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Technology Stocks : The *NEW* Frank Coluccio Technology Forum

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To: axial who wrote (31314)	9/13/2009 5:53:20 PM
From: Frank A. Coluccio	Read Replies (2) of 46821

Science Unboxed: Wall Street’s Math Wizards Forgot a Few Variables By Steve Lohr \| NY Times Science Section \| September 13, 2009 IN the aftermath of the great meltdown of 2008, Wall Street’s quants have been cast as the financial engineers of profit-driven innovation run amok. They, after all, invented the exotic securities that proved so troublesome. But the real failure, according to finance experts and economists, was in the quants’ mathematical models of risk that suggested the arcane stuff was safe. The risk models proved myopic, they say, because they were too simple-minded. They focused mainly on figures like the expected returns and the default risk of financial instruments. What they didn’t sufficiently take into account was human behavior, specifically the potential for widespread panic. When lots of investors got too scared to buy or sell, markets seized up and the models failed. Cont.: nytimes.com FAC: Note in the left-hand margin, some interesting graphipcs, sidebar articles and a number of video clips featuring a number of key players of last year's unfolding. ------

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