Benoit Mandelbrot, the father of fractals, spoke last week to an audience at MIT gathered by the Molecular Frontiers Club. Mandelbrot focused his remarks on his recent efforts to seek out patterns in the NASDAQ. (Video of a 2001 lecture at MIT, where Mandelbrot touched on this subject, is available here.) The fractal nature of the market is the subject of Mandelbrot's latest popular book co-written with journalist Richard L. Hudson, titled "The (Mis) Behavior of Markets: A Fractal View of Risk, Ruin And Reward." From the MIT News Office:
An unusual type of fractal that comes from a simple equation, the Mandelbrot Set (image at right) is popular outside of mathematics because of its aesthetic appeal and its complicated structure. No one has been able to prove the Mandelbrot Set is true, according to Mandelbrot. "But no one has been able to prove it's not true, either," he said, as large pictures of fractals filled the screen behind him.
Mandelbrot recently began to apply his knowledge of fractals to explain stock markets. "Markets, like oceans, have turbulence," he said. "Some days the change in markets is very small, and some days it moves in a huge leap. Only fractals can explain this kind of random change."