David's Reviews > The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It
The author of this book makes a big deal of the fact that the major players in his story treated stock price time series like Gaussian random variables. And they lost big time in 2008. Two of the minor players in the book, Nassim Taleb (author of The Black Swan: The Impact of the Highly Improbable) and Benoit Mandelbrot (of fractal fame, and author of The (Mis)Behavior of Markets and Fractals and Scaling In Finance) had an entirely different concept. They treat stock prices as distributions with very large tails. (They did alright in 2008.) Well, duh!! Why didn't any of the "genius" quants understand this very basic concept? They all adopted a super-simplistic mathematical model that was in vogue, and got themselves and their companies into a heap of trouble. Were they geniuses? Well, in a sense they were, since they were able to get incredibly high-paying jobs. But on the other hand, they seem to have been mathematical lemmings.
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