Summary of James Owen Weatherall's The Physics of Wall Street

By IRB Media

Please note: This is a companion version & not the original book. Book Preview:

#1 The French capital, Paris, was abuzz with progress in the 1890s. The city was home to the Bourse, France’s principal financial exchange, and the Palais Brongniart, a palace built by Napoleon as a temple to money.

#2 Paul Samuelson, an economics professor at MIT, was interested in mathematical finance. He had never heard of Louis Bachelier, but he had read his dissertation, which was titled A Theory of Speculation. It contained the mathematics of financial markets, and it was 20 years old.

#3 Cardano was the first person to take a mathematical interest in games of chance. He believed that if one assumed a die was just as likely to land with one face showing as another, one could work out the precise likelihoods of all sorts of combinations occurring.

#4 The French writer Chevalier de Méré was interested in a number of questions, the most pressing of which was how to play dice games. He had an instinct that if you bet that a 6 would get rolled, and you made this bet every time you played the game, over time you would tend to win slightly more often than you lost.

• Language: English
• Publisher: IRB Media
• Release date: Jun 13, 2022
• ISBN: 9798822539686

IRB Media

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Insights on James Owen Weatherall's The Physics of Wall Street

Contents

Insights from Chapter 1

Insights from Chapter 2

Insights from Chapter 3

Insights from Chapter 4

Insights from Chapter 5

Insights from Chapter 6

Insights from Chapter 7

Insights from Chapter 8

Insights from Chapter 1

#1

The French capital, Paris, was abuzz with progress in the 1890s. The city was home to the Bourse, France’s principal financial exchange, and the Palais Brongniart, a palace built by Napoleon as a temple to money.

#2

Paul Samuelson, an economics professor at MIT, was interested in mathematical finance. He had never heard of Louis Bachelier, but he had read his dissertation, which was titled A Theory of Speculation. It contained the mathematics of financial markets, and it was 20 years old.

#3

Cardano was the first person to take a mathematical interest in games of chance. He believed that if one assumed a die was just as likely to land with one face showing as another, one could work out the precise likelihoods of all sorts of combinations occurring.

#4

The French writer Chevalier de Méré was interested in a number of questions, the most pressing of which was how to play dice games. He had an instinct that if you bet that a 6 would get rolled, and you made this bet every time you played the game, over time you would tend to win slightly more often than you lost.

#5

The odds of getting a 6 when you roll a die four times are slightly better than 50 percent. de Méré’s first strategy was good because the chance that you would roll a 6 if you rolled a die four times was slightly better than 50 percent.

#6

The law of large numbers states that the more times you flip a coin, the more likely it is that you will get a head. If the probability of getting heads is 50 percent, the probability that the percentage of heads you actually got would differ from 50 percent by any given amount got smaller and smaller the more times you flipped the coin.

#7

Louis Bachelier, the