This international bestseller, which foreshadowed a market crash, explains why it could happen again if we don?t act now. Fractal geometry is the mathematics of roughness: how to reduce the outline of a jagged leaf or static in a computer connection to a few simple mathematical properties. With his fractal tools, Mandelbrot has got to the bottom of how financial markets really work. He finds they have a shifting sense of time and wild behaviour that makes them volatile, dangerous - and beautiful. In his models, the complex gyrations of the FTSE 100 and exchange rates can be reduced to straightforward formulae that yield a much more accurate description of the risks involved.

Certain noises, many aspects of turbulence, and almost all aspects of finance exhibit a level of temporal and spatial variability whose "wildness" impressed itself vividly upon the author, Benoit Mandelbrot, in the early 1960's. He soon realized that those phenomena cannot be described by simply adapting the statistical techniques of earlier physics, or even extending those techniques slightly. It appeared that the study of finance and turbulence could not move forward without the recognition that those phenomena represented a new second stage of indeterminism. Altogether new mathematical tools were needed. The papers in this Selecta volume reflect that realization and the work that Dr. Mandelbrot did toward the development of those new tools.

This book is based on notes for the course Fractals: lntroduction, Basics and Perspectives given by MichaelF. Barnsley, RobertL. Devaney, Heinz-Otto Peit gen, Dietmar Saupe and Richard F. Voss. The course was chaired by Heinz-Otto Peitgen and was part of the SIGGRAPH '87 (Anaheim, California) course pro gram. Though the five chapters of this book have emerged from those courses we have tried to make this book a coherent and uniformly styled presentation as much as possible. It is the first book which discusses fractals solely from the point of view of computer graphics. Though fundamental concepts and algo rithms are not introduced and discussed in mathematical rigor we have made a serious attempt to justify and motivate wherever it appeared to be desirable. Ba sic algorithms are typically presented in pseudo-code or a description so close to code that a reader who is familiar with elementary computer graphics should find no problem to get started. Mandelbrot's fractal geometry provides both a description and a mathemat ical model for many of the seemingly complex forms and patterns in nature and the sciences. Fractals have blossomed enormously in the past few years and have helped reconnect pure mathematics research with both natural sciences and computing. Computer graphics has played an essential role both in its de velopment and rapidly growing popularity. Conversely, fractal geometry now plays an important role in the rendering, modelling and animation of natural phenomena and fantastic shapes in computer graphics."

This is the first book in the Selecta, the collected works of Benoit Mandelbrot. This volume incorporates his original contributions to finance. The chapters consist of much new material prepared for this volume, as well as reprints of his classic papers which are devoted to the roles that discontinuity and related forms of concentration play in finance and economics. Much of this work helps to lay a foundation for evaluating risks in trading strategies.

Mandelbrot is world famous for his creation of the new mathematics of fractal geometry. Yet few people know that his original field of applied research was in econometrics and financial models, applying ideas of scaling and self-similarity to arrays of data generated by financial analyses. This book brings together his original papers as well as many original chapters specifically written for this book.