When Markets Misbehave

Markets misbehave, sometimes when we least expect it. How badly they misbehave depends on the soundness of the hull and the level of self-reinforcing hubris.

When Benoit Mandelbrot's book The (Mis)behavior of Markets was published in 2004, it was a revelation for many of us. I remember sitting in my car in a parking lot, unwilling to tear myself away from reading it.

Here's the super-short summary: from time to time markets crash for no visible reason. The internal dynamics of market structures are fractal, a…