Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets? (Hardcover)

~ (Author), Nassim Nicholas Taleb (Foreword)

Editorial Reviews

Review

"Points to the over-reliance on financial models and quantitative techniques as what ultimately brought down the financial markets. Sure, many of us feel that we have heard enough on this topic-do we really need another book about the financial mess and how it all began? Yes, we do. . . Triana's impressive knowledge and experience allows him to dig deeper and go beyond the mere musings of his published peers."
—Risk Management Magazine

"Readers of this book may make quite a lot of noise. . . Some will cheer out loud; others will yelp as cherished beliefs are torn into. At times, the book is deliberately incendiary. Triana is trying to stimulate debate. . . On the whole, this is a good read."
—The Financial Times, July 23rd 2009

"...calls for a return to "good old fashioned commonsense decision making"."
—Daily Express, June 4th 2009

"This book explains how it is that theoretical finance can fail dramatically in the real world."
—Finanace & Management Faculty, June 2009

"The book is fizzing with ideas"
—The Economist, June 29th 2009

" Triana’s book will ruffle a lot of feathers, but it also will make many readers think hard."
—BizEd

"A deeply unsettling insider account of how bogus mathematics overtook finance and was a key contributor to the financial collapse of 2008-2009 . . . With deep insight, Triana deconstructs the "pillars" of mathematical finance . . . Like Nassim Taleb, celebrated author of The Black Swan (2007), Triana is calling for major surgical reform of such business schools' curricula. An important addition to our deeper understanding of how finance must be reformed."
—Hazel Henderson, Ethical Markets

"Should the Nobel Prize for economics be abolished? That is one of the suggestions in Pablo Triana's provocative book "Lecturing Birds on Flying: Can Mathematical Theories Destroy the Markets?" . . . As Nassim Nicholas Taleb writes in his witty introduction to the book, giving someone the wrong map is worse than giving them no map at all. . . a good read. Some may find the elaborate prose closer to Cervantes than to, say, Nobel Prize winner Robert Merton -- annoying. But perhaps Cervantes is the right writer to emulate when tilting at windmills. "
—LA Times

"The highlight of Triana's book is his valuable insights into the problems with mathematical economic models, which make his argument quite forceful."
—Shanghaidaily.com

"Points to the over-reliance on financial models and quantitative techniques as what ultimately brought down the financial markets. Sure, many of us feel that we have heard enough on this topic-do we really need another book about the financial mess and how it all began? Yes, we do. . . Triana's impressive knowledge and experience allows him to dig deeper and go beyond the mere musings of his published peers."
—Risk Management Magazine

"Readers of this book may make quite a lot of noise. . . Some will cheer out loud; others will yelp as cherished beliefs are torn into. At times, the book is deliberately incendiary. Triana is trying to stimulate debate. . . On the whole, this is a good read."
—The Financial Times, July 23rd 2009

"...calls for a return to "good old fashioned commonsense decision making"."
—Daily Express, June 4th 2009

"This book explains how it is that theoretical finance can fail dramatically in the real world."
—Finanace & Management Faculty, June 2009

"The book is fizzing with ideas"
—The Economist, June 29th 2009

" Triana’s book will ruffle a lot of feathers, but it also will make many readers think hard."
—BizEd

"A deeply unsettling insider account of how bogus mathematics overtook finance and was a key contributor to the financial collapse of 2008-2009 . . . With deep insight, Triana deconstructs the "pillars" of mathematical finance . . . Like Nassim Taleb, celebrated author of The Black Swan (2007), Triana is calling for major surgical reform of such business schools' curricula. An important addition to our deeper understanding of how finance must be reformed."
—Hazel Henderson, Ethical Markets

"Should the Nobel Prize for economics be abolished? That is one of the suggestions in Pablo Triana's provocative book "Lecturing Birds on Flying: Can Mathematical Theories Destroy the Markets?" . . . As Nassim Nicholas Taleb writes in his witty introduction to the book, giving someone the wrong map is worse than giving them no map at all. . . a good read. Some may find the elaborate prose closer to Cervantes than to, say, Nobel Prize winner Robert Merton -- annoying. But perhaps Cervantes is the right writer to emulate when tilting at windmills. "
—LA Times

"The highlight of Triana's book is his valuable insights into the problems with mathematical economic models, which make his argument quite forceful."
—Shanghaidaily.com

Product Description

Praise for Lecturing Birds On Flying

"Finally, a book taking a critical look at quantitative finance models, illuminating both their flawed fantasy assumptions as well as the uncritical use of such models on Wall Street, in many cases, leading to billion dollar losses. Pablo Triana knows both the financial industry and the academic community from the inside. A must-read for anyone interested in finance."
—Dr. Espen Gaarder Haug, trader, thinker, and author of Derivatives Models on Models

"A thoroughly readable explanation of the problems that have beset the models and quantitative techniques that have underpinned so much of finance in recent years. If only the bankers had heeded this message a few years before, we might not be in such a big mess today."
—Gillian Tett, Assistant Editor of the Financial Times, overseeing global financial markets coverage, and author of Fool's Gold

"Pablo Triana dismembers quantitative finance, in theory and in practice, with expertise, anger,and an excellent eye for the illuminating anecdote. By the time he has finished marshalling his evidence, his call to replace complex equations with something more like common sense sounds like, well, common sense."
—Edward Hadas, Assistant Editor at Breakingviews.com; and author of Human Goods, Economic Evils: A Moral Approach to the Dismal Science

"Pablo Triana is an entertaining and engaging writer, even on the dry subject of finance theory. His debunking of conventional wisdom is a treat."
—Pauline Skypala, Editor, FTfm, Financial Times

"Triana's book is an unrelenting fusillade of detailed and irrefutable arguments against financial theorems and those who teach them. It should, by rights, spark a revolution in both investment banks and business schools. But, at the very least, it is required reading for anyone who would regulate the finance industry."
—Felix Salmon, Finance Blogger, Reuters

See all Editorial Reviews

Product Details

• Hardcover: 400 pages
• Publisher: Wiley; 1 edition (June 9, 2009)
• Language: English
• ISBN-10: 0470406755
• ISBN-13: 978-0470406755
• Product Dimensions: 9.1 x 6.3 x 1.4 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 2.4 out of 5 stars  See all reviews (14 customer reviews)
• Amazon.com Sales Rank: #174,440 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

32 of 36 people found the following review helpful:

1.0 out of 5 stars Lecturing traders on writing, July 5, 2009

By	Lewis A. Glenn (Danville, CA) - See all my reviews (REAL NAME)

I was attracted to this book partly by the intriguing title, but mostly by the fact that the foreword was written by Nassim Nicholas Taleb, the author of 2 fascinating books on roughly the same material, "Fooled by Randomness" and "The Black Swan".

I was expecting more of the same from Triana, but with perhaps a slightly different viewpoint and possibly more details. What I got was a 350 page polemic from a confirmed math phobe and a slavish paen to Taleb. OK, Black-Scholes is not a great idea and VAR greatly underestimates market risk, but to repeat this theme again and again borders on the lunatic.

But that's not all, here's a quote from p. 203 that sums up the style of writing; he's referring (endlessly) to Black-Scholes-Merton and, in this case, to the S&P 500 volatility surface: "...Obviously, horizontal is not the same as curved. A curved line is a complete violation of BSM. Horizontal is not the same as curved. The end results are not BSM-compliant any more. It's not BSM. Curved is not horizontal. It's something else. BSM endorses horizontality. BSM negates curvedness. It can't be BSM. Curved is not horizontal". I kid you not.

The message of the book, delivered amply in Taleb's foreword and elsewhere, is that too often in the past econometric models put foward by the likes of Merton, Scholes and others have been blindly followed by market makers and regulators, with resultant disastrous effects. Unfortunately, Triana adds little additional insight and commits the greatest of all faults an author can make--to bore the reader.

29 of 34 people found the following review helpful:

2.0 out of 5 stars The most repetitive book ever written, July 6, 2009

By	Socrates Socrates - See all my reviews

I read Nassim Nicholas Taleb books, "Fooled by Randomness" and "...Black Swan"; so I figured (regrettable, on hindsight) given that Taleb wrote the foreword then the book would be on par with his books! I was wrong.


Negatives:

The book is way too repetitive!
-Imagine going for >74 pages (that's the longest chapter, #7) of repetition. Not only is he repeating lines from other chapters, no.... at times from the the same paragraph!

The writing style is rather weird.
- At some point he mentions Victor Niederhoffer by name and then at another chapter, he talks about the same story but this time it's no longer Victor but rather a "famous speculator"
- Again, he mentions Emanuel Derman by name and then in another chapter, he talks about the same story but this time, it's not longer Emanuel but it's now a "...famous quant/academic..."!
- I coud go on....


Positive(s):

His understanding of the subject is not in question, at least not by me!
His opinions on VaR, BSM.
His opinions on the need for change, especially the financial economics professors' influence in the real world of finance
The relating of his work experience is another positive

All in all, I'd rather pass on the book, for I can assure anyone that the repetitiveness will be found very annoying.

12 of 15 people found the following review helpful:

1.0 out of 5 stars Awful Writing, August 7, 2009

By	Animal - See all my reviews

I came on Amazon with the intention of spelling out why this book is so disappointing. I see a few people have already written my criticism. If you like reading criticisms that are repetitious you will 1) Like this review and 2) Like this book.

Just to reiterate, the writing is unbelievably bad. Whether it be the repetition, the rambling, or the awful humor (most of it stolen from others...e.g. the "Good Will Hunting" line about library fees), the author makes reading this book as painful as possible. He spends pages and pages bemoaning those in academia, specifically what he calls "B schools" (yes, he's one of the guys that says "B school"), but if he'd lower himself to some instruction he might find the practice of outlining before writing leads to a better product (and a more terse one). He clearly sat down at the computer and started churning words. I doubt he has read this book himself.

What is unfortunate is, when he gets into his specific points on the credit crisis, he does a better job than any others I've read of explaining what all the products were and how the progressive collapse occurred. However, what would have been an excellent couple of magazine articles was wrapped in an endless (and unnecessary for the book) rant against a few MBA classes, repeating himself, uncomfortable sexual jokes, and his incessant crusade against Black, Scholes et. al. Skip this book.