Postscript
Mandelbrot may also have incorporated and claimed some original ideas and expressions of other Elliott
wave practitioners. The preceding pages discuss, for example, the wording of Mandelbrot’s claims
to his model’s forecasting value that mirror expressions appearing in Elliott Wave Principle.
Perhaps the following quotations will serve further to demonstrate that Mandelbrot has read and absorbed
the expressions in that volume. Compare this quote:
Can we both theorize and observe that the stock market
operates on the same mathematical basis as so many natural phenomena? The answer is yes.... In its
broadest sense, the Wave Principle suggests the idea that the same law that shapes living creatures and
galaxies is inherent in the spirit and activities of men en masse.38
—Frost and Prechter, Elliott Wave Principle, 1978
with this one, which opens Mandelbrot’s article:
The geometry that describes the shape of coastlines and the patterns of galaxies also elucidates
how stock prices soar and plummet.39
This idea is repeated in the article, as follows:
Fractal patterns appear not just in the price changes of securities but in the distribution of galaxies throughout the cosmos [and]
in the shape of coastlines….40
—Mandelbrot, “A Multifractal Walk Down Wall Street,” 1999
While I am prone to quip that
all these lines could be part of the same fractal object, I will leave it to you to judge their similarity.
Cynics
have often objected to comments such as the one quoted above from Elliott Wave Principle on
the grounds that its implications are too grand. As you can see, one of the most renowned scientists in
the world is now saying essentially the same thing.
A Market Forecast?
Mandelbrot’s article ends with this line: “The new modeling techniques…also recognize
the mariner’s warning that, as recent events demonstrate, deserves to be heeded: On even the
calmest sea, a gale may be just over the horizon.” One might take this as simply a general
comment about the suddenness of major movements within the financial fractal except that its imagery is
specific to market panics. Thus, in conjunction with the magazine’s table of contents introduction
saying, “When will the Dow top 10,000? When will it crash?”, it stands as a sentence that
Mandelbrot would probably love to have quoted when the stock market does crash. It would seem so prescient.
Yet Mandelbrot’s method provides no basis for anticipating any such thing. Any implication that
it does is false. Only the Wave Principle — or perhaps some other specific market model — can
do that. If his closing line is to be accepted as a knowing hint of coming events, as an indication that
Mandelbrot was bearish on the stock market, then we would have to ask him on what basis he held
such an opinion. One hopes that he did not simply purloin Elliott wave analysts’ long term stock
market outlook, which has received worldwide publicity through countless books and articles.
NOTES
38. See endnote 8. p.114, 121.
39. See endnote 2.
40. Ibid. p.71.
Continue with
Mandelbrot's Reply and Prechter's Response
Scientific
Controversy Introduction - Mandelbrot's Article - Prechter's
Letter to the Editor - Prechter's Response
Follow-up Responses - Postscript - Mandelbrot's
Reply and Prechter's Response - Socionomics
