Skip to main content

View Diary: The algebra formula that saved an industry (258 comments)

Comment Preferences

  •  can a computer (7+ / 0-)

    Also tell you what you are inputting? Last year I studied for an exam that tested derivatives among other things. I learned a lot about how derivatives are priced and analyzed.

    How many people in these big firms like GS knew any of that? All they knew was enter some parameters into the computer and out spits a billion dollars.

    Understanding math also gives you an intuitive feel for when something doesn't "add up." Back in 05 or so the housing prices for real estate just didn't feel right. They felt out of control. Sure CNBC told me everything was great but I did some research and looked at some scary graphs and sure enough... this was correct!

    Maybe if more people were informed about mathematics instead of listening to dingbats like Cohen, we wouldn't have the problems we do.

    •  The old GIGO conundrum (7+ / 0-)

      Garbage In Garbage Out.
       Lost track of how many times I've encountered that problem from professional people who were supposedly trained to know better.  They focused on the end product, not understanding that what they were putting in (or not checking what was put in) was questionable to begin with.

      My Karma just ran over your Dogma

      by FoundingFatherDAR on Mon Apr 19, 2010 at 11:29:26 AM PDT

      [ Parent ]

    •  The Wall Street firms hired a lot of (2+ / 0-)
      Recommended by:
      condorcet, Larsstephens

      Math and physics people, to set up the models for computerized trading, arbitrage and for risk analysis. They we called "Quants" (for Quantitative Analyst).

      These guys made a lot of money, but part of the problem was that they didn't think like Hedge Fund managers, and the Hedge fund managers would say "Hey, I don't understand the details, but these guys are Phd Mathematicians, so what could go wrong...?

      And the quants would say "hey, you didn't tell me that cheaters are allowed to use these formulas and pretend they represent all versions of reality..."

      Without geometry, life is pointless. And blues harmonica players suck.

      by blindcynic on Mon Apr 19, 2010 at 01:16:17 PM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

  • Recommended (145)
  • Community (63)
  • 2016 (41)
  • Environment (40)
  • Republicans (37)
  • Elections (34)
  • Culture (34)
  • Bernie Sanders (32)
  • Memorial Day (31)
  • Media (26)
  • Labor (25)
  • Climate Change (25)
  • Education (24)
  • Civil Rights (23)
  • Barack Obama (23)
  • Spam (23)
  • Trans-Pacific Partnership (22)
  • GOP (22)
  • Hillary Clinton (21)
  • Science (20)
  • Click here for the mobile view of the site