I read this when it came out and thought it was pretty good. The first half, about how people figured out how probability worked, was really entertaining. The end, about how the geniuses on Wall St. conquered risk, is so wrong it's hilarious. Bernstein is a victim of what Taleb calls the ludic fallacy -- mistaking well-defined games like craps for the truly unpredictable.

So go read "The Black Swan" or "Fooled by Randomness" instead.

I read this when it came out and thought it was pretty good. The first half, about how people figured out how probability worked, was really entertaining. The end, about how the geniuses on Wall St. conquered risk, is so wrong it's hilarious. Bernstein is a victim of what Taleb calls the ludic fallacy -- mistaking well-defined games like craps for the truly unpredictable.

So go read "The Black Swan" or "Fooled by Randomness" instead.

My friends and colleagues have a hard time believing that one of the most entertaining books I have ever read is about risk management and probability. Yet, Peter Bernstein's masterpiece bestseller is just that. By tracing the development of risk through the ages, he sets the personalities of the key innovators against the background of the times, and shows the practicality of what they did and how it changed the way we look at the world.

Most of my favorite mathematicians are profiled here, in witty and digestible bites of prose that often read more like a novel than a business book. The chapter titles themselves bear witness to the delightful style of the author: The Man with the Sprained Brain, The Measure of Our Ignorance and The Fantastic System of Side Bets are just a few examples. The segues between chapters and sections are also very well-done - creating a bit of suspense and making this quite a page-turner.

With apologies for seeming trite, there is a high probability, at little risk, of reaping a great reward from the story told by Mr. Berstein.

Against The Gods is a popular account of the history of financial risk management. The author takes us through a journey of discovery spanning almost a thousand years, from the introduction of Arabic numerals and the concept of zero, to the most sophisticated derivative instruments of modern finance. At each point in history when a great leap forward was made, the personalities involved are introduced, and the advances they are credited with are explained. All throughout, mankind's age-old struggle to measure and control uncertainty is seen to stumble time and again against the same, seemingly insurmountable problem: There is no guarantee that what happened in the past will continue to happen in the future.

The book is highly recommended for anyone seeking to understand the origins of modern risk management and what the concept of risk really means.

There are two things that I really liked about this book, and one thing that I didn't. The good things:

1) The author's vast knowledge of the financial markets, from most of a century of experience.
2) His extensive and entertaining history of risk analysis.

The bad thing:

His attempts to explain math concepts that he apparently doesn't understand very well.

His history of risk analysis was a pleasure to read -- from Fibonacci and Cardano, to Markowitz and Sharpe. My favorite, was his coverage of Francis Galton, the man who measured everything.

Above all, the greatest value in this book is that it's packed with the author's knowledge of finance, from 63 years of experience. He's 89 years old now, and appears to still be going strong.

This book is well worth reading.

My favorite quote from the book:
Today's hero is often tomorrow's blockhead.(pg 297)

Risk Management has always been interesting to me, and learning about the history of it through this book has increased my understanding tremendously. The book is written very well, and it reads very easily for the material being discussed. I was pleasantly surprised as I delved further and further into the book.

I wasn't sure what this book would be about when I flipped through the pages at some airport (even with the subtitle, it still wasn' clear what the book would address). I made the right decision to buy it.
For all of us who have had a course in statistics and who trade in the stock market, this book provides a history which otherwise may be difficult to come by as in this book. The book is also well-written and fun to read.

Great book for Risk Manager's Professionals. Include great point of view and provide a good background.

This book is an abolute must for whoever uses the word RISK in reflexion, work, publication or lecture.

The topic is interesting, but the minutiae of the story makes it difficult to stay engaged, and as such, reads more like a very dry thesis. So, the phrase: "Story of Risk" might sell books, but it does not accurately address this book. I did not feel engaged throughout the reading of this work, and this belies the problem with the asymmetry of title and book.

However, for academics and teachers, the book does give detail which may be used to "spice up" lectures. This may prove to be its number one utility.

My own barometer of whether a book is truly five stars is measured by its life on my bookshelf. I have a finite sized bookshelf, and yet the number of books being published is something for which an end of publication is difficult to see. As my attention was drawn to this book again, after seeking out other "Black Swan" books, I can tell you that my hardcover is looking for a different venue for its life time on my bookshelf is now in question.

This book was a gift for the man interested in investments!
He loves it!

This book was recommended to me because I'm interested in getting an MBA eventually. I don't see what the fuss was about.

It's a long dry series of history interjection separated by basic probabilities and a few simplified algorithms. I took math courses in college, and this book came off as simplistic.

It goes over the history of risk from approximately ancient Greece up to 1950. It isn't going to help you in your own business dealings. The concept of punctuated equilibrium bursting artificial market bubbles and rewriting the rules of risk isn't even mentioned. Chaos theory gets one paragraph at the end of the novel. This made the book largely useless.

The only good about the book (to me) was chapter 16, titled 'The Failure of Invariance' (inconsistent choices for the same problem framed in different ways) which explains Prospect Theory. Distilled it means emotions destroy rational decision making, and people often don't understand what they are dealing with. Basically 'we use shortcuts that lead us to erroneous perceptions, or we interpret small samples as representative of what larger samples would show' (overgeneralization, p271). We interpret gains and losses (chance of losing means we gamble more) differently, and overvalue dramatic components, ignoring the data from other sources. It means we misjudge risk because we don't understand the situation well enough. It is applied fuzzy thinking strained through ego. This chapter made me investigate the research of Kahneman and Tversky, and I found it the [only] worthwhile portion of this book.

History and math are subjects that have a reputation for being dry. However this book weaves them both together and tells there story in an extremely engaging way. I recommend this one be put in the stocking of any friend or family member with an interest in either mathematics, economics or just a good read.

Risk is a topic central to many facets of everyday life. Peter Bernstein offers a compelling and readable historical overview of the evolving role of risk in everyday life combined with thoughts on the future of risk in our changing world.

Well-documented and interesting, this is a key book for those who are interested in contextualizing risk. After reading this book, you may well see risk in a new and different way.

As a statistics and economics teacher, I naturally jumped at this book. But while I found some parts to be interesting, I didn't love it. All too often, I found it a bit boring -- not nearly a page turner, like When Genius Failed, Fortune's Formula, Fermat's Enigma, or many other books that Amazon puts on the boat. It read to me more like a history textbook on a niche subject -- not really what I was hoping for.

I did learn a lot from reading it, but I found that I could only read one short chapter at a time before nodding off.

The reason that I bought this book was because it was highly recommended by the teachers at my MBA class.

They were not kidding, from head to toe its very good and kept my attention till the end. It has been of great help to me. Aside the history content it helps you to think on how to mitigate risk and how improve the opportunities.

Bernstein does an adequate job bringing the concepts together, but this is not a page-turner. I found myself reading on for the promise of insight, and he offers some, but the writing is a bit dull.

Bernstein is an interesting writer since he is the consummate finance insider- a practioner, regulator and academic. This range helps and harms the book - in his efforts to render the history of risk, he delves into anecdotal caricatures while amusing definitely smack of basis risk with the underlying ideas that are provocative enough! I found the behavioural finance and derivatives section to be rather basic but then realised the book was written in 1996. It's a pleasant read but a more pragmatic introduction to probability is the infinitely witty Cartoon Guide to Statistics.

According to this book you are both, it only depends on the point of view that is presented. I enjoy the book from the beginning to end, especially the last three chapters. The history and analysis of rational behavior is enlightening, to anyone who has ever thought about the process of decision.

2 crucial ponits in this book:

1.Sociological: Bernstein describes how risk was first imagined as an essentially modern cultural form and significantly operationalized in early mercantile capitalist shipping, where individual losses in rapidly expanding global trade become large enough to encourage their socialization in insurance arranegemnts. This book implies some viable if crude forms measurement and scaling of risk. In his narrative, risk was there waiting to be discovered, carrying its own intrinsic meaning, which the visionaries, through their heroic powers of access to msteries of Nature, were able to reveal to men of commerce and others who could then drive the economic, cultural and technological revolution of modernity. We can note from this account of risk how an implicit normative framework`and a claim of control are advanced as defining features of this new state`of enlightenment. It is this scientific risk discourse which gives total control`of `the future at the service of the present', the implication being that risk`analysis identifies and domesticates all significant future consequences of the`relevant actions. In this way ignorance and unanticipated consequences - lack`of control - lying beyond the reach of existing scientific knowledge, thus`potentially embarrassing in future to risk assessment, are seamlessly deleted.`Risk is thus assumed to define the full sphere of conceivable meaning for considering`new technologies and their implications, and science reveals this`independent meaning. (Reference, Wynne:Reflexivity inside out?)

2. Historical: While it is apparent to historians that both Khayyam and Kharazmi were Persian thinkers, the author in keen to be selective inattentive to this fact such that he argues the system of numbers were imported from Arab world to West whereas it was firstly introduced to Arabs at the time Persia was invaded by them. Hence the author's historic mind-set starts from 12th Century while long before which is 500 B.C. risk used to be engineered among Persians. (Reference, Channel History-Engineering an Empire: Persia)

The author seems to cover every aspect of risk. The book is so broad in scope that everything in it may not be of interest to every reader, but it is hard to imagine that every reader will not finding something of interest that is applicable to their lives -- be it insurance, investment (if you don't like derivatives, Peter Bernstein indicates that index funds might be just the thing for you) or the effect of seat belts on risky behavior.

In "Against the Gods", Peter Bernstein proposes that the capacity to manage risk sets modern civilization apart from all that came before it. It allows us to take risks and make decisions crucial to any kind of progress. This book tells the story of how and why our understanding of risk came to be what it is now, from the absence of mathematical probability in the ancient world, through its emergence in the Renaissance, to the evolution of our modern theories of risk management in finance. Though he concludes that "the goal of wresting society from the mercy of the laws of chance continues to elude us", Bernstein paints an exciting picture of how the ideas behind risk management develop and become increasingly sophisticated as technologies and economics demand greater mastery of risk.

"Against the Gods" has five sections, corresponding to historical periods in the understanding of probability and risk. "To 1200: Beginnings" is the weakest section, because it attempts to explain why probability did not emerge before the Renaissance, even though many civilizations possessed the mathematical sophistication to take it on. The hypotheses just aren't convincing, and I don't think I'd call the Greeks "the most civilized of all the ancients" either. But the Arabic numeral system with its concept of "zero" was the critical development during this time, as the author points out. "1200-1700: A Thousand Outstanding Facts" covers the invention of basic probability theory, statistics, and the beginnings of business forecasting in Renaissance Europe.

Bernstein provides mini biographies of the many mathematicians, gamblers, and others who made significant contributions to our understanding of probability and risk, making this story one of human endeavor. "1700-1900: Measurement Unlimited" tells the story of risk in the Enlightenment, which introduced the concepts of utility, standard deviation, and regression to the mean as tools in measuring uncertainty. Bernstein begins using the stock market to illustrate problems of risk, a theme which will continue for much of the rest of the book. I was puzzled by the story of Francis Galton who discovered regression to the mean, much to his own chagrin, while researching eugenics. Genes don't slavishly regress to the mean. If they did, there wouldn't be over 400 breeds of dog in the world, most of which were created by 19th century selective breeding.

"1900-1960: Clouds of Vagueness and the Demand for Precision" brings us into the 20th century with the development of modern theories of risk management, the influence of game theory, and the role of diversification. One chapter is dedicated entirely to measuring risks on the stock market. The last chapter, "Degrees of Belief: Exploring Uncertainty", takes a look at new ways of viewing human behavior toward risk that gave birth to the study of "behavioral finance". While many financial risk management models were built on Efficient Market Hypothesis, which assumes human choices are independent and collectively rational, Prospect Theory has shown that "human choices are orderly, although not always rational". In other words, people are predictably irrational, opening up a whole new way of analyzing risk where human behavior is involved.

The origins, historical progression, and modern concept of risk is
presented in "Against the Gods." From the abacus to rolling dice,
annuities, insurance industry origins, explorations, gambling,
military tactics, scientific research, to investing, and more. In
most things in life big and small, there is some element of risk is
involved. This book presents Risk, and how our civilization has
utilized it - and needed it - to evolve to where it is today.

Individuals and groups don't take a risk with the expectation that it
will fail (although there's awareness that failure is a possibility).
The *expectation* is not of failure.

Peter Bernstein made this topic fun and informative for those of us
that are 'non-numerically oriented.' Actually, the concept of risk
involves a lot of non-mathematical and statistical concepts.

The writing style and chapter titles are hip: "The Winds of the
Greeks and the Roll of the Dice, The Renaissance Gambler, The Measure
of Our Ignorance, The Man Who Counted Everything Except Calories, The
Failure of Invariance," and "Awaiting the Wildness," for example.

The modern and Western concept of risk began with the Hindu-Arabic
numbering system that arrived in the West about 700 years ago. The
more in-depth examination of risk truly began during the Renaissance,
resulting in exploration an the exploitation of resources.

In Chapter 10, "Pea pods and Perils," Bernstein emphasizes the
rock-solid concept of "Regression to the Mean" (RoM). This is true
especially concerning the historical trends and patterns of the
financial markets. Yet, he notes how difficult the Predictable
Regression of the Mean is for humans to plan with RoM, and around it.
There are three reasons why humans have trouble using the RoM in
decision-making: 1) It proceeds so slow that a 'shock' will disrupt
the process, 2) When the RoM is reached, as it is periodically
people don't recognize it and hover on either side of the mean, and
3) The old mean may be unsustainable, meaning the old Mean is being
replaced by a new Mean. But....there still is....a Mean.

Bernstein states on page 173:

"If you bet that today's normality will extend indefinitely into the
future, you will get rich sooner and face a smaller risk of going
broke than if you run with the crowd."

This strategy seems oriented for the long-term growth oriented crowd.
We witnessed the sheep and lemmings in the late 1990s that
jumped onto the Tech Bubble Wagon, only to get burned badly by not
getting off in time. (Or perhaps, the sheep got out in time, but the
lemmings didn't.) Some similarities In 2007 with the Real Estate SFH
housing and condo speculation, flipping, and sub-prime mortgage and
ARM market, currently.

A certain percentage of the human population are basically, lemmings.


Bernstein spent some time on Jacob Bernoulli. Bernoulli's notion of
"satisfaction resulting from any small increase in wealth will be
inversely proportionate to the quantity of good previously
possessed." And perhaps this is why King Midus was an unhappy man.

What are the consequences of excluding, avoiding, or making risk
illegal? In modern times, when the Soviets tried to administer
uncertainty out of existence through the government fiat and
planning, they choked off social and economic progress. Communism is
contrary to human nature. But much of it was that communism took
away the concept of risk.

Risky Businesses, or business involving risk: the insurance industry
actually goes back to the Code of Hammurabi in 1800 BC. Called
"Bottomry," the owner of the ship would take out a loan to finance a
ship's voyage. No premiums were every paid but if the ship was lost,
the loan didn't have to be repaid.

The concept of life insurance basically began in Greece and Rome. In
the Middle Ages, the growth in trade spurred the insurance and
finance industries in Western Europe.

Tons of info. on common things we usually don't think of know much
about, that you can further delve into: The American game of "craps"
came to Europe via the Crusades. The mathematical invention of the
"0" and the abacus which still is in our roots. The Abacus is the
oldest counting instrument in our history. The word "Abacus" comes
from the Greek word for "sand" and "calculate" comes from the Latin
word for pebble, "calculus."

John Von Neumann invented Game Theory. Defeat is highly likely of
you play to win rather than avoid losing. True in everyday business.
There are benefits to cooperation, that produces two winners or
semi-winners rather than on loser and one winner.

A great book. If you read it, I think the odds are that that you'll
like it. :)

Bernstein's book effectively reviews the history of numerical measurement and probability theory, then veers into a history of financial instruments up to the mid-90s (when the book was released). He has an excellent touch for presenting complex philosophical and financial concepts in easy-to-understand terms, although I must admit to a bit of confusion in the sections covering modern markets, including derivatives. My interest was in the first two thirds of the book which anyone who teaches courses in statistics should read, if only for a little background. A rather esoteric topic, to be sure, but if you are already intrigued by such things, you will not be disappointed.

Who would have thought that the history of stastics would be interesting? It surely is when Bernstein tells it. Highly recommended.

This one was used as a text for a class in markets at my college. What makes the subject - and this book - interesting is that the inevitable math is placed in an historical context. It's not the sort of book I would read on a cold winter night in front of the fire, but Bernstein did manage to make a rather dry - albeit valuable - subject remarkably interesting.

I ran into this book while studying for my Black Belt in Six Sigma. As a professional engineer, in the field of Energy - this kind of book peaks my interest.

I learned much about the long history of Risk, and the now better understand the use of risk in today's business world. Much of the book includes narrative detail, however, I believe much of this material will fade in my memory over time. I found it an interesting read, but not exactly what I was hoping for.

In fairness - the author did an excellent job with a difficult subject.

The author of this book outlines the history of the theory of risk in the last 450 years and its modern metamorphosis into risk management. The reading is fascinating, giving many historical tales and anecdotes that one could only obtain from time-consuming consultation of many different documents or books. The author confuses skepticism with cynicism at times, especially when discussing the relation between modern financial engineering and risk management, but in general the dialog is pleasant to read, and offers many different insights into the different viewpoints of risk. This is especially true for the discussion of 'prospect theory' as first proposed by Daniel Kahneman and Amos Tversky and its elaboration of risk averse behavior. Readers sympathetic with prospect theory will find its inclusion refreshing, although it would have been even more helpful to such a reader to find a discussion of the relation between prospect theory and its expression, if any, in modern risk management.

The author however seems not to be aware of the notion of 'model risk' that is embedded in modern approaches to risk management and financial engineering. This is apparent when he speaks of the inability of risk analysts to input concepts into computing machines that they themselves cannot conceive. The issue for risk management is not whether these concepts are exact representations or reality, but rather the cost or risk associated with their inaccuracy. In addition, risk analysts do not need to conceptualize on a level that is extremely far from current paradigms. They need not think the 'unthinkable" as the author believes that they do. Instead, their goal is to invent concepts, models or even new paradigms that allow risk managers to make estimates based on these concepts. But these managers do not view these models as sacrosanct, or as "oracles" as the author puts it. In fact there is typically a large amount of skepticism exhibited towards the models, and the managers at time do resort to personal intuitions and hunches.

The author though is correct in his opinion of the huge role of machines in risk management and in finance in general. With each passing day these machines are given more responsibility for doing financial analysis, forecasting, trading, and even model building. And more importantly, they are beginning to actually construct concepts and theories about how markets work, with the guidance for the time being of human experts. This trend will continue, and with faster and faster machines on the horizon, and with more trust placed in these machines, one can expect even more volatility in the financial markets. This volatility will require even smarter machines to deal with the huge risk trade-offs that will be involved, and it is likely that the machines will compete fiercely with each other as the strive to optimize the financial health of the firms that deploy them.

Thus there are very challenging times ahead for risk management, and therefore it is important to keep its role in proper context. It is not done for the sake of it, and it depends on conceptions and theories that were developed centuries ago, as the author of this book shows in great detail. It is wise to keep in mind these historical origins to the same degree that risk algorithms depend on historical data. Risk in the twenty-first century will dwarf anything that has come before, and new political ideologies. legal and regulatory frameworks, and systems of ethics will arise just to deal with its complexity. The degree to which humans are overwhelmed by this risk will be inversely proportional to their willingness to learn from history as well as depart from it, and to interact with the most complex technology ever constructed.

We are used to calculating odds to make decisions on a daily basis, whether it relates to betting at poker or horses, deciding what the traffic is going to be like on different roads en route to work, etc. This is a great analysis of how we have arrived at our current state, with a particular interest on how to calculate risk. This book is very succinct, and does not dwell unnecessarily on particular topics but moves forward in a most agreeable manner. This written in a historical manner, and I believe will appeal most to those that want to have a better understanding of how to analyse risk and/or the historical underpinning of our current state of knowledge.

"Against the Gods; The remarkable story of risk," is a world-class history of ingenious ways to measure probability. Author Peter L. Bernstein approaches the subject of risk/uncertainty with patience and unfolds a stirring tale of how civilization dicovered ways to improve the understanding of probability.

The author should be applauded for taking a disciplined academic approach to the subject...and presenting his findings in a sophisticated narrative. All students of financial markets...be it equities, fixed-income, foreign-exchange or commodities should read this book. The origin of risk/reward theory...and the evolution of the practice of risk management is valuable information for rookie and veteran Wall Street administrators, brokers, traders & executives.

The historical narrative is superb. Two sections in particular were very impressive...how to infer previously unknown probabilities from the empirical facts of reality (page 133) &...how the regression of the mean provides many decison-making systems with their philosophical underpinnings (page 173). Overall this book presents the outlook that, "to tackle the question of how human beings recognize and respond to the probabilities they contront, is ultimately what risk management and decision making are all about and where the balance between measurement and gut become the focal point."

Non financial mathamaticians will also enjoy this book. Bernstein starts out examining the risk rooted in the Hindu-Arabic numbering system. He explains that without the ability to quantify with numbers...risk is wholly a matter of gut. The author does not fail to overlook many pioneers, including; Fibonacci, Euclid, Paccioli, Cardamo, Frank Knight, John Maynard Keynes and many more. Highly recommended.

Bert Ruiz

"Against the Gods; The remarkable story of risk," is a world-class history of ingenious ways to measure probability. Author Peter L. Bernstein approaches the subject of risk/uncertainty and unfolds a stirring tale of how civilization learned to measure probability.

The author should be applauded for taking a disciplined academic approach to the subject...and presenting his findings in a sophisticated narrative. All students of financial markets...be it equities, fixed-income, foreign-exchange or commodities should read this book. The origin of risk/reward theory...and the evolution of the practice of risk management is valuable information for rookie and veteran Wall Street administrators, brokers, traders & executives.

The historical narrative is superb. Two sections in particular were very impressive...how to infer previously unknown probabilities from the empirical facts of reality (page 133) &...how the regression of the mean provides many decison-making systems with their philosophical underpinnings (page 173). Overall this book presents the outlook that, "to tackle the question of how human beings recognize and respond to the probabilities they contront, is ultimately what risk management and decision making are all about and where the balance between measurement and gut become the focal point."

Non financial mathamaticians will also enjoy this book. Bernstein starts out examining the risk rooted in the Hindu-Arabic numbering system. He explains that without the ability to quantify with numbers...risk is wholly a matter of gut. The author does not fail to overlook many pioneers, including; Fibonacci, Euclid, Paccioli, Cardamo, Frank Knight, John Maynard Keynes and many more. Highly recommended.

Bert Ruiz

Really got me thinking and was filled with very useful, helpful, informative, but easy and simple to understand tricks. One of my favorites. A+

It has interesting parts. Good for those looking for a recreational reading rather than a good manual for beginners. On this count, I recommend Barboianu's "Understanding and Calculating the Odds".

For people who are interested in the economic side of risk (mainly stock), rather than the probabilities and risks of every day things.

The book goes through a tour all the thinkers and mathematicians who contributed to the field of probability and risk, such figures include Gauss, Bernoulli, and Von Neumann, describing the evolution of the field of probability from simple dice games, to the probability of today. Similarly the book describes the different factors that stimulated the maturity of probability, from the introduction of Arabic numerals to the west, to the hundreds of computers number crunching figures for chaos theory.

There is not one mathematical formula presented in the book. While this might be a good thing if you have a phobia against numbers, it limits the general practical knowledge gained from the book. The book does, however, discuss how to read graphs and statistics, or more precisely how prominent figures in the fields of risk arrived at important conclusions and properties from given data.

Must confess my bias on this. I like games, gambling and investing. This book covers the gamut and does it well. What I found especially enjoyable was Bernstein's literate background. He spun a fascinating tale of 'The remarkable story of risk' (from the front cover) in a totally engaging way.

Following comes from the introduction, "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 than a whim of the gods and that men and women are not passive before nature."

Clearly, this book covers important ground. Fortunately for us, it does so in a way that leaves no one behind.

As a student of business I found this to be totally absorbing.

Because I like to gamble, it was wonderful to learn that questions posed by gamblers in the Renaissance resulted in the groundwork in our modern understanding of risk management.

Because Bernstein writes this as a history the reader can enjoy it as such without struggling through a textbook-like treatment of this material.

I have read and enjoyed it several times.

Bernstein writes with the depth of knowledge of a university professor, and the style of popular fiction writer. He captures both the scientific and human aspects of this broad subject.

Against the Gods is a fantastic book for people who love to read the history of risk, dating back as far as to the greeks. Bernstein's passion to the topic makes it a clear 5 star book. And he's passions shows on almost every page. Example: if you are just interested in the Markowitz formula, don't buy this book. But if you wanna read that Markowitz's methodology is a synthesis of the ideas of Pascal, de Moivre, Bayes, Laplace, Guass, Galton, Daniel Bernoulli (especially since he's had the same nationality than me) and von Neumann & Morgenstern. Furthermore, that Markowitz's methodolgy draws on probability theory, on sampling, on the bell curve and dispersion around the mean, on regression to the mean, and on utility theory. If this history is what interests you, this book is for you (if not only for the great title & book cover) !

This is an excellent book on the history and development of the concepts surrounding and the measurements of risk.

For the first time, a book on this subject was prepared that stands as a guide to help the individual in his professional career and investing activities and serves as a legitimate academic work worthy for incusion in capital markets study.

Professor John W. Kercheval, III
Georgetown University
Washington, DC

This is an excellent book on the history and development of the concepts surrounding and the measurements of risk.

For the first time, a book on this subject was prepared that stands as a guide to help the individual in his professional career and investing activities and serves as a legitimate academic work worthy for incusion in capital markets study.

Professor John W. Kercheval, III
Georgetown University
Washington, DC

Crisp reading, articulate, gives an exacting history of math and the pursuit of managing risk through the use of math since the beginning of time.

if you're curious about the history of western cuture (like i am), specifically in the realm of science and measurement, this is a fascinating read. while a bit dry for some, overall it's a well written telling of the story of how humanity began to understand things like probability, risk, and reward.

bernstein starts his story in the classical times of western civilization, and tells the tales from the perspective of the people who shaped our understanding of risk models. not just in finance, but also in gambling and games. some fun moments in there as you see how some gamblers had an inherent understanding in the rolls of dice and were able to profit from it.

a good half of the book focuses on modern models of risk in the realm of finance, which is probably because the field is so important to so many of us and has so many researchers and practitioners.

you wont put this book down and be a master of understanding risk models, but if you've been curious about some of the basics, you'll learn them here. but, you'll also learn a lot of history and enjoy several great tales of people who helped shape the world in which we live.

For the lay person, this book provides a wonderful history of the development of risk management ideas througout the centuries. Take for instance the history of the insurer (of celebrity legs) Lloyd's of London: Edward Lloyd opens a coffee house in 1687 near the Thames on Tower Street, a favorite haunt ot men from ships that moored at London's docks. Ship captains would drink coffee and compare notes on the hazards of all the New World routes that were opening up. This led to a list filled with arrival and departure information with notes on conditions abroad and at sea. The information began being used by marine insurance underwriters willing to "buy" the risk of ship disasters...until we arrive at the Lloyd's of London today insuring the fingers of piano players and all else, except the assurance of female chastity (page 90).

The book's one weakness as a history book has to do with the fact that it was published in 1996, just as rational decision theory was being tested in laboratory experiments world-wide--this theory being the theory that we are rational (greedy) agents in our dealings with other rational (greedy) agents. Since 1996, we have learned that populations of people have "saints" who sacrifice for the good of the society, "moralists" who, either from goodwill or fear of punishment, work for the better good of all, and "knaves" who try to ride the system for free.

In rational decision theory, no one in, say, Britain would have signed up to serve in WWI. My (little me) joining the Army can get me killed, and won't significantly alter the odds of the war. I'm rational. This is the logic of rational theory. Hence no one joins the war. In reality, some people, the "saints", self-sacrificed themselves for the better good of their society at large by joining literally out of the goodness (and possbibly "dumbness") of their hearts, while a larger group (the moralists) joined because of goodness and/or fear of punishment. Those men of age (the rational knaves) who didn't sign up, were rapidly ostrasized. English women would present them with white feathers of shame, while children and elder people made life hell for the shirkers. So, eventually, many of the shirkers joined.

To sum up, rational decision theory has many valid conclusions, but fails at key aspects of social cooperation involved in risk management. Look up the research on the "ultimatum game" and "public good games" that has been conducted world-wide since 1996.

For the expert in insurance, or derivative instruments and so on, this book provides a wonderful historical foundation to modern risk management ideas. No, it doesn't discuss long-tailed densities, artificial societies, mathematical ecology, and so on. It is a history book mainly.

Alex Alaniz Ph.D.

1. Please see the reviews of my own strong science fiction book: Beyond Future Shock about the near-terms perils and promise of advanced bio/nano technology in a world still roiled with Middle Age religious conflict and ever growing extreme wealth gradients.

2. I have REVIEWED many books from undergraduate to graduate in: PHYSICS, MATH, ECONOMETRICS, and HISTORY among other areas.

Peter Bernstein helped kick off a trend in modern publishing by writing this best seller. By taking a humble idea and showing how it changed society, we've since seen books likes Guns Germs & Steel which turn seemingly prosaic items into historic driving forces. The idea here is a good one though: that the moment mankind started calculating risk, we could begin to take control of our destiny - beating the odds in our human endeavours of exploration or enterprise.

This book makes a mentally exhilarating read, and turns mathematicians into heroes (rightly so!) as the story of probability unfolds. Bernstein has an actuarial background so his story, a large cargo-ship of information and anecdotes, tends to slew around at the end to take a very financial tilt, but I think this is a minor criticism. It launched this reader off into several related explorations - most recently into decision theory, heuristics and the experiments of Kahneman and Tversky who help explain why markets and individuals are less rational than people like Bernstein generally assume.

This book is exhilarating, both for those who work with probablility and statistics (we come from a proud lineage) and for those who love history. Well recommended.

The reader would be better served by reading a primer on probability and a short article on the evolution of probability. There is no talk of heavy tailed distributions and the finance stuff has been done in much better ways a thousand times before. Too much of a reading input for too little return.

I picked this book up based on Mauldin recommedations, and former finance professor considered Bernstein a mentor of sorts. Occassionally I read J. of Port. Mgt and Financial Analyst Journal which he contributes very insightful articles that challenge my understanding of risk as it pertains to asset allocation.

This book is review of how risk that are incorporated in all of our lives (in all decision making capacities) was discovered. It is amazing how young the field really is and fast it has advanced.

An remarkably boring book that talks about everything but risk. The author spend 3/4 of the book describing historical formulation of strategic models that derived to become the modern risk management concepts. The rest 1/4 are scientifically inaccurate references to the stock market. The writing is conceded, historical facts were blurry, and none of the models were throughrally explained.

This book is rather a historical cliff notes of who invented what mathematical theory.

This is a history of the notion of risk, which is written to please both math jocks (gearheads) and poets (their opposites). As a financial advisor, Bernstein knows all about the former, which he can explain in layman terms to the latter. The result is a truly brilliant book.

According to Bernstein, our notion of risk occured in 3 stages. It began in the 16th C, when Renaissance mathematicians turned their attention to Earth, a major departure from the preoccupations of philosophers since antiquity, who studied the motions of the planetary bodies as the only measurable regularities in nature. The new guys studied dice and other games of chance as well as bookkeeping and the insurance industry (i.e. useful to the rising bourgoisie). This represented a revolution in our notion of fate, he says, as the future was regarded more as something human beings could master and manipulate regardless of their birth station, etc.

FOr the next 200 years, Bernstein reports, mathematicians attempted to measure, with rapidly evolving tools (physical and conceptual), what they believed could be "known" with certainty. Pascal and Fermat formulated the general rules for the calculation of probabilities, which was the first real step in the science of risk management, that is, recognising that math rules could guide decisions about the future. Bernstein argues that this signalled the birth of the modern era, in which rational planning replaced mystics and numerologists.

This was the golden age of classical statistics. First, researchers examined what could be inferred of the whole from a limited number of observations (statistical inference, as in vote sampling today). Then, they turned their gaze to uncertainty, which they might estimate. This resulted in Bayes' theorem, which incorporates intuition into the equasion. THe bell curve was also discovered.

I found Bernstein's third stage the most interesting, i.e. post-WWI. This was a time when the confidence in Western rationalism came into question, not only whether we operate logically but if we even come to the right conclusions when armed with the "required" information. At this time, the science of risk breaks into a number of competing schools, whose arguments are mutually exclusive, including game theory.

FInally, Bernstein offers up some surprisingly skeptical financial advice. Investment professionals, we learn, rarely do consistently better than random choices (!) and if they develop a system that works, it will quickly become obsolete because others will copy it.

This book is an extremely useful review of the complicated, sometimes arcane techniques that many of us sweated through during late nights a grad student toil. I hated every minute of it, but in Bernstein's hands it is indeed facsinating and written with a remarkable clarity. Berstein makes a lively case for the judicious use of this risk-analysis techniques - we should take them into account even if we fail to follow them rationally. His book is a useful primer for investor caution, i.e. quantitative techniques are useful but should be questioned continually. There are also innumerable fascinating asides, in which personal details of the mathematicians are examined with humor and psychological depth.

Warmly recommended.

The positive: if you've taken various statistics classes through college and know a little to a lot about risk management, you'll probably feel enlightened by the end of the book about the progression of knowledge that has led to current risk management standards and theory. It's generally an entertaining read.

The negative: At least one illustration (game theory, p 241, 1998 (2nd) edition) in the book is wrong; if you know theory (and in some cases, application -- as with various points on investing), you'll laugh (or cringe) at some of the examples as abbreviations of knowledge. On the other hand if you don't know theory/application, you may end up being perplexed if you stop to think about some of the examples and a few terse statements of alleged fact made by the author. But most readers won't notice most of this.

Overall: I feel enlightened for having read of the origin of much of risk management in one story. It was a quick read. Yet I wouldn't recommend it to non-statisticians (excepting math buffs), and my recommendation would be muted to statisticians and (less so) risk managers, unless they enjoy history.

This book immediately grabbed me - I have a passion for learning about risk management strategies from options and futures to other instruments. What I loved about this book was the historical understanding of how the mathematical foundations were layed for the evolution of probability theory and risk management, and how that backdrop pervades modern life from portfolio theory, to odds-making, to how insurance companies set premiums, to how unbelievable it was for the Red Sox to come back from four games down last year vs. the Yankees.

I've recently finished this book in concert with two others - The (Mis)Behavior of Markets by Benoit Mandelbrot and Hot Commodities by Jim Rogers. As a group, they are an interesting pairing. What's interesting is how the Misbehavior of markets de-constructs and points out the problems with a lot of the fundamental notions laid out in Against the Gods, with the thesis that many aspects of modern finance theory are wrong (under-stating volatility and mis-applying probability and normal distributions) to financial markets. It's a good counter-balance.

While I found this book really engaging and interesting, I can't give it five stars because I felt a little let down at the end. I was hoping for a little more info about current ground-breakers in risk management, but it ended a little bit abruptly for me. But overall, I think this is a really excellent book worth reading if you have these interest areas.

Bernstein has an enjoyable writing style and his _Against the Gods_ is an excellent book on what can be a dry subject: risk. Rather than write a dull book of formulas and deadly dull theory, Bernstein writes a passioned and engaging history from the Greeks (of course) to elements of today's modern portfolio theory.

Everybody from Euclid to Fabinocci to Markowitz to Black and Scholes is mentioned. Hell, even the Prudent Man rule is discussed.

Lots of interesting tidbits. I was amused to read how Markowitz didn't know anything about stocks shortly before writing "Portfolio Selection" and that the Black-Scholes paper on pricing European options was rejected by two journals before being finally published.

Even if you don't know or care what standard deviation and regression to the mean is, this book is so well written you'll hardly bat an eye. Non-math types will enjoy it along with the number crunchers.

His thesis is that what separates the modern world with the ancient is our ability to quantify risk as opposed to just blaming the gods.

Bernstein's book on Gold: History of An Obsession, is equally engaging.