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

“So you go and collect that horse manure . . .”: this quote comes from the 
shorter of two autobiographical documents osborne dictated before his death (osborne 
1987b).
26 “. . . to work at the Naval Research Lab (NRL) . . .”: for more on the history of 
the nrL, both before and after World War II, see Allison (1985) and Gebhard (1979).
26
“. . . if you took into account both the lift produced . . .”: this paper, osborne 
(1951), didn’t appear in print for another six years because, even though osborne had 
institutional support for working on whatever he liked, he had difficulty finding jour-
nals for some of his most interdisciplinary work. the insect flight paper was ultimately 
published in the Journal of Experimental Biology.

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t h e p h y s i c s o f wa l l s t r e e t
27 “. . . he worked exclusively on his own projects”: He also served as an internal 
consultant. other navy scientists could come by his office and ask questions; osborne 
was quick enough and creative enough that he was a resource for the lab even though he 
did not participate directly in its research initiatives. He also helped during the search 
operation for the U.S.S. Thresher, a nuclear submarine that was lost at sea during a depth 
test in 1963.
28 “Nylon”: the story of the development of nylon and du Pont’s participation 
in the plutonium project comes from Hounshell and Smith (1988), Hounshell (1992), 
and ndiaye (2007). Additional details concerning the early reception of nylon are from 
Handley (2000); for background concerning the Manhattan Project, see Baggott (2009), 
rhodes (1995), Jones (1985), and Groves (1962). for more on the dawn and development 
of “big science,” see Galison and Hevly (1992) or Galison (1997).
28
“As the Philadelphia record put it . . .”: Philadelphia Record, november 10, 
1938 (Handley 2000).
31 “. . . Einstein wrote a letter to Roosevelt . . .”: See rhodes (1995).
31
“. . . Nobel laureate Arthur Compton secretly convened a group . . .”: In addition 
to the references above on the Manhattan Project, see compton (1956).
34 “. . . his parents wouldn’t let him attend college so young . . .”: Although this 
is true, osborne told the story in a slightly different way: When he graduated from 
high school, he wanted to go immediately to the University of virginia, but his parents 
told him that the college catalog said they would not accept such a young student. the 
following year, when he went to interview at the university, the interviewer told him 
that they would have been glad to have him at fifteen. After that, osborne always cited 
the college catalog story (apparently manufactured by his parents) as evidence that one 
should never believe what one reads. this independence of spirit was characteristic of 
osborne’s intellectual life.
34
“Osborne began ‘Brownian Motion in the Stock Market’ with a thought experi-
ment”: See osborne (1959, pp. 146–47). It is quite easy to imagine the scene occurring 
much as he describes.
36 “The rate of return . . .”: the rate of return is usually just called the returns, or 
sometimes logarithmic returns, by people who work in finance. But I want to be careful 
to distinguish it from what you might call absolute returns — that is, the total amount of 
money earned on an investment — since for many people outside of the profession, it is 
natural to think of the returns on an investment in terms of the amount earned. It is the 
logarithmic returns, and not the absolute returns, that osborne argued were normally 
distributed.
36