I've stumbled across a very interesting interview with a ph.d. quant researcher guy: http://forex-hunter.blogspot.com/2009/11/interview-dr-mikhail-kopytine-talks.html Great advice for all traders, discretionary and quants alike Good like trading everyone! Today should be interesting, be careful out there . . . HiddenAgenda
Do you realise that quants are responsible for all of the stock market crashes since 87 ? Black Scholes/Portfolio Insurance - FAIL Value At Risk - FAIL Gaussian Copula - FAIL The majority of quants are developing IT systems that can ultimately be overriden by cockney barrow boys who actually know the risk and how to trade. The whole concept of the 'big boys' employing quants to write software that will predict the direction of the markets is a MYTH. It is however, in vogue, to go on to the interweb and claim to be a quant who can predict the markets. It is, of course, all bullshit. Just more interweb crap to keep wannabee traders looking for a holy grail.
Right . .. . and quants are also responsible for the global warming and all other problems on this planet . . . A group of nuclear physicists had invented the atomic bomb. Does this mean we should blame Dr. Ernie Chan or David Leinweber for the fact that various countries now have large nuclear arsenals? I don't think so . . . And as far as trading is concerned, as someone once famously said: "The average retail trader by definition does not stand a chance and the best advice to such a person is indeed: stop being average. A herd-following trader is doomed just like an artist without individuality."
That's pretty silly... How is it that the quants are to blame for all these things that you list? That's like blaming Einstein for Hiroshima or Karl Marx for the October Revolution...
Not at all. Even now, the idiots that devised all of these clever formulas that got everyone selling at the same time are advocating a fix with smarter formulas. The reliance on bad math is getting us into more and more trouble in the financial world. We are relying on smart guys that never placed a trade to tell us what the risk is. The most usual fundamental flaw in their models is that the models don't take into account he impact of people acting on the model. How much more suffering should we withstand at the hands of smart idiots who think that the world of finance can be quantified and who can't realise that the 5th time you see a 100 year storm in a year that it is no longer a 100 year storm ? Of course, some blame goes on the shoulders of the people that took excessive risk because these 'smart' guys told them their risk was low - but to be honest - if it came down to the guy in the corner shop and a Quant telling me what the next big thing was - I think I'd go with the corner shop guy.
As someone said, forecasting is difficult, especially if you try to forecast the future . . . I mean, think about the people who had made a conscious, calculated bet on Google stock at the IPO price level . .. Now THOSE people are the ultimate forecasters, if you ask me. .. I would even go so far as to call them the ULTIMATE WIZARD FORECASTERS They're probably drinking cocktails in the Bahamas now, and enjoying the sun, while your and I are still talking
It is beyond the scope of what we can post on this forum to discuss the complex formulas that keep causing massive crashes in the market. Should we start with 1987, Black Scholes & Portfolio insurance ? Are you in denial that the whole crash was caused by people following rules devised by mathematicians that told them to sell when the market moved against them ? That the fact that everyone was using the same rules caused the most massive drop in the markets in a single day ever ? What is it, apart from what has been WIDELY published that is at question here ? It is an unrefutable fact that the academic world has taken the world of finance from a practical skill to a fake science over the past 50 years. Would you ask for proof that the world is round ? Tell you what - have a read of this article by Pablo Triana before you reply : http://www.wilmott.com/blogs/PabloT...2/THE-DAY-WHEN-BLACKSCHOLES-MADE-BLACKSCHOLES