Mandelbrot does not deny intrinsic value, but argues that its use as a unique reliable market anchor is overrated and that trading price differences need not require agreement on such an anchor.

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These arbitrage tactics assume no intrinsic value in the item being sold. They simply observe and forecast a difference in price and try to profit from it. Of course, I am by no means the first to suggest the importance of arbitrage in financial theory. One of the latter-day fixes of orthodox finance, called arbitrage pricing theory, tries to make the most of this. But a full understanding of multifractal markets begins with the realization that the mean is not golden. Chapter 13. In the Lab. If you take the number four streetcar from the center of Zurich, Heading down the Eastern Lakeshore, you will eventually come to the Old Mill Museum. A four-story, century-old factory now housing worthy exhibitions on cereals, the food industry, and the age-old human cycle of famine and surplus, boom and bust. Next door, however, is a kind of laboratory for boom and bust. A test reactor, its founder calls it.

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Cotton prices flipped around so wildly, you could not say that average or variance, the standard parameters of measurement, had much meaning. And what real value would you have assigned to silver in the winter of 1979-1980, when prices nearly trebled in the space of just six weeks. Property prices are no more substantial. As anyone buying or selling a house knows, average prices have no significance. The quoted survey figures are based on just a few sales scattered around a neighborhood and can apparently change by the day. And even those figures show bizarre patterns. In the late 1990s, London house prices more than doubled. So divorced from any idea of intrinsic value did property become that one developer rehabilitated a former public restroom to sell as a small cottage for about £125,000, more than six times the average London wage. To be sure, I do not argue there is no such thing as intrinsic value.