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Summary: A Remarkable History of Risk
Review: This is a book which should be classified in the field of the "History of Ideas". It is not so much a story of what peoples or societies did, but how they thought about things. In this case, the idea is the idea of RISK.To us, "risk" seems an intuitively simple idea. Even those who know no mathematics or economics at all intuitively feel that 1). risk can be *quantified* - events can be assigned a value saying how likely they are to occur, specifically, a *probability*. 2). Risk can be *managed* (that is, different stratedies on our part could make our risk of future calamity higher or lower), and 3). It is a good thing to *avoid* unnecessary risk. This view, however, is very modern. For example, during the middle ages the idea of our actions influencing the risk of disaster was inconcievable, since calamity was a punishment from God, and man is helpless against God. Or, to give another example, the idea of probability was surprisingly late in appearance, even in the case of gambling: the romans played a game of dice, for centuries, with betting odds that were not correlated with the true odds of the outcome - apparently without anybody noticing! Bernstein takes us, chronologically, on a journey starting with the ancient Egyptians and ending with still-living winners of the Nobel Prize for Economics. He unfolds, in a compelling way, the major personalities who helped develop out modern concept of risk - some of them well-known from other fields (e.g., the Bernoulli familty), some of them (unjustly) unknown to the average reader. He shows us how the culture of the time effected what people thought about risk - and vice versa. And, last but not least, he gives the reader a better understanding of what risk is understood to be today - for example, by stock market analysts - and how it is managed. One disclaimer, though: this book is NOT, nor does it claim to be, a "how-to" guide of practical advice about gambling, or managing the risk of your personal portfolio, or on buying insurance. If that is what you are looking for, buy a different book. But if you want to broaden your understanding of the concept of risk, or have interest in the history of ideas in general, this book is highly recommended.
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Summary: Half good for a Mathematician
Review: As a mathematician I found the first half of this book fascinating. During this portion the author speaks about the mathematical history probability and risk. He traces a nice path through famous historical mathematicians and what inspired them to research the fields of probability, statistics and game theory. Most of the examples focus on games of chances. Then second half of the book, as the author pulls into the current centuries focuses hard on the economy and the stock market. The reader will need to have some knowledge of economics to appreciate this portion of the book. With little experience and knowledge about stocks, bonds, options, etc., I found most of his examples difficult to follow and did my best to trudge through for the interesting mathematical tidbits I found interesting. If you're not a mathematician the first half might be a little confusing. If you're not an investor the second half might be a little confusing. Still, it's a good look at risk from many different angles.
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Summary: A comprehensive examination of the origin of probability!
Review: Against The Gods, by Peter L. Bernstain, demonstrates to the reader how human beings have made decisions over the course of time. In the beggining, people believed that the gods determined the course of events and human beings had no concept of risk management. With the dawn of the age of reason, however, human beings began to realize that they can quantify the likelihood of certain occurances and make decisions in accordance to these probabilities. This book is strongly reccomended for any strategist, whether he be a bussiness man, a mathematician, a politician, an economist, a demographer, or an investor. This book really gets to the core of how to make decisions.
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Summary: Key to understanding stock market
Review: This wonderfully-written account of how man has faced uncertainty is a must-read for anyone who really wants to understand how the stock market works, and, indeed, on how accept the inherent unknown that is the future.
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Summary: Good overview of probability theory
Review: The sweeping story of probability and the related concept of risk. Interestingly, the modern notion of probablity was really not "invented" until the Renaissance. This fact hints at the fact that the concept is not intuitively obvious, and explains why people often behave in ways that are not consistent with basic probability theory itself. Bernstein covers how the modern notion evolved, and how it grew to be such an integral part of modern financial theory, including concepts such as diversification, portfolio insurance, and the advent of derivatives. Also covered are aspects of behavioral finance -- driven by the sometimes peculiar decisioning approaches of the human mind. This is an excellent book for any executive who is interested in decision making in general, as well as financially-related decisions.
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Summary: Mildly interesting, but not remarkable
Review: The book was interesting in several ways. The author's central idea, that having a mature concept of risk management is a prerequisite for modern civilization, is intriguing, yet not fully substantiated by his book. Having studied Finance in business school, it was interesting for me to learn a bit of the history behind contemporary thinking on financial risk management (in other words, he explains who figured out & popularized the alpha/beta thing). Towards the end of the book, he just began to touch on some of the non-rational behavioral aspects of humans, and I wish he had gone deeper. Some of the most interesting work in economics is being done today with the radical assumption that human behavior is driven more by emotion than by reason. Why do people make ill-conceived decisions about risk? Not really answered in this book. The book is almost totally oriented towards financial risk, and doesn't really look at other forms of risk management. Although the writing style is engaging--this is NOT dry--there are some structural problems. The author wanders around a bit, and sometimes introduces ideas or personalities without ever explaining why. It is important to mention that this is treated as a 'story', from the historian's point of view, and not as a text book. In this way, it is true to its title. The book cover makes no claims for this as an intellectual or academic treatment of the subject, which makes this a very accessible book. It isn't profound, and it is only mildly informative, but outside of the minor annoyances of some outline weakness, I enjoyed reading it.
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Summary: every subject needs a history...
Review: ...and this book gives financial risk management that history. It provides a context to where we are now, and allows the reader to glimpse the future through the pathways of the past. An entertaining read, well written and thoughtful. Bernstein has a number of other books but I found this one his best.
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Summary: fascinating from one end to the other
Review: Every so often, as a writer (I am one) you read a book that you wish you had written yourself. This book merges history with clear explanations of mathematics and the result is brilliant and fun. For anyone intrested in investing, in the history of math, or in the quirky personalities of pioneers, this book is a must. I learned so much from this book - it covers my specialities, business and science - that it is embarassing! And it is beautifully written.
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Summary: Sloppy editing from Wiley
Review: History is a deep subject. Probability theory is a deep subject. History of probability theory, and its applications to risk management is a very deep, if not murky, subject that deserves expert treatment. The author is commended for being the first to tackle such a thorny topic and to make serious effort to educate the lay reader. But the book is full of mistakes. Other reviewers have already commented on mistakes in history and in mathematics. Let me comment on mistakes in physics. Page 200, Einstein did not discover the motion of electrons. In 1905, Einstein wrote a paper on Brownian motion of particles that could be observed using an optical microscope. Page 216: Einstein did not demonstrate than an imperfection lurked below the surface of Euclidean geometry. Einstein used Riemannian geometry to describe gravitatonal effects. Page 232: von Neumann was not instrumental in discovering Quantum Mechanics in Berlin during the 20's. von Neumann worked on mathematical aspects of Quantum Mechanics that are far removed from anything like discovering the subject. The problem with mistakes like that, is that they make one very suspicious of any other statement on a topic that one is not familiar with. One more comment but this time on a historical matter: On page 200, the author labels Poincare' as "Bachelier's nemesis". I recently read a biography of Bachelier, that unfortunately I cannot locate, and my recollection is that Poincare' tried to help him obtain an academic position. I'm afraid the author took rather drastic poetic license here, and it would be interesting if someone clarifies this point. I think the book suffers from lack of serious editing on behalf of the publisher. A non-academic author should not be expected to cover such a subject all on his own and get it all perfectly correct. If the above points are too technical for an editor, how about at least making sure that all names mentioned are correct? Page 245: is there a Nobel prize winner named "Henry Simon"? Do you mean the 1978 Economics Nobel winner Herbert Simon?
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Summary: developments in the concept of risk
Review: This is a remarkable book. Quoting from the introduction, "This book tells the story of a group of thinkers whose remarkable vision revealed how to put the future at the servic of the present." It pulls together descriptions of the ideas of several major thinkers, most of whom I had encontered in various stops in my education. These include Fibonacci, Pascal, Halley (of the comet), several Bernoulli's, Newton, Leiniz, DeMoivre, Bayes, Gauss, Laplace, Cournot, and more modern writers like Baumol, Keynes, Bachelier, Arrow, and Markowitz. If these names are familiar to you, but you are not sure why, the book tells us why. Iit appeals more to academics who are interested in the development of ideas, rather than practioners who are interested in using the ideas. I would have preferred "Against the Odds" as a title.
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