The Physics of Wall Street: a brief History of Predicting the Unpredictable

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A Brief Histor y of Predicting 
the Unpredictable
J A M E S O W E N W E A T H E R A L L
JAMES OWEN WEA
THERALL
T H E
P H S I C S
O F
W L L 
S T R E E T
How physics transformed finance, 
and why it could prevent the next crisis
A F T E R T H E E C O N O M I C M E L T D O W N
of 2008, many pundits placed the 
blame on “complex fi nancial instruments” like derivatives and the physicists 
and mathematicians who dreamed them up. But a young academic named 
James Weatherall began to question this narrative. Were the physicists really 
at fault? 
In this important and engaging book, Weatherall tells the story of how 
physicists came to Wall Street and how their ideas changed fi nance forever. 
Taking us from fi n-de-siècle Paris to Rat Pack–era Las Vegas, from wartime 
government labs to yippie communes, Weatherall shows how physicists suc-
cessfully brought their science to bear on some of the thorniest problems in 
economics, from options pricing to bubbles. But models — whether in sci-
ence or fi nance — have limitations; they break down under certain condi-
tions. And in 2008, sophisticated models fell into the hands of people who 
didn’t understand their purpose, and didn’t care. It was a catastrophic misuse 
of science. 
Th e solution, however, is not to give up on models; it’s to make them bet-
ter. And Weatherall reveals the people and ideas on the cusp of a new era in 
fi nance. Th e Physics of Wall Street is riveting history that will change how we 
think about our economic future.
J A M E S O W E N W E A T H E R A L L
is a physicist, philosopher, and 
mathematician. He holds graduate degrees from Harvard, the 
Stevens Institute of Technology, and the University of Califor-
nia, Irvine, where he is presently an assistant professor of logic 
and philosophy of science. He has written for Slate and Scientifi c American. 
THE PHYSICS OF W
ALL STREET