Fractal from African Fields to Science
A giant has passed Benoit Mandelbrot: November 20th 1924 – October 14th 2010.
It took many years for fractal geometry to become a tool of science and now being applied to risk and market prices, against stupidity build in Global Finance. It is amazing how at one time science frowned on images. Mandelbrot made images a integral part of analysis. A quote from the co-author of the book The (Mis)behaviour of Markets, Mr. Hudson, an ex-Wall Streeter:
Modern Portfolio Theory, by which stock portfolios can be built are fundamentally wrong.
Sharp price swings – crashes and booms – are far more common than the standard models assume. And price changes in the past affect markets today; they are not ‘independent’ from one another, as standard models assume. “The mathematics behind a lot of the most common financial calculations – how to balance a portfolio of stocks and bonds, how to decide whether an acquisition is priced right, how to hedge a dollar/sterling currency exposure – can be dangerously off-base,” said Mr Hudson
Prof Mandelbrot’s analysis suggests that bubbles, such as the Internet boom, are an inevitable part of markets and that even substantial-looking patterns can, in fact, be the product of mere fractal chance. That explains why most people miss market trends or imagine them where none exist – to their own financial grief.
A mentor, Nassim Nicholas Taleb states this in 2005
More specifically, it was the first time in my life that I had a conversation with someone who can naturally hold that the notion of “variance” is meaningless in characterizing uncertainty
The uncertainty felt by many today is based on good intuition. I leave this thought and video, given the weakness of us controlling randomness. This is the essence of why I am looking deeply at the evolution of Faith, in our present future, stay attuned.
Benoit Mandelbrot thinks we’re all screwed
Order doesn’t come by itself. Benoit Mandelbrot
