Quants: The Alchemists of Wall Street

[The One]

Quants are the math wizards and computer programmers in the engine room of our global financial system who designed the financial products that almost crashed Wall st.

The credit crunch has shown how the global financial system has become increasingly dependent on mathematical models trying to quantify human (economic) behavior.

Now the quants are at the heart of yet another technological revolution in finance: trading at the speed of light.

What are the risks of treating the economy and its markets as a complex machine? Will we be able to keep control of this model-based financial system, or have we created a monster?

A story about greed, fear and randomness from the insides of Wall Street

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[crosby]

i haven't finished watching this yet, but i'm wondering how David X. Li, a chinese quantitative analyst fits into what we have watched here. from what i understand, he was noted as the world's most influential actuarian. in the early 2000's he pioneered the gaussian copula model for collateralized debt obligations. i know that hedging is a dangerous game and you better have the money to play the risk. my ex-husband thought he was a wizard at it until one day he lost a good portion of his life savings. so from the outset of this 'bad model', from the very start, the only ones who were going to make money were the ones who knew the outcome mathematically or when the bubble would bust...... puts and stays....dangerous ground. for a lot of people who have lost their homes from this 'collaterlized mortgage debacle' the so-called 'subprime' mortgage deal, there just might be the strategy of a 'class action' law suit.

excellent thread. thanks a bunch!
regards, corson

[Mad Hatter]

Thanks The One that was fascinating and more than a few home truths in it...

I've had my suspicions for a while now but had no idea it had come down to who is on the shortest bit of fibre optic cable. Interesting that the algorithm writer seemd genuinely upset by timing dicrepancies. Well they better not let him in on the dirty little secret of off market trades as that might tilt his sense of justice completely out of whack!! :eek:

Interestingly enough they held up the systems achilles heel for all to see (United Airlines). No need for Anonymous & DDOS attacks. We can do it ourselves by simply starting a rumour and get it to go viral...food for thought. :cool:

I just can't help but imagine the benefits that would accrue to mankind if we can just stop wasting time on money and minds like these on the persuit of it by simply batering a suitable life style in exchange for their love of puzzle solving...