Trillion Dollar Bet Essay Example | Topics and Well Written Essays - 750 words

Trillion Dollar Bet - Essay ExampleQuantitative finance is nevertheless a huge part of institutional investing, but despite that fact there are serene those traders who feel that it is used too much. This in the end creates a certain amount of hostility in the midst of the rocket scientists or quants and the intuitive traders who depend only minimally on mathematics.What is interesting, and similarly unfortunate roughly this tension, is that no one has really conducted a study that would shed light on which approach is more than optimal in terms of making money for either individual investors or financial institutions. much(prenominal) a study would be fascinating, and would give much needed and incredibly valuable information on job strategies. The viewer is given the opportunity to learn of the attempts that have been made to find a numerical formula for risk, which after some decades of query has finally been achieved by Myron Scholes and Fisher Black, with important cont ributions as vigorous from Robert Merton. The Black-Scholes equation is now ubiquitous in financial engineering, and as the program mentions, is greatly used in trading pits to estimate the price of an option. This part of the program is actually very interesting, for it discusses the historical origins of quantitative finance, in feeling at the thesis of Louis Bechalier. ... For example, the factors which lead LTCM to go into liquidation are not immediately known. The viewer is also led to believe that the LTCM organization, through its vast positioning, aggravated the financial turmoil at that time. With the unknown reason behind the ultimate liquidation, any such conclusions or statements first should go through serious research before any final decision is made. No evidence for this is given in the program, and also umteen of the guests fall a certain incline against quantitative finance. Bias on any topic dope lead to an unfortunate sense of crucial facts being potential ly ignored in favor of turnout with a popular idea(s). For starters, one of the guests on the program, Stan Jonas of FINAT Brothers, makes reference to a collection of people who a consumer would want to manage their money. In the end, who are these people and what justifies imputing to them this rare ability Also what is their track record in investment Do they consistently make money, and is this consistency verifiable to an external observer It is these questions which are genuinely important, and is imperative to ask in order to have a fully well rounded ground of the subject matter that is being assessed. Sadly, Jonas does not give any names or examples unfortunately, and his statements do reflect to an already mentioned degree of bias against the practice of mathematical modeling in finance. Such a bias in and of itself is not necessarily bad, but a reader who is really interested in canvass the difference in efficacious between trading strategies, i.e. maybe between thos e that exploit complex mathematics and those that do not, will not gain anything from Jonas statements. Such