The Logic of Miracles by Laszlo Mero

Author:Laszlo Mero [Mérő, László]
Language: eng
Format: epub
Publisher: Yale University Press
Published: 2018-09-15T00:00:00+00:00

8

Scale-Invariance

How many times have I wished that my glasses had a phone number!

Figure 14 shows the pound-to-dollar exchange rate over various time intervals during the fiscal year 2012–2013. The first thing to notice about these graphs is that I neglected to label dates and times on the horizontal axis, and I also failed to supply the vertical scale. Can you tell which graph represents a five-minute history and which represent one-hour, one-day, and one-week histories? I will not spoil the fun by revealing the answers here; the solution can be found at the end of the book.1 And take heart, gentle reader, if you failed to figure out which graph is which. Not even the most renowned stock market gurus can do it.

Self-Similarity

The fact that financial market graphs look the same at all time scales caught the attention of Benoit Mandelbrot, whom we encountered in chapter 6. He wanted to know whether the experts were missing something or whether there was indeed no way to tell the difference.

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