Recipe for Disaster: The Formula That Killed Wallstreet

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Gman's picture
Gman
Status: Member (Offline)
Joined: Feb 11 2009
Posts: 7
Recipe for Disaster: The Formula That Killed Wallstreet

This article in Wired Magazine gives a sensible explanation of how quantitative analysis led otherwise smart people to make fatal decisions. It covers the issue of CDO's and CDS's.A good read and should be helpful to many of the people on this forum.

 

http://www.wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=1

 

 

 

SamLinder's picture
SamLinder
Status: Diamond Member (Offline)
Joined: Jul 10 2008
Posts: 1499
Re: Recipe for Disaster: The Formula That Killed Wallstreet

Money is not the root of all evil - Greed is the root of all evil!

Every time, he would warn them that it was not suitable for use in risk management or valuation.

In hindsight, ignoring those warnings looks foolhardy. But at the time, it was easy. Banks dismissed them, partly because the managers empowered to apply the brakes didn't understand the arguments between various arms of the quant universe. Besides, they were making too much money to stop.

(Emphasis in last sentence added by me) 

 

Great first post Gman. Welcome!

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