"With such theories, economists developed a very elaborate toolkit for analyzing markets, measuring the "variance" and "betas" of different securitie… - Benoit Mandelbrot

"With such theories, economists developed a very elaborate toolkit for analyzing markets, measuring the "variance" and "betas" of different securities and classifying investment portfolios by their probability of risk. According to the theory, a fund manager can build an "efficient" portfolio to target a specific return, with a desired level of risk. It is the financial equivalent of alchemy. Want to earn more without risking too much more? Use the modern finance toolkit to alter the mix of volatile and stable stocks, or to change the ratio of stocks, bonds, and cash. Want to reward employees more without paying more? Use the toolkit to devise an employee stock-option program, with a tunable probability that the option grants will be "in the money." Indeed, the Internet bubble, fueled in part by lavish executive stock options, may not have happened without Bachelier and his heirs."

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About Benoit Mandelbrot

Benoît B. Mandelbrot (20 November 1924 – 14 October 2010) was a Poland-born French-American mathematician known as the "father of fractal geometry".

Biography information from Wikiquote

Also Known As

Alternative Names: Mandelbrot, B. B.‏ Benoît Mandelbrot Benoit B. Mandelbrot Benoît B. Mandelbrot
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Additional quotes by Benoit Mandelbrot

The next thing which surprised us very much, is that both for Julia sets and even more so for the Mandelbrot set, the complication was not, how to say, arbitrary, and almost everybody found the impression that these shapes were hauntingly beautiful. These shapes resulted from the most ridiculous transformation, z<sup>2</sup>+c, taken seriously, respectfully and visually. And people thought at first that they were totally wild, totally extraterrestrial, but then after a very short time, they came back and said, "You know, I think they remind me of something. I think they're natural. I think they are like perhaps nightmares or dreams, but they're natural." And this combination of being so new, because literally when we saw them nobody had seen them before, and being the next day so familiar, is still to me extraordinarily baffling.

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I always saw a close kinship between the needs of "pure" mathematics and a certain hero of Greek mythology, Antaeus. The son of Earth, he had to touch the ground every so often in order to reestablish contact with his Mother; otherwise his strength waned. To strangle him, Hercules simply held him off the ground. Back to mathematics. Separation from any down-to-earth input could safely be complete for long periods — but not forever. In particular, the mathematical study of Brownian motion deserved a fresh contact with reality.

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