How Will The Quant Models Change The World of Finance?

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?

Some of the hedge funds that do black box trading have been very successful in the past 10 - 20 years. One of the best hedge funds started in 1982 by James Simons, Renaissance Technologies (https://www.renfund.com) is said to be one of the most successful hedge funds in the human history. It currently has more than $15 billion in assets under management. Since 1989, the company's $5 billion Medallion Fund has averaged 35% annual returns, after fees.

Video clip below tells a story about greed, fear and randomness from the insides of Wall Street.


Anonymous said...

that is what Goldman Sachs is all about!!!

Editor said...

Quant will never die... the market needs the quant force to improve market efficiency

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