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# Against the Gods: The Remarkable Story of Risk

With the stock market breaking records almost daily, leaving longtime market analysts shaking their heads and revising their forecasts, a study of the concept of risk seems quite timely. Peter Bernstein has written a comprehensive history of man's efforts to understand risk and probability, beginning with early gamblers in ancient Greece, continuing through the 17th-centur...more

Paperback, 383 pages

Published
September 14th 1998
by John Wiley & Sons
(first published 1996)

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Take Bernstein's introduction, for example:

"The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more...more

The author has a nice way of mixing background color and the personalities of the various people he discusses in with the overall examination of risk. I enjoyed thinking along with notions like why the number zero didn't exist until society had moved forward...more

Like Bernstein, I spent the majority of my career in financial services (that may be the only similarity between us), so I have always been fascinated with people’s attitudes about risk and money in general. I also wanted to know more about my own proclivities on those matters. Sometimes, I look back in wond...more

"A and B are playing a fair game of balla. They agree to continue until one has won six rounds. The game atually stops when A has won five and B three. How should the stakes be divided?"

Not until 1654 would an answer to the previous question finally be discovered when the French Lawyer and amateur Mathematician Pierre de Fermat joined forces with the French Mathematician Blaise Pascal. Peter Bernstein's "Against the Gods: The Remarkable Story of Risk" traces not only their relationship, but the...more

Out of this, banking was created and trade evolved including the ability to evaluate risk and calculate interest risk which gave rise to modern banking, stock trading, insurance and other mathematically based industries which are the cornerstone of our modern financial structure.

It can be a little dry at times, but skipping the mathematical lessons will not detract from the st...more

I recommend you have at least univeristy level understanding of stats before you undertake this read.

Some of the book was good, like when the author briefly touched on the golden ratio, insurance through Lloyds of London and derivatives. I felt like the he could have gone deeper in to some of the sections or extrapolate more applications of the newly discovered statistical calculations - ie through analysis of the bell curve and r...more

No, instead this is a book the first two-thirds of which are a history of probability and forecasting, which, though related to risk, are not the same thing as risk, as evidenced by the author awkwardly sh...more

Apr 01, 2011
Velvetink
marked it as to-read

Interesting so far, a little heavy going in the early chapters for those deficient in math skills but fascinating in the details. Amazed to find that Da Vinci had only 3rd grade math skills.

A page turner that you can take to the beach. Very enjoyable.

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, strai...more

Peter best summarizes the content of the book in his introduction: "this book tells the story of a group of thinkers whose remarkable vision revealed ow to put the future at the service of the present. By showing the world how to understand risk, measure it, and weight its consequences, they converted risk-taking into one of the prime catalysts that drives modern Western society."

The book presents the...more

The author spent a good amount of time on analyzing how well our history of risk management has worked, particularly with regards to investing. It was very useful to see an interpretation on just how good (or how no...more

Unfortunately, the history of risk is a very difficult story to tell and it shows. We are given page after page of amazing anecdote and fascinating characters, but every attempt to thread them together into a cohesive narrative falls flat.

The book is divided chronologically, but...more

206: Arrow warns, however, that a society in which no one fears the consequences of risk-taking may provide fertile ground for antisocial behavior. // When things finally went wrong, the taxpayers had to pay. Whenever insurance can be had, moral hazard will be present.

285: I believe this kind of emotional ins...more

54 The factors that contributed t...more

Liked the beginning that explained how the number zero '0' comes about and helped to fuel the advancement in mathematics.

A little boring in the middle until it reaches the end. Among the interesting points to note:

(1) Prospect Theory ( which questioned rationality and previous models built upon this assumption. E.g. Game theory is built on one. It's not the logic that is being questioned, but rather the human mind required to perform it).

For example, if we were to choose...more

Poignant Quotes:

The capacity to manage risk, and with it the appetite to take risk and make forward-looking choices, are key elements of the energy that drives the economic system forward.

The Law of Large Numbers says in essence that the difference between the observed value of a sample and its true value will diminish as the number of observations in the sample increases.

The more uncertain the outcome, the greater may be th...more

My only complaints are that he glosses over some of the details of various mathematical and economic advances, though I suppose since entire textbooks have been written on the subjects, it wo...more

topics | posts | views | last activity | |
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Fantastic Review of Against the Gods | 1 | 29 | Sep 22, 2011 09:57PM |

Founder and President of Peter L. Bernstein, Inc., which he established in 1973 as economic consultants to institutional investors and corporations around the world.

In 1951, after teaching economics at Williams College and a five-year stint in commercial banking, Peter became Chief Executive of a nationally–known investment counsel firm, where he personally managed billions of dollars of individua...more

More about Peter L. Bernstein...
In 1951, after teaching economics at Williams College and a five-year stint in commercial banking, Peter became Chief Executive of a nationally–known investment counsel firm, where he personally managed billions of dollars of individua...more

## Share This Book

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“The information you have is not the information you want. The information you want is not the information you need. The information you need is not the information you can obtain. The information you can obtain costs more than you want to pay”
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“The word 'risk' derives from the early Italian risicare, which means 'to dare'. In this sense, risk is a choice rather than a fate. The actions we dare to take, which depend on how free we are to make choices, are what the story of risk is all about. And that story helps define what it means to be a human being.”
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