provides the most compelling explanation for unusual or rare events. I am a self admitted mathamatical dunce, but even for someone that has never taken a calculus class, I could understand the underlying message of this book. The math is much too complicated for me to understand, but fortunately the style of writing the author uses allows readers like me to get around the math and to the point.
Rating: 5
Summary: Great Intuitions --Please reread
Comment: The author aside from the problem of crashes presents an insightful exposition of tipping points. I don't know why his approach makes it clearer and deeper than those of Watts and Barabasi --is it due to his using financial markets as a base? or his being an expert at fat-tailed dynamics?
His work builds on the "abyssus abyssum invocat" (panic begets panics) and the dynamics of compounding disequilibria. In addition the notion of "CRITICAL POINT" is made very clear.
Honestly I don't care for the idea of crashes; the same concepts can apply to sudden and unexpected euphorias.
I learned more from this book than any other on disequilibrium.
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Title: A Mathematician Plays the Stock Market by John Allen Paulos ISBN: 0465054803 Publisher: Basic Books Pub. Date: 13 May, 2003 List Price(USD): $25.00 |
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Title: Tomorrow's Gold: Asia's Age of Discovery by Marc Faber ISBN: 9628606727 Publisher: CLSA Pub. Date: 12 November, 2002 List Price(USD): $35.95 |
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Title: Practical Speculation by Victor Niederhoffer, Laurel Kenner ISBN: 0471443069 Publisher: John Wiley & Sons Pub. Date: 21 February, 2003 List Price(USD): $29.95 |
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Title: The Dollar Crisis: Causes, Consequences, Cures by Richard Duncan ISBN: 0470821027 Publisher: John Wiley & Sons Pub. Date: 25 July, 2003 List Price(USD): $29.95 |
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Title: Financial Reckoning Day: Surviving the Soft Depression of the 21st Century by William Bonner, Addison Wiggin ISBN: 0471449733 Publisher: John Wiley & Sons Pub. Date: 12 September, 2003 List Price(USD): $27.95 |
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