Earlier in the month the CFA Book Club (St. Paul group) met to discuss The Physics of Wall Street, by James Owen Weatherall. The book featured biographies of some famous, and not so famous, physicists that used their knowledge of physics systems in nature, such as chaotic systems, and how they were able to translate those theories into actionable strategies in the financial arena. Additionally those biographies were interlinked so you could see how one person’s work influenced others.  Some of those names would be familiar to those in the financial industry, such as Scholes, Black, Merton and others.

Overall, the book received good-to-mixed reviews. About half of our group would have recommended the book to a friend, while the other half had reservations. Here were some of the observations from the group:

What people liked about this book:

• This would be a good book for undergraduate Finance and Economics majors to read to see why it is important to understand quantitative analysis and calculus, because sometimes as a student it’s not easy to see how those disciplines are used in finance every day.
• It was a good lesson on how we all need to talk to others in related disciplines to gather insights that we would not have gotten otherwise.
• It was interesting how the people in the biographies intertwined and utilized each other’s ideas to build upon their own theories offered a nice insight on how quantitative analysis in finance and trading strategies came into existence and evolved over time.

What people did not like about the book:

• Sometimes the biographies dwelled too much on the subjects’ academic background and how those people became physicists in the first place.
• The book dwelled too much on historical information and background and less about the interpretations of the theories and how it influenced today’s financial world.

Our next book for the St. Paul group will be Dark Pools: The Rise of the Machine Traders and the Rigging of the U.S. Stock Market, by Scott Patterson. Our next meeting is at Sweeney’s Dale Street Room on Wednesday, February 26 from 5:30 to 7:00.