Just started a new book *The Physics of Wall Street: Brief History of Predicting the Unpredictable*. The seeds of decision making in the presence of uncertainty, started long ago with Louis Bachelier's *A Theory of Speculation.*

This work, started in 1892, and published in 1914, lays the groundwork for the mathematics of making choices in the presence of uncertainty.

March 29, 1900, is likely the day mathematical finance was born. On that day a French doctoral student, Louis Bachelier, successfully defended his thesis *Theorie de la Speculation* at the Sorbonne. The jury, noting the topic was far different from any of those considered by other candidates, appreciated its high degree of originality.

In the to the book left, with commentary and background, of Bachelier's seminal work is provided in English. The thesis is a remarkable document. In mathematical terms, Bachelier's achievement was to introduce many of the concepts of what is now known as stochastic analysis. His purpose of the thesis was to provide a theory for the valuation of financial options. He came up with a formula that is both correct on its own terms and surprisingly close to the Nobel Prize-winning solution to the option pricing problem by Fischer Black, Myron Scholes, and Robert Merton in 1973, the first decisive advance since 1900.

Those options theories, are the basis of Real-Options. RO are used in making decisions about future *values* for investments - many in the IT domain - based on probabilistic outcomes for valuation of capital budgeting decisions. A **real option** itself, is the right — but not the obligation — to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project in the presence of uncertainty.

Many in the anti-estimates business may want to read about how *making decisions in the presence of uncertainty *is core to all business management, investment decisions, any decision about spending money when the outcome of that decision is probabilistic, based on the underlying statistical processes that drive these outcomes. So when we read, ask *how can this actually be the case?* Time to ask if the basis of mathematical decision making got suspended?