Indianexpress.com : comments : Of market and math

You are here: IE » Story » Comment »

Of market and math

Remember the neocons after the Iraq war went bad? Many long-standing critics of mainstream economics — they are getting a large audience now — are arguing that the financial crisis has placed economists close to the same position. To be more specific, a subset of mainstream economics is in the ....Read more

Comments

Post comment

2 Comments |

CRASH OF 2008By: sanjiv | Monday , 24 Nov '08 15:57:22 PM Reply | Forward Definition of Risk as Standrad Deviation around Mean, Beta, the EMH Concept in fact the foundation of Modern Finance has been repeatdely proven wrong over last 20-30 years. VaR, another holy mantra was criticised as a "single digit magic number produced by pioneers of pecuniary perils to mislead the senior management in believing that market risk is properly controlled" BLACK-SCHOLE-MERTON model the magic formulae for option valuation was proved to be a disaster within a year of its authors getting Nobel award. The mathematical disasters, weapons of mass destructions, toxic assets all are well documented and known facts. In spite of this historical perspective, the genius of Wall Street invited the disasters. Irrationality and herd mentality plagues not only the common folks but also the corporate honchos and double doctorate in Maths, Physics dominating the Wall Street.

Of market and mathBy: Rajaram B | Monday , 24 Nov '08 11:30:00 AM Reply | Forward Well written- finally the innocent assumption that market plays straight and it is only a matter of assuming normal distribution with low standard deviation which did not prove to be right is right... but solution has to factor in correcting the asymmetrical information where the credit rating agencies should have been more honest while the bundling the risks for re-sale, will remain. It is a matter of honesty and integrity. So long as fees become important, both auditors and the credit rating agencies are liable to be seduced at one point or the other. The trick is to become cautious when some groups of people without creating real physical wealth or service , start becoming stinkingly rich, that is parasites' income falling outside the normal distribution curve for incomes, monitored stochastically, for rate of change, warning bells should ring that a Ponzi's game is on.

Post a Comment

Name:

Email:

Title:

Maximum characters allowed

Comment:

TERMS OF USE:
The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).

I agree to the terms of use.