The Physics of Wall Street

A Brief History of Predicting the Unpredictable

By: James Owen Weatherall

Narrated by: Kaleo Griffith

Length: 9 hrs and 41 mins

Publisher's summary

After the economic meltdown of 2008, Warren Buffett famously warned, "beware of geeks bearing formulas." But as James Weatherall demonstrates, not all geeks are created equal. While many of the mathematicians and software engineers on Wall Street failed when their abstractions turned ugly in practice, a special breed of physicists has a much deeper history of revolutionizing finance. Taking us from fin-de-siècle Paris to Rat Pack-era Las Vegas, from wartime government labs to Yippie communes on the Pacific coast, Weatherall shows how physicists successfully brought their science to bear on some of the thorniest problems in economics, from options pricing to bubbles.

The crisis was partly a failure of mathematical modeling. But even more, it was a failure of some very sophisticated financial institutions to think like physicists. Models-whether in science or finance-have limitations; they break down under certain conditions. And in 2008, sophisticated models fell into the hands of people who didn't understand their purpose, and didn't care. It was a catastrophic misuse of science.

The solution, however, is not to give up on models; it's to make them better. Weatherall reveals the people and ideas on the cusp of a new era in finance. We see a geophysicist use a model designed for earthquakes to predict a massive stock market crash. We discover a physicist-run hedge fund that earned 2,478.6% over the course of the 1990s. And we see how an obscure idea from quantum theory might soon be used to create a far more accurate Consumer Price Index.

Both persuasive and accessible, The Physics of Wall Street is riveting history that will change how we think about our economic future.

Download the accompanying reference guide.

©2013 James Owen Weatherall (P)2013 Tantor

nice dive into both physics and Wallstreet.

at first I was was a little intimidated by the subject of the audio book, but it turned out to be very easy to fallow.

Be a Scientist...

Would you listen to The Physics of Wall Street again? Why?

Nope, It's long and at the end the guy is like, so it doesn't work, but only because the Wallstreet guys aren't scientists, be scientists. I actually laughed really hard at the end when I made it through this huge info dump just to be told to think like a scientist when dealing with finance...

What was one of the most memorable moments of The Physics of Wall Street?

Deciding whether or not I should go to vegas and try and beat the system before they found me out because of this book.

Was this a book you wanted to listen to all in one sitting?

No, With this much info I need processing time.

Any additional comments?

It's an interesting and good book overall but the ending killed me.

Interesting history of complex math in practice

Where does The Physics of Wall Street rank among all the audiobooks you’ve listened to so far?

I finished this book in one day. The subject matter was interesting, and was a good basic overview of the history of financial markets and complex mathematics.

What did you like best about this story?

The author sited interesting problems throughout history which I had no idea related to each other.

Have you listened to any of Kaleo Griffith’s other performances before? How does this one compare?

No.

What’s the most interesting tidbit you’ve picked up from this book?

DuPont used its experience with women's leggings to help drive the production of the atom bomb.

Fascinating and intelligent book

The author clearly and enjoyably relates the history of how science and mathematics became applied to finance, highly enjoyable if you have a little bit of popular science background, it serves as a gentle introduction to many statistical and mathematical relationships as well.

In the history of the financial systems modeling

Owen Weatherall gives an in depth historical account of financial systems modeling, from Bachelier to Mandelbrot.

economics updated

It is very interesting to see science change, in our time. I have recently read Physics of Wall Street and these two reads are very telling as to the "underside" of economics in our world.
The book itself is in a narrative style and is of recent date.

Review of the mathematical invasion of Wall Street

Two criticisms: first, somewhat serious is that almost no time is devoted to Jim Simons; second, less serious, is that "Scholes" is pronounced as "Skoles" which is pretty annoying but half-way through someone must have mentioned this to the narrator and I could relax. I guess they decided not to go back and redo the offending passages.

The story is a good one and is told well. It really should have gone deeper into how Jim Simons got started and what he did to be so spectacularly successful.

Fantastic!!

Great writing and narration. Simple and clear. Like Hemingway. (But print out the pdf before you start listening, to make it even easier to follow this history-type book that brings us up to speed on probability theory applied to the stock market, in clear English.) Do you need to know math or physics? Nope. But you do need to be open to learning. And able to concentrate. That's it.

Have you ever wondered what theory explains the movement of dust particles (the ones you see in a stream of sunshine flowing through an attic window)? It's the same theory that explains the movement of stocks. The Random Walk theory is the main thrust. Based on the Bell Curve. Don't worry, it's clearly explained by a physicist who's obviously a good professor too. (FYI: As we listen/read, we learn that this theory is quite old. But like the Heliocentric Theory - which was silenced for over, what, 15 hundred years(!) - this old/new theory, too, was silenced, but not as long. But for the same reasons; because the people with political clout in physics in the day didn't want anyone to publish a theory that would cause too much change. In short, it was 'ahead of its time'. (Similarly, the Heliocentric Theory was silenced because the anti-Science Inquisitors of the time, i.e., the religious right, would've lost their power over the world. So you can say that both theories were 'ahead of their time' or that 'they both upset the status quo'. P.S. Think 'astrology', and you'll embody the same mindset of people who poo-pooed these two theories. But that's another subject, related but way too 'ahead' of the status quo.)

Anyway, what we learn about in The Physics of Wall Street is apparently quite old, well not like the Heliocentric Theory, but only decades old. It was a theory that was then 'rediscovered' around the 1980s or so, by an econ professor who thought he was inventing it for the first time. Until he found out. Ah, what a disappointment, imagine.

The book's narrator relates all this related history at a clear, simple, and fascinating clip. You'll be glad your read this.

Learn about what makes this Fund earn over 40%-plus returns since the 1990s - twice the annual average returns of Warren Buffet. (This Fund also made 70%-plus returns during the 2008 meltdown, while Buffet lost half the 'value' of his fund.) And did you know, this 2008 meltdown wasn't caused by the middle class buying subprime mortgages, Oh No!. (Isn't that special.) Instead the 2008 debacle, which is still melting our socks off was caused by this cadre of 'specialist physicists' on Wall Street, who used math to create computer models (that didn't work). These specialists are called Quants, and initially caused the HUGE multi-Billion dollar loss in August 2007 (called the Quant Crisis, which was pretty much covered up. Did you know about it?) Well, these same fund physicists kept their fingers crossed, hoping that the worst was over w/o having a clue as to what caused the original fiasco. Unfortunately, the Quants' prayers didn't work, just like their models. The same thing brought everything down around our ankles in 2008, which led, and continues to affect, our current situation. Those quants!

Everyone lost their shirt in 2008 (even Buffet, right!) -- everyone lost, except for this one Fund that we start hearing about from the beginning of this book. And few of us off of Wall Street have heard about this fund, right? They're like EF Hutton. "When they talk, everyone Listens. (Whoever wrote that ad campaign was great in the day, but is currently one of the many reasons why advertising is currently ineffective now. Unlike Public Relations, which includes customer referrals like this one. Note: Don't use customer referrals/testimonials w/o using the person's first & last name. Why? Credibility is King in the Internet Age.)

Ok, enough. Read it so you don't weep. But just so you know -- the founders of this Fund won't hire anyone associated with Wall Street nor anyone coming from a related, traditional background in Finance or Trading etc - because they know these folks don't have a clue. (Yet its 40%-plus returns - except for 2008, when it had 70%-plus returns -- these returns are enough to convince you of this Fund's effectiveness, at least for me.)

Note: A fascinating read for astrologers who know there's a link btwn physics and astrology (a la Will Keepin, the physicist-astrologer-environmentalist, and a contemporary who's coined astrology as "the Science of Meaning.").

The Physics of Wall Street. And it comes with a pdf so you can follow along and see the figures used in the book.

Fascinating stuff. All of it.

Where's The Beef?

Would you say that listening to this book was time well-spent? Why or why not?

The first three hours of this nine hour selection was time well spent as some light math described Wall Street's wiggles. As physics describes motion, this section was point on and I looked forward to the remainder of the book.

However last six hours were spent constructing mirrors and blowing smoke to the point of me asking where the beef of the book was or if he had intended the title to be included on a Oprah Winfrey list.

Simply put, one does not describe physics with words as Mr. Weatherall for the last six hours. The first three hours is easier to understand if you have some math background and requires at least a college sophomore's level of thinking. The remaining six hours lapsed into material that a high school junior would grasp.

Do you think The Physics of Wall Street needs a follow-up book? Why or why not?

A follow-up book? No. A revision as in a rewrite and a new editor? Yes. While the The Physics of Wall Street starts on focused on a point, it then diverges from its thesis as Mr. Weatherall explores personalities, backgrounds, etc. of the people working on Wall Street's jiggles. In the end, the first three bites of the hamburger were great but the last six bites of the hamburger eating lettuce and tomato as there wasn't any beef.

Except for any commercial success, Mr. Weatherall's thesis adviser should be unimpressed.

An excellent summary of your very complex topic

Weatherall does a good job of tracing the history of financial markets and those who have tried to use math and physics to best them.
It moves right along and in my opinion works best at about 1.5 speed