Why stock markets crash
by D. Sornette · first published 2003
100% recommend
Why HN recommends it
A physicist applies complex systems and fractal ideas to market crashes, arguing bubbles arise from the market's own structure. An eye-opening, scientifically minded read, especially for technically trained readers.
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…canonical value investing books, or Cunningham's book of excerpts from Berkshire Hathaway's annual letters by the chairman. For a more scientifically minded angle to this topic, please see Didier Sornette's "Why stock markets crash" (PUP 2003). Price and value are two different things, at least in my representation of the world...
on “Everybody's Lying to You” ↗If anyone is interested in this sort of thing, I'd highly recommend the (very technical) book Why Stock Markets Crash by Didier Sornette - a guy who comes from a Physics/Geophysics background. tl;dr - Stock markets crash because of fractals/chaos/complex systems. And there's no such thing as an equilibrium (in the stock…
on “When does the concept of equilibrium work in economics?” ↗Since I'm mainly interested in risk and volatility, this list might be a bit biased but here we go: A random walk down Wallstreet Options and volatility pricing, by Natenberg Why stock markets crash, by Didier sornette Manias, panics and Crashes by Aliber and Kindleberger Debt: the first 5000 years
on “Ask HN: Book recommendations for understanding financial systems?” ↗…inefficiencies. What this means is that the very fabric of the market itself can give rise to bubbles or crashes. A brilliant book that I found an eye-opening read is by Didier Sornette, a physicist by training, "Why stock markets crash," circa 2003.
on “Real money, invested with algorithms” ↗Mathematically trained economist here. Why Stock Markets Crash by Didier Sornette The complete oeuvre of Paul Wilmott (The Computational Beauty of Nature, by Gary W. Flake because it's wonderful and puts you in the right frame of mind)
on “Ask HN: What are the must-read books about economics/finance?” ↗Why Stock Markets Crash by Didier Sornette is the book which most rigorously applies physics to economics that I have ever read.
on “Books to Understand Economics” ↗It’s not ‘basic’, but I strongly recommend Why Stock Markets Crash by Didier Sornette.
on “Ask HN: Introductory Books on the Stock Market?” ↗The Computational Beauty of Nature, Gary William Flake (1997) Why Stock Markets Crash, Didier Sornette (2003)
on “Ask HN: Which books you have read till now that were worth investing time in?” ↗