"The techniques I developed for studying turbulence, like weather, also apply to the stock market"
About this Quote
Mandelbrot is smuggling a provocation into a calm, professorly sentence: the stock market is not a tidy machine awaiting better equations, but a storm system pretending to be a clock. By pairing “turbulence” and “weather” with finance, he punctures the comforting myth that markets are governed by smooth, well-behaved randomness. Weather is legible only in probabilities and patterns; it resists precise long-range prediction. If the market belongs in the same conceptual bucket, then the entire culture of confident forecasts, clean risk models, and crisp “expected returns” starts to look like ritual.
The intent is less “math can explain Wall Street” than “Wall Street has been using the wrong math.” Mandelbrot’s work on fractals and heavy-tailed distributions pushed against the Gaussian assumptions embedded in much of 20th-century economics and risk management. Turbulence is defined by intermittency: long stretches of relative calm punctuated by violent bursts. Markets do that too. His subtext is a warning about arrogance: the most consequential events are not the small wiggles models are trained on, but the outliers they quietly file under “unlikely.”
Context matters. Mandelbrot’s critique gained cultural bite as finance industrialized and derivatives pricing made statistical elegance feel like safety. Read after crashes, the line lands like an indictment: you don’t get to call a hurricane a “six-sigma event” and keep building beachfront condos. His analogy doesn’t promise clairvoyance; it asks for humility, and for tools that treat extremes as features, not errors.
The intent is less “math can explain Wall Street” than “Wall Street has been using the wrong math.” Mandelbrot’s work on fractals and heavy-tailed distributions pushed against the Gaussian assumptions embedded in much of 20th-century economics and risk management. Turbulence is defined by intermittency: long stretches of relative calm punctuated by violent bursts. Markets do that too. His subtext is a warning about arrogance: the most consequential events are not the small wiggles models are trained on, but the outliers they quietly file under “unlikely.”
Context matters. Mandelbrot’s critique gained cultural bite as finance industrialized and derivatives pricing made statistical elegance feel like safety. Read after crashes, the line lands like an indictment: you don’t get to call a hurricane a “six-sigma event” and keep building beachfront condos. His analogy doesn’t promise clairvoyance; it asks for humility, and for tools that treat extremes as features, not errors.
Quote Details
| Topic | Investment |
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