Against the Gods

A Business Week, New York Times Business, and USA Today Bestseller"e;Ambitious and readable . . . an engaging introduction to the oddsmakers, whom Bernstein regards as true humanists helping to release mankind from the choke holds of superstition and fatalism."e; The New York Times"e;An extraordinarily entertaining and informative book."e; The Wall Street Journal"e;A lively panoramic book . . . Against the Gods sets up an ambitious premise and then delivers on it."e; Business Week"e;Deserves to be, and surely will be, widely read."e; The Economist"e;[A] challenging book, one that may change forever the way people think about the world."e; Worth"e;No one else could have written a book of such central importance with so much charm and excitement."e; Robert Heilbroner author, The Worldly Philosophers"e;With his wonderful knowledge of the history and current manifestations of risk, Peter Bernstein brings us Against the Gods. Nothing like it will come out of the financial world this year or ever. I speak carefully: no one should miss it."e; John Kenneth Galbraith Professor of Economics Emeritus, Harvard UniversityIn this unique exploration of the role of risk in our society, Peter Bernstein argues that the notion of bringing risk under control is one of the central ideas that distinguishes modern times from the distant past. Against the Gods chronicles the remarkable intellectual adventure that liberated humanity from oracles and soothsayers by means of the powerful tools of risk management that are available to us today."e;An extremely readable history of risk."e; Barron's"e;Fascinating . . . this challenging volume will help you understand the uncertainties that every investor must face."e; Money"e;A singular achievement."e; Times Literary Supplement"e;There's a growing market for savants who can render the recondite intelligibly-witness Stephen Jay Gould (natural history), Oliver Sacks (disease), Richard Dawkins (heredity), James Gleick (physics), Paul Krugman (economics)-and Bernstein would mingle well in their company."e; The Australian

PETER L. BERNSTEIN is President of Peter L. Bernstein, Inc., economic consultants to institutional investors. Mr. Bernstein is the author of six books in economics and finance, including the bestselling Capital Ideas: The Improbable Origins of Modern Wall Street, as well as many articles in the professional and popular press. He is the Editor of The Portable MBA in Investment (Wiley) and was the Founding Editor of The Journal of Portfolio Management.

Acknowledgments ix Introduction 1 TO 1200: BEGINNINGS 1. The Winds of the Greeks and the Role of the Dice 11 2. As Easy as I, II, III 23 1200-1700: A THOUSAND OUTSTANDING FACTS 3. The Renaissance Gambler 39 4. The French Connection 57 5. The Remarkable Notions of the Remarkable Notions Man 73 1700-1900: MEASUREMENT UNLIMITED 6. Considering the Nature of Man 99 7. The Search for Moral Certainty 116 8. The Supreme Law of Unreason 135 9. The Man with the Sprained Brain 152 10. Peapods and Perils 172 11. The Fabric of Felicity 187 1900-1960: CLOUDS OF VAGUENESS AND THE DEMAND FOR PRECISION 12. The Measure of Our Ignorance 197 13. The Radically Distinct Notion 215 14. The Man Who Counted Everything Except Calories 231 15. The Strange Case of the Anonymous Stockbroker 247 DEGREES OF BELIEF:EXPLORING UNCERTAINTY 16. The Failure of Invariance 269 17. The Theory Police 284 18. The Fantastic System of Side Bets 304 19. Awaiting the Wildness 329 Notes 339 Bibliography 353 Name Index 365 Subject Index 369