John Allen Paulos does for statistics what Stephen Hawking did for theoretical physics for the masses. Paulos takes a seemingly complex field and makes it understandable, and sometimes even usable. I own two of his previous books, A Mathematician Reads the Newspaper and Once Upon a Number. So when I browsed through the economics section at Barnes and Noble this weekend and came upon his latest book, I knew I had to buy it.
In this book, as the title suggests, Paulos focuses on the stock market. He bought into Worldcom and lost money on it. He uses his own investment and his own psychology to illustrate the vagaries of the market. For anyone who espouses any economic theory, be prepared to have your sacred cows slaughtered. Paulos ridicules such techniques as
technical analysis (widely covered in Investor's Business Daily, which I stopped subscribing to last week for it's overemphasis on the technique). But he also shows some of the fallacies in more fundamental analysis of companies used successfully by such investor's as Warren Buffet. His central tenet throughout the book is this: the supposed advantages of most techniques could just as easily be the product of luck as it could be of innate skill. And he backs it up as well.
A large percentage of his book is devoted to examples and game theory. I won't go into it here, but watch gkr and I might include a few of them as well as how I can see these things applying. If nothing else, they are fun.