I believe that knowledge is power. Understanding how something works leads to practical applications. In markets, I believe you should develop your own ideas on how to invest rather than being told. After all, how can you profit if you’re doing what everyone else is doing? Markets are efficient enough to give an opportunity to everyone but advantage to no one, unless you do something different than the crowd. My list is designed to give you information to develop investment strategies based on chaos theory, complexity, and fractals. It is not designed to tell you how to invest.
I wrote...
Fractal Market Analysis: Applying Chaos Theory to Investment and Economics
While I’ve spent much of my career debunking the Random Walk Theory and the Efficient Market Hypothesis, I believe you need to understand where we’re coming from in order to develop new ideas.
Cootner’s anthology contains all of the important early writings that became Capital Market Theory. You will find Bachilier’s original paper from 1900 postulating using statistics to analyze markets. Mandelbrot’s original paper suggesting that markets are not a random walk is here, too.
It’s an important time capsule of the development of market theory. I’ve read it extensively because you can’t criticize widely held ideas unless you know them yourself.
This best-seller kicked off the public interest in chaos theory.
I was schooled in traditional Capital Market Theory. However, as a practitioner, I realized that those ideas had serious flaws. Gleick’s book opened my mind to new ideas. This history of the development of chaos theory has an enthusiasm for new ideas that is infectious.
Gleick was also able to introduce these ideas in a way that was easily understandable to the layman. Understanding the ideas is the only way to use them in practical applications. I highly recommend this book to all levels of readers.
Uncover one of the most exciting frontiers of modern physics in this fascinating, insightful and accessible overview of Chaos theory.
'An exceedingly readable introduction to a new intellectual world' Observer
From the turbulence of the weather to the complicated rythmns of the human heart, 'chaos' is at the centre of our day to day lives. Cutting across several scientific disciplines, James Gleick explores and elucidates the science of the unpredicatable with an immensely readable narrative style and flair.
'An awe-inspiring book. Reading Chaos gave me the sensation that someone had just found the light-switch' Douglas Adams
Readers of this list may be surprised that there are no books by Benoit Mandelbrot, the father of fractals. I found his books fascinating but frustrating. Feder’s book, by contrast, was readable and usable.
This book taught me how to do fractal analysis. While Feder’s book has nothing to do with markets, it has everything to do with applications. While I reuse much of Feder’s methodology in my books, readers will find it useful to see other practical applications of fractal analysis.
This lovely little book will take off and fly on its own power, but the author has asked me to write a few words, and one should not say no to a friend. Specific topics in fractal geometry and its applications have already benefited from several excellent surveys of moderate length, and gossip and preliminary drafts tell us that we shall soon see several monographic treatments of broader topics. For the teacher, however, these surveys and monographs are not enough, and an urgent need for more helpful books has been widely recognized. To write such a book is no easy…
Fractals are a combination of chance and rules, randomness and order. This book gives us multiple examples of how important randomness and uncertainty are to evolution, adaptability, and innovation.
This book is not about the markets, but it does show us how the element of uncertainty that cannot be eliminated from investing is crucial to the functioning of markets and other non-linear dynamical systems. Since risk and uncertainty are closely tied, understanding how chance functions in the development of markets will help in the development of market strategies.
Using game theory and examples of actual games people play, Nobel laureate Manfred Eigen and Ruthild Winkler show how the elements of chance and rules underlie all that happens in the universe, from genetic behavior through economic growth to the composition of music. To illustrate their argument, the authors turn to classic games--backgammon, bridge, and chess--and relate them to physical, biological, and social applications of probability theory and number theory. Further, they have invented, and present here, more than a dozen playable games derived from scientific models for equilibrium, selection, growth, and even the composition of RNA.
The Austrian School of Economics has been completely non-mathematical. Yet their concepts have direct analogies to complexity theory. Reading this book gives you fundamental economic ideas that tie back to the mathematical foundations of complexity, chaos, and fractals.
When dealing with markets, which are made up of people, after all, I have always found that basing your ideas on behavior rather than pure mathematics is always the way to go. Otherwise, you will not know when the markets have changed, and your ideas may no longer work.
This book also brings us back to the idea of cycles and explains them in an intuitive way. O’Driscoll and Rizzo also write well, so this isn’t a dry academic overview. It is a book that gives you both theory and intuition.
The Economics of Time and Ignorance is one of the seminal works in modern Austrian economics. Its treatment of historical time and of uncertainty helped set the agenda for the remarkable revival of work in the Austrian tradition which has led to an ever wider interest in the once heretical ideas of Austrian economics. It is here reprinted with a substantial new introductory essay, outlining the major developments in the area since its original publication a decade ago.
This book provides ideas and methods for doing research in the framework of fractals and chaos theory. In many cases, I provide step-by-step instructions on how to determine whether a process is random, find cycles, analyze risk, and many other topics crucial to understanding markets in order to develop investment strategies and manage risk.
This book introduces the fractal market hypothesis for the first time. The hypothesis combines fractals and behavioral finance to create a framework for understanding how risk changes over the market cycle. Since its introduction, many research papers have supported the hypothesis.
My core value is realistic education—learning from each other’s errors and successes, but with full awareness of the difference between the determined past and the uncertain future. We can benefit from uncertainty, which I’ve been doing for a living as an engineer, academic researcher, and inventor. I make use of knowledge and science as much as possible, but I also know that strategic decisions for the uncertain future require skepticism and thinking to deal with the differences in a new circumstance. With my core value, I am passionate about sharing insights and knowledge that our formal education does not provide.
Everything in nature evolves by trial, error, and success—from fundamental physics, through evolution in biology, to how people learn, think, and decide.
This book presents a way of thinking and realistic knowledge that our formal education shuns. Stepping beyond this ignorance, the book shows how to deal with and even benefit from uncertainty by skeptical thinking, strategic decisions, and teamwork based on enlightened self-interests.
This bottom-up thinking is thought-provoking for leaders who wish to build teams rather than herds. The insights in the book will help you to be better prepared for the unexpected, less likely to conform when you…
Trial, Error, and Success: 10 Insights into Realistic Knowledge, Thinking, and Emotional Intelligence
Everything in nature evolves by trial, error, and success. They didn't teach you this in school, even though you should know why the rigid laws of physics don't rule nature and don't inhibit your free-will decisions to try, fail, and succeed. As a guide to success, this book shows how skepticism, prudent use of science, and thinking lead to strategic decisions for the uncertain future.
Presenting real-life examples, the thinking in the book combines sharp analyses with broad analogies to show:
How to identify realistic knowledge and avoid harm due to overgeneralized concepts.
How to create new knowledge and solve…
