|  | Author: Peter L. Bernstein
Publisher: Wiley
List Price: $19.95
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Rating:  163 reviews
Sales Rank: 2986
Languages: English (Original Language), English (Unknown), English (Published)
Media: Paperback
Pages: 400
Number Of Items: 1
Shipping Weight (lbs): 1.1
Dimensions (in): 8.9 x 6 x 1.1
ISBN: 0471295639
Dewey Decimal Number: 368
UPC: 723812295630
EAN: 9780471295631
ASIN: 0471295639
Publication Date: August 31, 1998
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Showing reviews 6-10 of 163
 Put the current economic crisis in perspective May 31, 2009
R. Boly (Silicon Valley)
A fantastic, well written survey of the history of understanding and mitigating financial and market risks. Should be required ready for every legislator or regulator dealing with financial markets. If you want to put the current financial crisis in perspective, read this now!
Lucid, accessible history of risk management May 19, 2009
Rolf Dobelli (Switzerland)
This work is a minor classic of financial literature. Business historian Peter L. Bernstein wrote it during the early 1990s, when faith in the power of quantitative models and financial engineering was at its apex, and he tells a heroic story. Beginning with Greek mythology, Bernstein shows how cultural ideas about risk and probability evolved through Arab mathematics, the European Enlightenment and Chicago School economics. He writes in a spare, straightforward style, and manages to convey the essentials of financial theory and the essences of great economists without losing the reader in a maze of equations. Of course, the 2008 financial crisis cast probabilistic models and financial engineering as global market villains. In retrospect, that makes Bernstein's evident admiration for those models seem rather touchingly ingenuous. Nonetheless, getAbstract finds that this is still one of the best popular introductions to the development of financial science.
fantastic April 2, 2009
Teresito P. Ocampo (philippines)
for many years, i have been the owner of this wonderful book. i re-read it and keep on learning about risk. i trade and invest in the local market (Philippines), and am making good money.
 A Learned Companion Volume to an MBA Course in Risk Management January 12, 2009
Etienne ROLLAND-PIEGUE (Tokyo, Japan)
2 out of 3 found this review helpful
Against the Gods was written with a public in mind. It is mainly intended for the professional investor, who deals with notions of risk and uncertainty on a daily basis, and for MBA students who wish to complement their courses in probability theory and financial analysis with a learned companion volume. It will provide such readers with a cultural perspective on the history and cultural significance of risk. According to Peter Bernstein, the taming of risk and its breakdown into something quantifiable and manageable defines the boundary between modern times and the past.
Why did humanity wait the many thousands of years leading up to the Renaissance before breaking down the barriers that stood in the way of measuring and controlling risk? The idea of risk management emerges only when people believe they are to some degree free agents. The notion of risk implies that the future is more than a whim of the gods and that men and women are not passive before nature. For all their wisdom and skills as mathematicians, the Greeks turned to the oracles instead of consulting their wisest philosophers when it came to predicting the future. The Arabs used the numbering system developed by the Hindus, but they too believed that men's worldly destiny is always determined by God.
The Renaissance and the Protestant Reformation would set the scene for the mastery of risk. It put human beings squarely in control of their own destiny, and enjoined them not to remain passive in the face of an unknown future. Like Prometheus, the Renaissance Man defied the gods and probed the darkness in search of the light that converted the future from an enemy into an opportunity.
But to put the future at the service of the present, people needed more than a free-thinking spirit, a passion for experimentation and a willingness to take risks. For most of the Middle Ages, scholars had to depend on a clumsy numbering system based on the Roman alphabet. Fibonacci's Liber Abaci, published in 1202, was a spectacular first step in making measurement the key factor in the taming of risk. Cardano's obsession with gambling led to the first exploration of probability in 1565, but his Liber de Ludo Aleae wasn't published until 1663.
It took a French Connection to lay the foundation of probability theory. The first French Quants appeared in 1654 when the Chevalier de Mere, a nobleman with a taste for gambling and mathematics, challenged the famed mathematician Blaise Pascal to solve a puzzle. The question was how to divide the stakes of an unfinished game of chance between two players when one of them is ahead. Pascal turned for help to Pierre de Fermat, a lawyer who was also a brilliant mathematician. The outcome of their collaboration led to an explosion of mathematical innovation.
Probability theory owes much to games of chance because gambling provides an ideal laboratory in which to perform experiments on the quantification of risk. But God was never far from Pascal's thoughts. In his Pensees, he frames the question of whether to believe in God in terms of a wager or a bet which reason cannot answer. Ian Hacking, the Canadian philosopher, asserts that Pascal's line of analysis to answer the question of belief is the beginning of the theory of decision-making. Pascal's fellow Jansenistes from Port Royal were also well-versed in decision theory and their Logic, published in 1662, was a reference throughout Europe up to the nineteenth century.
Whether motivated by God, or by gaming, or by commerce, or by the law, the same kind of ideas emerged simultaneously in many minds. This spurt of mathematical innovation was to last about a century, and all the tools that are now used in risk management and in the analysis of decision and choice stem from the developments that took place during that period. In England, John Graunt and William Petty were compiling numbers of births and deaths in London, laying the ground of statistical analysis. Edmund Halley carried the analysis further by breaking down the population into an age distribution and calculating life expectancies. Later in the eighteenth century, Jacob Bernouilly, Abraham de Moivre, and Thomas Bayes showed how to infer previously unknown probabilities from the empirical facts of reality, and invented thenormal distribution, the standard deviation, and the modern method of statistical inference.
That's where the author kind of lost me. The rest of the story includes memorable characters: Carl Friedrich Gauss, who was saluted by Napoleon as "the greatest mathematician of all times" ; Francis Galton, whose obsession with measurement led him to envision a science of eugenics ; Frank Knight, the Chicago economist who never forgave Keynes for having relegated him in a footnote of his Treatise on Probability ; and many others. But Bernsten often interrupts his narrative with practical advise for investors that could have been better addressed in a separate volume, and he loses focus with digressions on behavioral finance or neural networks. The commonly practical takes over the highly speculative, and the big questions that the pioneers of risk measurement grappled with, the "gods" of the title, have been driven out of the picture.
The author concludes by quoting the great statistician Maurice Kendall, who once wrote: "Humanity did not take control of society out of the realm of Divine Providence to put it at the mercy of the laws of chance." Well, mankind did not conquer risk against the gods of chance to put it at the mercy of bean counters and stock traders.
 probability good; Wall St. ridiculous September 22, 2008
C. Mealy (Seattle)
8 out of 15 found this review helpful
I read this when it came out and thought it was pretty good. The first half, about how people figured out how probability worked, was really entertaining. The end, about how the geniuses on Wall St. conquered risk, is so wrong it's hilarious. Bernstein is a victim of what Taleb calls the ludic fallacy -- mistaking well-defined games like craps for the truly unpredictable.
So go read "The Black Swan" or "Fooled by Randomness" instead.
Showing reviews 6-10 of 163
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