There's Enough Math in Finance Already. What's Missing is Imagination.

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[Nickuncle]

Well...I must say he has a point. I've been doing so many Financial problems and the only imagination comes from establishing an equation for every scenario.

[HaiLeQuang]

This dazzled me even though the fact that I haven't learnt enough math in finance

[TunioMir]

Imagine this: A world where there IS perfect knowledge, a world where computers DO have ALL the information and the processing ability deal with it. I believe the only reason math is lacking is because there aren't enough variables considered.

[zicongma]

His book was an interesting read, do give it a try if you are interested in this area.

[jonasianbuddy]

I saw the remake with Branden Fraser in it

[mindauggas]

Is the model self-referential? i.e. does it take into account when predicting the future market condition it's own actions now? Can anyone approve or decline this? And explain in few words why?

[minimalist]

no this guy is spot on, try to not apply the occupy wall street movement for a second and think purely as acting as individual. (BTW i support the ows movement). He's talk in terms of an investor, trying read the markets, foresee where capital will move, what will be vital, e.g. silicon valley late 80's, FDI in China 90's

[MoneyR]

If the models are based on predictive input and the future can’t be predicted, then isn’t everything a sham?

[schrodingerscat]

Derman is awesome. I love the point he is making here

[orjihvy]

But there are so many other things where imagination is needed. Is imagination applied to better forecasting prices, even if it improves market efficiency, that worthwhile, beyond monetarily? And how much larger is the marginal impact relative to so many other potential endeavors?

[orientrat]

there are tons of different kinds of financial models. There are simulation models such as monte carlo models. There are also stochastic models such as the black scholes model and other related options and interest rate models. And there are ibanking/dcf models which are basically just companies' financial statements put into a spreadsheet

[cammyjeee]

I'm not shooting that fookin' prawn!!!

[TempestTossedWaters]

@dilic Stealing means taking something from an another person so that the person no longer has it. You can't steal data.

[aSheeple]

@TunioMir what if there are an infinite number of variables? in reality you would at least have to include the minds of all inhabitants of planet earth, thats 7 billion variables. but that would still accumulate errors unless you went smaller. say all the cells in all human's brains, but there would still be errors, so you have to go smaller. like all molecules in all human you can see where that's going. at some point it gets impractical to become more accurate.

[Kliveive]

Ha!
What's missing in Finance is common sense.
The whole is Europe is screwed because everyone ignored the obvious... don't borrow money you can't pay back.

[supermonkeywtf]

South Africans and math, its like pen and paper.

[xDaBeginninGx]

looks like im renting bedazzled tonight

[jinmane]

@Kenji314159 It's in the video. Emanuel Derman.

[Kenji]

I think it's the opposite. There's enough imagination, speculation and expectations in finance. We have to bring rationality and carefulness in finance! Which is basically equal to maths.

[natashaphillips]

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