Benoit Mandelbrot and the wildness of financial markets: Scientific American Blog

Benoit Mandelbrot and the wildness of financial markets: Scientific American Blog:

"In a lecture at Columbia University this week, famed fractal pioneer Benoit Mandelbrot once again inveighed against traditional economic theories...many economic models ignore dramatic jumps, whether in a commodity's price or in an index such as the S&P 500, treating them as outliers. But real-life economic systems, Mandelbrot said, are 'dominated by details'—the extreme cases, and specifically the outer 5 percent, are just as important as the rest of the data. To prove his point, Mandelbrot showed a graph of the S&P since 1985, overlaid with the same data minus the wild swings that constitute the outliers. The two graphs were completely different, implying that to ignore the extreme cases is to ignore reality"

Thanks to SimoleonSense