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Yes, he can save the world !

Posted by Harry Seldon on February 23, 2009

He is from a minority. He is American, lives in the US but has a dual culture. He studied in the best universities. He is one of the smartest guys on Earth. He had many awards for his outstanding work along his long and brilliant career. He has always fought received ideas. He is not afraid of complexity but knows to recognize simplicity in the middle of intricated systems that most people consider as infinitely complex. He is not afraid of telling people when they are wrong. He is not afraid of telling them what to do. He does not hesitate to fight alone against the majority but definitely prefers to be with the majority. If listened to earlier, many casualties would have been avoided. He wants to change the world and he has a plan.
No, I am not speaking about Barack Obama. Let me continue. He is Franco-American. He studied aeronautics. He deserves a Nobel prize in all categories: economy, physics, medecine (biology), chemistry, and even litterature and peace, because his work helped describing and understanding the geometry of nature. His work can indeed be applied to stock market, natural borders, lungs description, fluid mechanics, animal population evolution, clouds. He wrote many inspiring books. If more listened to the world would be way more peaceful because better understood and less submitted to crisis.
Yes, I am speaking about Benoit Mandelbrot and the good news is: his work on finance is slowly being recognized by the media and by economists.

Listen to Mandelbrot and global warming, crisis and wars will just be bad memories. OK I am exaggerating, but I am not sure how much ;-).

PS If you know which conferences Mandelbrot is going to attend this year, please let me know in the comments because he is definitely the celebrity I would love most to meet.
mandelbrot antenna

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Good news from the combat against the crisis

Posted by Harry Seldon on February 22, 2009

Julia island
In my 2009 wishes, I wished that people better understand the world. For this purpose, I suggested they read The (Mis)behaviour of Markets: A Fractal View of Risk, Ruin and Reward by Benoit Mandelbrot.
Actually, for one year and a half we have been inside this growing up crisis I have been appalled by the small number of articles in the media about Mandelbrot’s work on Finance and more generally by the small number of articles about chaos theory and economy. Indeed more than ten years ago, Mandelbrot explained why the finance world was walking on its head. To make it short, it is because financial theory fundamental principles are wrong and over-optimistic. These principles state that the hazard involved in the market theory is regular enough to be smoothed by the big numbers law. This hazard is “benign”. Basically, with the standard theory, crisis can’t happen. So yes, you must be dreaming, there is no crisis, unless you listen to Mandelbrot that tells you that the hazard is actually “savage” and potentially leading to a collapse of the market: a crash.

So where is the good news ?

It looks like main stream media are slowly understanding Mandelbrot’s work and they are speaking about it. I found yesterday an excellent article in one of the main French financial newspapers about Mandelbrot’s work on finance. The second good news, contained in that article, is that Mandelbrot’s book are being republished. A third good news, is that the author of the previous article, Philippe Herlin is very proactive and has just created a Facebook group called “Finance & Mandelbrot”. I joined immediately ! An instant interest of this group is that Philippe Herlin gives a list of news articles about the subject (given below). Please notice the link called How Fractals Can Explain What’s Wrong with Wall Street which is dated on February 1999. Yep, it is not a typo for 2009 !
Last but not least, there is a significant political news. Mandelbrot showed that the financial system was fractal, exhibiting the same behaviour at all scales. Actually that was the start of his long and brilliant career. Later on he showed the same behaviour for climate, geology, ecology, or biology. Actually about any natural system is fractal and even chaotical. However, there is a good way to smooth the behaviour of a system, it is called control. Our world needs more control (distributed control whenever possible). That is to say, more rules, more ways to enforce them and more ways to measure their efficiency. So the good news is today European leaders backed sweeping new regulations for financial markets. Questions remain, will the rules be good and will they be enforced?

By the way, if you want to understand a little better the whole world, if you want to hear about economy, climate, geology, ecology, or biology in less than 200 pages, just read these two amazing books. Your vision of the world will change and for almost free because these books are quite old (but have never been so fashionnable).

Nostalgia: I was offered these books 13 years ago. I read them then. They are definitely among the best gifts I have ever received. They stand in my bookshelf, one arm away from where I am writing these lines. Believe me these books are far easier to read than the Bible so you can give them to your children. I read them again 2 years ago after completing my studies in Dynamical Systems and Controls. I understood plenty of things I had missed in the first reading. So you can also offer these books to adults. They will learn quite a few things about the nature of our world.

Resources

In English

In French

If you know other good links about fractal, chaos theory and economy, please leave them in the comments.
Mandelbrot set

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Happy new year 2009! May we better understand the world!

Posted by Harry Seldon on January 02, 2009

I wish you all an excellent year 2009 filled with happiness in your private life as well as in your professional life.
Besides that, I wish you to better understand the world we all live in. For this purpose, here are some subjects that deserve all your attention and about which I will blog soon.

This beginning of the new year will be very busy around here. Indeed, I am going to make a major update for ThinkoSphere.com with the new design and I will start a blogging series about Control Systems. Later on I will blog about the fractal theory applied to finance because it is today the best theory explaining the crisis that I have found so far. I am currently reading the book “fractals, hazard and finance” from Benoit Mandelbrot*, father of the fractal theory. This book is amazing, it is ten years old but it looks like it was written 2 days ago, after the crisis.

Moreover, I also wish you to be better understood by your company, by your mayor, by your government. I wish you more democracy in your environment. This starts by giving more your opinion when you are polled. So I wish you more polls and finally I wish you to find your interest in ThinkoSphere.com.

* I am actually speaking about “fractale, hasard et finance” a book in French. Its equivalent in English is The (Mis)behaviour of Markets: A Fractal View of Risk, Ruin and Reward. This is probably the best quality and best quality/price ratio book about finance you can buy nowadays!

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