Excessive and inappropriate reliance on mathematical models has led to...
1) October 1987 - crash caused by portfolio "insurance"
2) September 1998 - LTCM Collapse
3) October-December 2007 - Subprime CDO collapse
For guys that are supposed to be so smart, the quants sure do make the same stupid mistakes time and time again, don't they?
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1 comment:
That, of course, is the enduring dilemma of the LTCM fiasco. These people who run the money world really aren't all that good.
JAMES K. GALBRAITH
Professor of Economics
University of Texas
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