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Working Knowledge: Think! Apply!
"How do I guess the future? Based on the omens of the present. The secret is here in the present. If you pay attention to the present, you can improve upon it. And, if you improve on the present, what comes later will also be better. Forget the future, and live each day according to the teachings, confident that God loves his children. Each day, in itself, brings with it an eternity."
- Paulo Coelho in The Alchemist

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Working Knowledge: Think! Apply!
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Latest Developments In Global Finance, Economy, and Risk Management

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  • Working Knowledge: Think! Apply!
    "The biggest specific lesson from the experience is that the assumption of normality in returns is not just flat wrong, but dangerous. At least you can say that assumptions of perfect liquidity and market efficiency are approximations - but using a normal distribution actually leaves you exposed to the risks you most need to capture. People have known since Mandelbrot in 1963 that returns are not normally distributed, but because of its ease of use and simplicity it became very popular. But you see evidence refuting it every day."
    -- Emanuel Derman, 'On Model Risks and Quantitative Finance,' Risk Magazine, 03 Oct 2011.


     

     


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