Lecturing Birds on Flying - Can Mathematical Theories Destroy the Financial Markets?

Zusatztext "Triana's answer is experience honed by common sense." (FT.com! August 23rd 2009)"He makes many good points" (The-Actuary.org.uk! September 1st 2009)"...calls for a return to "good old fashioned commonsense decision making"."--Daily Express! June 4th 2009"This book explains how it is that theoretical finance can fail dramatically in the real world."--Finanace & Management Faculty! June 2009"The book is fizzing with ideas"--The Economist! June 29th 2009 Informationen zum Autor PABLO TRIANA has successful derivatives ex-perience at all levels: on the trading floor and as a professor, consultant, and author. He is a frequent contributor to business publications, including the Financial Times, Forbes.com, Breakingviews.com, and Risk magazine , among others. Triana is also the author of Corporate Derivatives . He holds a master of science from the Stern School of Business, New York University, and a master of arts from American University. Klappentext Führende Finanzexperten diskutieren, auch konvers, seit Jahren über den Konflikt zwischen Theorie und Praxis. Als einer der ersten befasste sich Nassim Taleb in seinem, eher für Finanzexperten geschriebenen Buch "Dynamic Hedging" mit diesem Problem. Pablo Triana bereitet in "Lecturing Birds on Flying" das Thema nun für Laien verständlich auf und erläutert, warum Finanztheorien in der Praxis oftmals jegliche Relevanz verlieren. Dabei geht er nicht auf finanztechnische Details ein, sondern zeigt, dass allgemein anerkannte und täglich angewandte Theorien für unsere Wirtschaftswelt schädlich sein können. Sehr oft führen quantitative Modelle, mit denen Hedge Fonds und Investmentbanken (aber auch Regulierungsbehörden und Rating-Agenturen) arbeiten zu einem Zusammenbruch des Marktes. Diese sogenannten Modelle führen zu falschen Entscheidungen, wiegen Investoren in falscher Sicherheit und sanktionieren eher fragwürdige Verhaltensweisen. So waren diese Modelle maßgeblich für den Börsencrash des Jahres 1987, die LTCM-Pleite 1998, die Kreditkrise 2008 und viele andere größere oder kleinere Crashs verantwortlich. Seit Jahren schreibt Pablo Triana über die Grenzen dieser Art mathematischer Berechnungen und zeigt nun, welche Konsequenzen dieser Ansatz für unsere Märkte hat und warum das blinde Vertrauen auf quantitative Maximen eine große Gefahr in sich birgt. Zusammenfassung An intriguing look at how financial models have repeatedly failed our markets, including now Leading and contrarian thinkers have been talking for years about the conflicts between theoretical and real finance. Nassim Taleb first addressed the issue in his technical treatise on options, Dynamic Hedging. Inhaltsverzeichnis Foreword xi Preface: An Evening at NYU, Taleb's Article, and a Credit Crisis xix Mathew Gladstein's Complaisance xliii Essentials Chapter 1 Playing God 3 ¿ It's tough to model human action ¿ Finance is not as religious as physics ¿ Black Swans make things harder ¿ The markets are not Normal and the past is a faulty guide ¿ Should we care that theorists persist? ¿ Chapter 2 The Financial Economics Fiefdom 29 ¿ Virginity matters ¿ When describing reality was okay ¿ It's the incentives, stupid ¿ Many obstacles to reform ¿ Heeding Fischer Black's message ¿ Chapter 3 Quant Invasion 59 ¿ Machine learning comes to finance ¿ It's a computational thing ¿ Models live here, too ¿ Quant punting ¿ Interesting enough for a movie ¿ Critique Chapter 4 Copulated Nightmares 93 ¿ Abrupt reform, if not so much prison ¿ Modeling death ¿ The 2005 pre-warning ¿ Rating us into hell ¿ A disapproving grin ¿ Chapter 5 Blah VaR Blah 127 ¿ Insalubrious charlatanism ¿ Tracking a true culprit ¿ Credit truths ¿ A long rap sheet of evidence ¿ The police ar...

List of contents

Foreword.
 
Preface: An Evening at NYU, Taleb's Article, and a Credit Crisis.
 
Mathew Gladstein's Complaisanc.
 
ESSENTIALS.
 
CHAPTER 1 PLAYING GOD.
 
It's tough to model human action.
 
Finance is not as religious as physics.
 
Black Swans make things harder.
 
The markets are not Normal and the past is a faulty guide.
 
Should we care that theorists persist?
 
CHAPTER 2 THE FINANCIAL ECONOMICS FIEFDOM.
 
Virginity matters.
 
When describing reality was okay.
 
It's the incentives, stupid.
 
Many obstacles to reform.
 
Heeding Fischer Black's message.
 
CHAPTER 3 QUANT INVASION.
 
Machine learning comes to finance.
 
It's a computational thing.
 
Models live here, too.
 
Quant punting.
 
Interesting enough for a movie.
 
CRITIQUE.
 
CHAPTER 4 COPULATED NIGHTMARES.
 
Abrupt reform, if not so much prison.
 
Modeling death.
 
The 2005 pre-warning.
 
Rating us into hell.
 
A disapproving grin.
 
CHAPTER 5 BLAH VaR BLAH.
 
Insalubrious charlatanism.
 
Tracking a true culprit.
 
Credit truths.
 
A long rap sheet of evidence.
 
The police are in on it.
 
CHAPTER 6 BLUE IS NOT GREEN.
 
Lehman did die.
 
Anything is possible.
 
Buffett versus the Black Swan.
 
Stubbornly holding the theoretical fort.
 
An end to indoctrination.
 
CHAPTER 7 THE BLACK-SCHOLES CONUNDRUM.
 
Once upon a time at MIT.
 
Frowning, not smiling.
 
How Black was that Monday.
 
A devastating KO.
 
The Taleb & Haug critique.
 
CONCLUSIONS.
 
CHAPTER 8 BLACK SWAN DECEIT?
 
The tired "perfect storm" alibi may be a facade.
 
Indoctrinating clients and investors.
 
The unseemly marketers of academic dogma.
 
Do as I say, not as I do.
 
Glorifying complexity.
 
CHAPTER 9 AN UNHEALTHY YEARNING FOR PRECISION.
 
Dangerous voluntary enslavement.
 
Let freedom ring.
 
Normality can kill you.
 
A VIXing issue.
 
Protect those derivatives.
 
CHAPTER 10 WE NEED FAT TONY.
 
FINALE SHOULD THE NOBEL PRIZE IN ECONOMICS BE ELIMINATED?
 
Notes.
 
Acknowledgments.
 
About the Author.
 
Index.

Report

"Points to the over-reliance on financial models and quantitative techniques as what ultimately brought down the financial markets. Sure, many of us feel that we have heard enough on this topic-do we really need another book about the financial mess and how it all began? Yes, we do. . . Triana's impressive knowledge and experience allows him to dig deeper and go beyond the mere musings of his published peers."
--Risk Management Magazine
 
"Readers of this book may make quite a lot of noise. . . Some will cheer out loud; others will yelp as cherished beliefs are torn into. At times, the book is deliberately incendiary. Triana is trying to stimulate debate. . . On the whole, this is a good read."
--The Financial Times, July 23rd 2009
 
"...calls for a return to "good old fashioned commonsense decision making"."
--Daily Express, June 4th 2009
 
"This book explains how it is that theoretical finance can fail dramatically in the real world."
--Finanace & Management Faculty, June 2009
 
"The book is fizzing with ideas"
--The Economist, June 29th 2009
 
" Triana's book will ruffle a lot of feathers, but it also will make many readers think hard."
--BizEd
 
"A deeply unsettling insider account of how bogus mathematics overtook finance and was a key contributor to the financial collapse of 2008-2009 . . . With deep insight, Triana deconstructs the "pillars" of mathematical finance . . . Like Nassim Taleb, celebrated author of The Black Swan (2007), Triana is calling for major surgical reform of such business schools' curricula. An important addition to our deeper understanding of how finance must be reformed."
--Hazel Henderson, Ethical Markets
 
"Should the Nobel Prize for economics be abolished? That is one of the suggestions in Pablo Triana's provocative book "Lecturing Birds on Flying: Can Mathematical Theories Destroy the Markets?" . . . As Nassim Nicholas Taleb writes in his witty introduction to the book, giving someone the wrong map is worse than giving them no map at all. . . a good read. Some may find the elaborate prose closer to Cervantes than to, say, Nobel Prize winner Robert Merton -- annoying. But perhaps Cervantes is the right writer to emulate when tilting at windmills. "
--LA Times
 
"The highlight of Triana's book is his valuable insights into the problems with mathematical economic models, which make his argument quite forceful."
--Shanghaidaily.com

Product details

• Authors: Taleb, TRIANA, Pablo Triana, Triana Pablo
• Assisted by: Taleb Nassim Nicholas (Foreword)
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 25.06.2009
• EAN: 9780470406755
• ISBN: 978-0-470-40675-5
• No. of pages: 400
• Dimensions: 161 mm x 235 mm x 30 mm
• Subjects: Social sciences, law, business > Business > Business administration; Finanzwirtschaft, Kapitalmarkt, Finance & Investments, Finanz- u. Anlagewesen, Investments & Securities