Capital Ideas traces the origins of modern Wall Street, from the pioneering work of early scholars, the development of new theories of risk, valuation, and investment returns by the next generation of scholars, to the actual implementation of these theories in the real world of investment management. Starting with the French mathematician Louis Bachelier who wrote the unpredictability of stock prices in early 1900s, Bernstein brings to life a variety of brilliant academics who contributed to modern investment theory. The characters include Harry Markowitz who wrote about optimizing the trade-off between risk and reward. William Sharpe who shook the pillars of the investment establishment by asserting that the market cannot be beaten. Fisher Black, Myron Scholes, and Robert Merton, who paved the way for the creation of financial derivatives and new ways of controlling risk. And Franco Modigliani and Merton Miller who extolled the central role of arbritrage in determining the value of securities. Bernstein shows how the contributions of each individual built upon each other and led to the development of a unified theory of market behavior, investment returns, and risk management. Most importantly, Bernstein explains how academic theory was translated into practice and profoundly changed the practice of investment management. This new Wiley edition is a paperback reprint of the original title with no new material added.
Book Details:
- Author: Peter L. Bernstein
- ISBN: 9780471731740
- Year Published: 1992
- Pages: 368
- BISAC: BUS036000, BUSINESS & ECONOMICS/Investments & Securities / General
About the Book and Topic:
Capital Ideas traces the origins of modern Wall Street, from the pioneering work of early scholars, the development of new theories of risk, valuation, and investment returns by the next generation of scholars, to the actual implementation of these theories in the real world of investment management. Starting with the French mathematician Louis Bachelier who wrote the unpredictability of stock prices in early 1900s, Bernstein brings to life a variety of brilliant academics who contributed to modern investment theory. The characters include Harry Markowitz who wrote about optimizing the trade-off between risk and reward. William Sharpe who shook the pillars of the investment establishment by asserting that the market cannot be beaten. Fisher Black, Myron Scholes, and Robert Merton, who paved the way for the creation of financial derivatives and new ways of controlling risk. And Franco Modigliani and Merton Miller who extolled the central role of arbritrage in determining the value of securities. Bernstein shows how the contributions of each individual built upon each other and led to the development of a unified theory of market behavior, investment returns, and risk management. Most importantly, Bernstein explains how academic theory was translated into practice and profoundly changed the practice of investment management. This new Wiley edition is a paperback reprint of the original title with no new material added.
Modern Wall Street is a complex arena in which vast amounts of money change hands daily in search of superior investment returns. Underpinning all the activity are theoretical concepts of risk, reward, and valuation that are expressed in computer programs that drive the vast majority of transactions. The foundation for what Wall Street has become are a number of innovative, forward-thinking academics, dating back to the early 1900s, who together developed modern investment and financial theory. For many years, the work of these investment pioneers was largely ignored by investment professionals. After many professional money managers lost a great deal of money in the early 1970s, Wall Street began to implement and eventually embrace the theories advanced by this small group of ivory tower academics. Capital Ideas is the story of these academics how their work has transformed Wall Street
Successful first edition. The first edition sold about 40,000 copies in softcover. It was published by Simon and Schuster, under the Free Press imprint. Strong author sales history. Against the Gods sold 146,820 in hardcover and 223,904 in paper. The Power of Gold sold 38,194 in hardcover and 14,231 in paper. Author reputation. Peter Bernstein is a giant in the investment industry. Without question, he is the preeminent historian of modern investment and finance. He is the most widely-known, most respected, and best-selling author in professional investment and finance. Broad audience. Bernsteins books are popular with professionals in investment, finance, and economics thats the foundation of his audience. But clearly Bernsteins appeal transcends the boundaries the financial world. Fundamentally, his books are about the history of ideas and how the ideas are manifested in the real world and, as such, he appeals to intellectually active readers who may have only a casual interest in finance and investment.
About the Author
One of the foremost financial writers of his generation, Peter L. Bernstein has a unique ability to synthesize intellectual history and economics with both the theoretical and real world of investment management. He is author of the best-selling Against the Gods: The Remarkable Story of Risk and The Power of Gold: The History of an Obsession, as well as five other books. He is president of Peter L. Bernstein, Inc., an investment consultant firm he founded in 1973 after many years of managing billions of dollars in individual and institutional portfolios. He is the founding editor of the Journal of Investment Management. He has lectured widely throughout the U.S. and abroad and has received the highest honors from his peers in the investment profession.