Comments on: Dizard on the Uses and Misuses of Financial Models http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html Sun, 22 Nov 2009 20:38:51 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Michael W http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-938 Michael W Tue, 25 Sep 2007 22:05:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-938 The Financial Times and the National Rifle Association are both wrong. The correct statement is not:" Guns do not kill people, people kill people."<br/>The truth is revealed by one little word left out (on purpose of course). The truth is: "Guns do not kill people, people with guns kill people".<br/>The NRA has been self servingly manipulating syllogisms for decades just like the greedy capitalists who have trotted out a bastardization of the real quotation regarding money. Their self serving version goes: "Money is the root of all evil." And then they rip this manipulated statement to pieces in such a way as to excuse any excess in accumulating their money.<br/>After all can there be a more correct definition of AMORAL than someone whose final deciding factor is size of their profit or money?<br/>The real quotation is:" The LOVE of money is the root of all evil".In fact the unfettered love of accumulating money regardless of consequences to others is the root of all evil. When stated as such the power of their manipulated syllogism is turned to revealing their our pathetic addiction to extracting money from others and providing an intellectual smoke screen behind which they can hide. The Financial Times and the National Rifle Association are both wrong. The correct statement is not:” Guns do not kill people, people kill people.”
The truth is revealed by one little word left out (on purpose of course). The truth is: “Guns do not kill people, people with guns kill people”.
The NRA has been self servingly manipulating syllogisms for decades just like the greedy capitalists who have trotted out a bastardization of the real quotation regarding money. Their self serving version goes: “Money is the root of all evil.” And then they rip this manipulated statement to pieces in such a way as to excuse any excess in accumulating their money.
After all can there be a more correct definition of AMORAL than someone whose final deciding factor is size of their profit or money?
The real quotation is:” The LOVE of money is the root of all evil”.In fact the unfettered love of accumulating money regardless of consequences to others is the root of all evil. When stated as such the power of their manipulated syllogism is turned to revealing their our pathetic addiction to extracting money from others and providing an intellectual smoke screen behind which they can hide.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-936 Yves Smith Tue, 25 Sep 2007 19:33:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-936 Anon of 12:31 PM,<br/><br/>Dizard wrote rather colorfully about the role of Gaussian distribution in an earlier FT article; <a HREF="http://www.nakedcapitalism.com/2007/09/journal-tells-us-quants-have-suffered.html" REL="nofollow">scroll down</a> in this post for details. Anon of 12:31 PM,

Dizard wrote rather colorfully about the role of Gaussian distribution in an earlier FT article; scroll down in this post for details.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-935 Yves Smith Tue, 25 Sep 2007 18:03:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-935 a,<br/><br/>I can't comment based on current knowledge, but as of a few years ago some major IBs were running their trading positions off Excel. Similarly, a software developer I know is working for one of the ten biggest hedge funds, in terms of assets under management, to get them off Excel. a,

I can’t comment based on current knowledge, but as of a few years ago some major IBs were running their trading positions off Excel. Similarly, a software developer I know is working for one of the ten biggest hedge funds, in terms of assets under management, to get them off Excel.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-934 Anonymous Tue, 25 Sep 2007 16:31:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-934 Surely if the models can be manipulated by greedy traders then by definition you have a problem with your models. I think this problem goes a little deeper than just human laziness and mendacity, the actual mathematical assumptions are themselves defective because they rely overwhelmingly on Gaussian distribution to calculate the probability of events. In practise 1 in 1000 year events seem to be hitting the markets 2 or 3 times each decade. Surely if the models can be manipulated by greedy traders then by definition you have a problem with your models. I think this problem goes a little deeper than just human laziness and mendacity, the actual mathematical assumptions are themselves defective because they rely overwhelmingly on Gaussian distribution to calculate the probability of events. In practise 1 in 1000 year events seem to be hitting the markets 2 or 3 times each decade.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-930 Anonymous Tue, 25 Sep 2007 11:25:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-930 "the main problem was the intentional obscuring of who benefited"....<br/><br/>Self-interest, we know from Adam Smith, is a wonderful driver of many good things .....<br/><br/>... But Adam Smith lived in an 18th century where other interests and values, most of the time, put a limit on self-interest...<br/><br/>... we don't. We live in complex markets, networks and organizations where, truth be told, the only limits to self-interest will either come from regulation from beyond the firm or regulation from within the firm...<br/><br/>.... "intentional obscuring"? <br/><br/>shell games and ponzi schemes .... the workings of unbounded self-interest even within a firm whose people share responsibility for their collective future....<br/><br/>... but then when everyone is getting rich, it's hard to pull the punch bowl away.... it's hard for some within the firm to be 'designated drivers' “the main problem was the intentional obscuring of who benefited”….

Self-interest, we know from Adam Smith, is a wonderful driver of many good things …..

… But Adam Smith lived in an 18th century where other interests and values, most of the time, put a limit on self-interest…

… we don’t. We live in complex markets, networks and organizations where, truth be told, the only limits to self-interest will either come from regulation from beyond the firm or regulation from within the firm…

…. “intentional obscuring”?

shell games and ponzi schemes …. the workings of unbounded self-interest even within a firm whose people share responsibility for their collective future….

… but then when everyone is getting rich, it’s hard to pull the punch bowl away…. it’s hard for some within the firm to be ‘designated drivers’

]]> By: a http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-929 a Tue, 25 Sep 2007 08:06:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-929 Sorry, I just can't believe that any major IB is using Excel to mark positions. Sorry, I just can’t believe that any major IB is using Excel to mark positions.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-928 Yves Smith Tue, 25 Sep 2007 04:20:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-928 Agreed that Dizard's piece is a bit lazy in that it is overly dependent on one source. However, the quotes from Numerix about risk management are very basic precepts and not controversial. It is nevertheless revealing that there are shops that don't adhere to them. Agreed that Dizard’s piece is a bit lazy in that it is overly dependent on one source. However, the quotes from Numerix about risk management are very basic precepts and not controversial. It is nevertheless revealing that there are shops that don’t adhere to them.

]]> By: v http://www.nakedcapitalism.com/2007/09/dizard-on-uses-and-misuses-of-financial.html#comment-927 v Tue, 25 Sep 2007 04:11:00 +0000 http://www.nakedcapitalism.com/2007/09/dizard-on-the-uses-and-misuses-of-financial-models/#comment-927 Numerix person is clearly speaking out of self interest. This fact does not invalidate his point but certainly opinion should be balanced by opponent's view or challenged in a different way. Just my 2 cents. Numerix person is clearly speaking out of self interest. This fact does not invalidate his point but certainly opinion should be balanced by opponent’s view or challenged in a different way. Just my 2 cents.

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