Table of contents for The (mis)behaviour of markets : a fractal view of risk, ruin, and reward / Benoit B. Mandelbrot and Richard L. Hudson.


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Prelude: Introducing a Maverick in Science             xvii
Benoit Mandelbrot, the "father" of fractals, has made a career
of going against the prevailing fashions in science.
Part I.
The Old Way
Chapter 1 Risk, Ruin, and Reward                         3
"Mlodern" financial theory is founded on a few, shaky myths
that lead us to underestimate the real risk of financial markets.
Chapter II By the Toss of a Coin or the
Flight of an Arrow?                                     25
lHow the operations of mere chance can be used to study a
financial market.
Chapter HIf Bachelier and His Legacy                    43
The study offinancial theory began a century ago with a brilliant
but undervalued French mathematician, Louis Bachelier,
Chapter IV The flouse of \lodern Finance                  59
How the edifice of: modern Ifin nc ia theory-- valuing assets,
building portfolios and assessing risk vu ws erected on
Bachelier's worh.
Chapter V T'he Case Against the Modern
Theory of Finance                                         79
Orthodox jinancial theorn is riddled with false assumptions and
wrong results. A sunnmmary of the evidence agatinst it
Pictorial E:saiv: Images of the \ibnorotal               88
Part II.
The New Way
Chapter VI Turbulent \Irirkets: A Preview                I1i
Financial markets are tiirb  lent  like the windl or the flood  ,n
introduction to the fractal view c of finr nce.
Chapter VII Studies in Roughness:
A Fractal Primer                                         123
How is a stock-price c hart like the leaves of a fer?. A survey of
fractal geometry
Pictorial Essay: A Fractal (Gallery                      132
Chapter VIII The Mystery of Cotton                       147
Ihe first clue to the fractal view of finance came in a study of
cotton by Mandelbrot. An uccount of his scientitic journey.
Chlapter TX Long Memory, from the Nile to
the Marketplace                                          1I7
-lihe second clue to fractal linance came from lifelong study of
the Nile River by an Eiiglish hydrologist, H.E. Hurst.
Chapter X Noah, Joseph, and Market Bubbles                197
The two critical features of financial markets are wild price
swings and long-term dependence--the Noah Effect and the
Joseph Effect.
Chapter XI The Multifractal Nature of
"Trading Time                                            207
In financial markets, time speeds up and slows down--as
described in the multifractal model of marIkets.
Part III.
The Way Ahead
Chapter XI Ten Heresies of Finance                      225
How do financial morkers really work? A list of key insights
provided by the fractal view of finance.
Chapter XIII In the Lab                                  253
So how can the study of fractals change finance? A program for
future research.
Notes                                                    277
Bibliography                                             303



Library of Congress subject headings for this publication: Capital market, Investment analysis, Stocks Prices, Securities, Risk management