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Mandelbrot is a mathematician whose theories on fractals have made him a renowned figure in the world of economics. In his theories he described shapes mathematically with a feature of them being the ability to zoom in on them so as they appear self-similar. In this book, Mandelbrot attempts to apply this theory to financial markets along with two key points, price charts are self-similar, and that prices do not vary in random ways like it is widely accepted. The first part of the book is about the Old Way of financial markets, which is then separated into five different aspects of the Old Way. A major aspect of his book that was very interesting and challenged common belief was his five rules, which he said, “I can boil some of them down to five “rules” of market behavior—concepts that, if grasped and acted upon, can help lessen our financial vulnerability” (74).
Mandelbrot describes and evaluates five different rules of market behavior in order to improve the vulnerability of the market. The first rule he discusses is in regards to the idea that ‘Markets are Risky’. He goes on to discuss that the movements of the prices do not follow any sort of regular curve, but in actuality the follow a less stringent and erratic curve. He believes that for trading to be successful people would need to take into account this erratic behavior into its market foundation and an investor has to take this into account along with other aspects of the market to build “a portfolio with greater security than the standard models suggest” (75).
The second rule Mandelbrot discusses is in regards to the idea that ‘Trouble runs in Streaks’. He believes that the turbulences in the market come in clusters and the first fifteen minutes of trading are v...

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... is a high change in price in one day, there is a higher chance that the next day there will also be a high chance in the price. So if different stocks have different power laws, some actually will move randomly but others with move in an erratic way. In the same idea, if a person wanted to predict a stock using the traditional way, the bigger effects on the market would strand them. However, his assumption of the power law has no theoretical or mathematical basis and any regular distributions, aside from normal, are challenging to promote over any time longer than a day. His practices are interesting but may not be the most practical without some real data to support them.

Works Cited
Mandelbrot, Benoit B., and Richard L. Hudson. The (Mis)Behavior of Markets: A Fractal View of Risk, Ruin, and Reward. New York: Published by Basic, 2004. Print.