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Benoit Mandelbrot from The Misbehavior of the Markets

Ten Heresies of Finance

1. Markets Are Turbulent.

2. Markets Are Very, Very Risky—More Risky Than the Standard Theories Imagine.

3. Market “Timing” Matters Greatly. Big Gains and Losses Concentrate into Small Packages of Time.

4. Prices Often Leap, Not Glide. That Adds to the Risk.

5. In Markets, Time Is Flexible.

6. Markets in All Places and Ages Work Alike.

7. Markets Are Inherently Uncertain, and Bubbles Are Inevitable.

8. Markets Are Deceptive. (Don't put credence in technical analysis)

9. Forecasting Prices May Be Perilous, but You Can Estimate the Odds of Future Volatility.

10. In Financial Markets, the Idea of “Value” Has Limited Value. (The prime mover in a financial market is not value or price, but price differences; not averaging, but arbitraging. People arbitrage between places or times.)

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