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Before Markets, There Was Gaming

Long before I began watching financial markets on a daily basis, I read Peter L. Bernstein’s Against the Gods: The Remarkable Story of Risk and found it intriguing. It’s a history of mathematics beginning with the use of Arabic numbers and tracing the development of probability theory, modern portfolio theory and even chaos theory. It’s probably no surprise to anyone that long before there were financial markets there was gaming, and that’s where ideas of chance and predictability began. Bernstein didn’t write for mathematicians and economists; he wrote for ordinary people who are simply curious about these things. His other books include Capital Ideas: The Improbable Origins of Modern Wall Street.

Yesterday I opened my update from Marketwatch and learned that he had passed away June 5 at the age of 90. I’m taking the liberty of reprinting a couple of paragraphs from their news item.

“For more than half a century, he enjoyed a front-row seat to the parade of ideas and theories that Wall Street transformed into useable—if not always useful—investment products. But he kept his distance from the salesmen and other promoters lining the route. As an eyewitness, Bernstein was objective, clear-minded, and scrupulously honest. As a judge, he was unafraid to question the status quo.

“Above all, Bernstein put investors first. Gently, but adamantly, he advised investors to have broadly diversified portfolios, so they might stand a fighting chance to survive the market’s worst. Bernstein was, as one admirer put it, a master of the ‘art of holding hands.’ Investors will always feel his reassuring grip”