Skip navigation
Why Stock Markets Crash
Book

Why Stock Markets Crash

Critical Events in Complex Financial Systems

Princeton UP, 2003 more...


Editorial Rating

7

Qualities

  • Comprehensive
  • Analytical
  • Innovative

Recommendation

The word crash strikes fear into any investor’s heart. Fear not, writes scientist Didier Sornette, who has crunched the numbers (not to mention the probabilities and log periodicities) and has determined that crashes are, in fact, quite normal and predictable. If prices are soaring and everyone you know says profits are guaranteed, get ready. Sornette backs up his argument with countless charts, formulas and phrases such as "spontaneous symmetry-breaking regime." Still, there’s enough plain English here to enlighten the lay reader. getAbstract suggests this book to traders and investors looking for a unique analysis of market crashes.

Take-Aways

  • Investors, traders and regulators constantly worry about market crashes.
  • While people generally consider crashes unpredictable, they follow a logical pattern.
  • Crashes invariably follow bubbles, those periods of optimism when individual skepticism gives way to a mass rush to invest.

About the Author

Didier Sornette is professor of geophysics at the University of California, Los Angeles, and a research director at the Centre National de la Recherche Scientifique in France. Sornette specializes in scientifically predicting catastrophes in complex systems. He is the author of the textbook Critical Phenomena in Natural Sciences.