Pages 25-28

A little family history from Fischer's side and also the side of his wife, Libby Zemp. The Fischers and the Zemps had strong, determined parents that instigated strong morals for their children.

The siblings of Fischer were quite successful. Most found themselves in upper management of large organizations such as banks or power plants. One sister, Louise, followed a modeling career in New York. Fischer was interested in the sciences but took opportunities in other areas as they arose.

The Libby family did not have so much fame but focused on strong morals and self-discipline. Libby was an only child. She loved math and later majored in mathematics at Converse College along with a minor in English. She met Fischer while at a party. Fischer was, at that time working at Potomac Electric as an engineer.

They married in June 1936 and were quite involved in an elaborate social life while living in Georgetown. However, being raised in the Depression, they were good savers, even saving $50 a week, half their income at the time.

Thou Living Ray of Intellectual Fire, p 23-25

« The act of a man creating is the act of a whole man, that it is rather than the product that makes it good and worthy. » Jerome S. Bruner, On Knowing (1962, p.17)

Fischer Black grew up in Bronxville, New York. The neighborhood was composed of wealthy people. While the parents were occupied with elite sports and cocktail parties, children were in charge of the service. Thus, children were used to take part in events organized by the upper society, a really good thing when you know you will have a successful career and you will have to participate to many of those events during your life.

In 1954, he went to visit Harvard College with his parents but stayed in the car. His parents thought he could become a good doctor but Fischer chose a career in science. This college was the only one for which he applied. As he was the “number one candidate” from the elite Bronxville High School, he had no trouble to be accepted in it.

The only one reason he chose Harvard was for its Freshman Glee Club. Indeed, as a math and science geek, he was awkward in social situations. According to him, the choral groups provided social contacts.

With three of his high school friends, he created the group called “the American Society of Creators, Apostles, and Prophets”. One of them, Georges Amis, his best friend, defined Fischer as “the personification of Oriental mystery”.

Fischer's sources of creativity (Pages 20-22)

Not only Fischer has two distinctive sides, he can switch from one to another regarding the situation. The interactive mode is useful while performing his daily tasks at work then he gets back to the creation mode once thinking and chilling at home.

Fischer Black is a man of experience: leading people and giving orientations to his team in an effective communicative way. The price he had to pay to get in there was aloneness. He lived and loved to work. Divorced twice, he decided to find comfort outside the marriage.

He still remembers his childhood when he was open to the world of simple emotions, this is the core of his personal approach: scrutinizing the world through the eyes of an innocent child, avoiding any kind of prejudgments so that he will not miss any detail. This is his secret to improve creativity.

Furthermore, not only thinking like a child matters, another important factor was the strategies for research and communication. Last but not least, the CAPM model was for Fischer the ultimate source of creativity, letting him know what to do with his life.

The origins of Fischer's success: a strategic methodology and a strong commitment. (Pages 15 -20)

Beyond the transformation of financial institutions to come, those new perceptions of risk and time, will soon allow people to operate a change in their ways of living. To this concern, Fischer Black showed the example, acting as "a man from the CAPM future" in both in personal and professional life.

Although Fischer had a really strong capacity to forecast the future, most of his success in surfing the revolution of financial market, comes from the hard work he put in understanding the actual world, he was part of, by the use of strong research and communication strategies.

First, for his researches and because of his need for high variance and regulation of his thinking, Fischer used as much as interactions with others as he could. According to the problem he was facing at a moment, he used to launch a topic, get people to talk about it, and save their ideas on note cards. After that he used to conserve all the notes reviewed and organized into his colossal elaborate filling system, preferring to focus on his true ability of thinking. That what is called, his interactive mode.

On the other hand, because of his very nature, Fischer used to rely on select gifted communicators to help him interface with others on a daily basis, and then to rely on written communication when dealing with the hard-won product of his creative thought. Taking inspiration from the manuals of Rudolf Flesch, he learnt how to wrote in a sort of universal code that could run on any brain. This is the Fischer's creation mode.

To conclude on this part of the prologue, I would like to enhance the strong commitment that Fischer demonstrated during his whole life by letting surrounding himself by his task, in one or the other of these two modes.

Risk and Time

Beginning with a solid background in CAPM, Black was ready to consider risk as it really was. One of the first things he noticed was the incredible amount of risk that time imposes on people and investments. This risk stems from the ever changing nature of the world in which we live. With our understanding and visions as limited as they are, we need another way to consider the risk that time forces onto us.

One area in which Black noticed great opportunity for improvement was future wages. Black noted that wages are one the primary method people accrue wealth. Jobs with the highest wages require high levels of specialization. The high levels of specialization expose people to risk. One possible counter to this risk, is to diversify the skill they posses. Black followed this council as he successfully worked in both academia and business.

Another way people can safeguard their future wages is to form long term contracts. These contracts give people the stability and commitment that are necessary to endure the shifts that so frequently sweep the business world. This is similar to a reinvestment risk that investors should consider when searching for proper investments.

The final way that risk over time can be countered is through the use of simple models. Black noticed that simple models have a tendency to survive much better than complicated ones. Similarly, people who have simple marketable skills tend to fare better than people with highly technical and therefore transient skills. Nothing showed these beliefs more than Black’s adherence to the CAPM model, or his later options pricing model.

Pages 10-12

After establishing himself at Goldman Sachs, Fischer Black published his second book Exploring General Equalibrium. The book had been a long time coming, with 30 years of hard thought put into the book. The book looked at large and complicated economic problems from Black's brilliant finance point of view. Being Ignorant and close-minded most economists set aside the ideas in the book, holding fast to their narrow ways of thinking.

Black was born in 1938, into a generation that took foolish risk on as second nature. In his younger years Black took dangerous risks that only had life threatening rewards. He took on a lifestyle of sex and drugs. Black's first marriage ended in a bitter divorce, only to move on to watch his second fiancee die a slow death. Black hit rock-bottom, and found comfort in the Capital Asset Pricing Model (CAPM) of all things.

The CAPM gave Black a scientific basis to measure risk and reward. He no longer took risks that didn't potentially have a great reward. He viewed the principles of the CAPM far beyond stocks and markets, it was now a scientific way to make conscious decisions. Black's lifestyle flipped a 180: he substiuted alchohol for water, his drugs were now vegetables and whole foods, he became a safe driver and wore his seat belt, and took all precautions too prevent cancer.

Pages 7-10

Fischer Black was not one for conventional wisdom. He enjoyed finding a better solution to a problem that had already been solved to the satisfaction of most. If there was a problem whose solution wasn't perfect, he would toss aside that solution and find one that was.

Unfortunately this didn't quite endear himself to all his colleagues. Many of his theories were rejected at the time of their introduction, only to find acceptance later, and some are still under debate.

His greatest success, the Black-Scholes model, traveled almost instantaneously from the domain of academia to the desks of the professional world. This model, along with others he developed throughout his career, have established his prominence in the financial world as an expert across several disciplines.

Black looked at financial problems the same way he looked at video games, finding new and better ways to solve old problems. For him, merely reaching the goal wasn't enough, he wanted to find the best solution.

Perhaps the greatest lesson to be learned from Fischer Black is that what is accepted is not always true. To the chagrin of many of his colleagues, he always questioned the way things were done.

One of capitalism's most enduring traits is the importance of innovation. New and better ideas are accepted by the marketplace, sustaining further economic growth. In this regard, Black's manner of questioning everything should be not only adopted, but encouraged.

Though the American academic system rarely - if ever - encourages or rewards challenging the status quo, the innovative spirit should always be kindled if any economy hopes to thrive.