A Mathematician Plays the Stock Market (John Allen Paulos)

Genre: Nonfiction
Year Published: 2003

This is one of the most helpful books I've read in years. Paulos, a professor of mathematics at Philadelphia's own Temple University, gives his readers a broad rundown of the stock market, game theory, behavioral finance, and basic statistics. Although I am a mathematician by training, I knew next to nothing about the world of finance before starting this book, but I consider myself relatively well-informed now about the very basic structure of the market.

But -- and here's the great part -- this is the most enjoyable work of nonfiction I've read in years. Paulos is amazingly funny, and manages to cram in asides and jokes that take what could easily have been a primer and make it into a wonderful read instead. I found myself laughing out loud, something I rarely do while reading. (One quick example: "I thought news stories in November 2002 recounting New York Attorney General Eliot Spitzer's criticism of . . . analyst awards were a bit superfluous. Spitzer noted that the stock-picking performances of most of the winning analysts were, in fact, quite mediocre. Maybe Donald Trump will hold a press conference pointing out that the country's top gamblers don't do particularly well at roulette.")

Here's the catch (isn't there always one?): this is not a book for the mathphobes among us. If you hate the idea of being taught something about covariance or chaos theory, skip this book. But if you're intellectually curious and open-minded, and you have a thorough mathematical grounding (say, up to precalculus at least), don't miss out on this one.

Recommended? If you can stomach the math, then don't hesitate!