Paul Wilmott Wants To Retrain and Reform Wall Street's Quants

theodp writes "What if an aeronautics engineer couldn't reconcile his elegant design for a state-of-the-art jumbo jet with Newton's second law of motion and decided to tweak the equation to fit his design? In a way, Newsweek reports, this is what's happened in quantitative finance, which is in desperate need of reform. And 49-year-old Oxford-trained mathematician Paul Wilmott — arguably the most influential quant today — thinks he knows where to start. With his CQF program, Wilmott is out to save the quants from themselves and the rest of us from their future destruction. 'We need to get back to testing models rather than revering them,' says Wilmott. 'That's hard work, but this idea that there are these great principles governing finance and that correlations can just be plucked out of the air is totally false.'"

Re:The problem with economics is

[TinBromide]

but people still manage to feed, clothe and house themselves far better in a market like ours where there's a plethora of consumer advertising, than in a planned economy where nearly all advertising is government propaganda.

So the lack of quality advertising caused the product scarcity in the soviet block and the downfall of communism? Please sir, tell me more.

Or by far better do you mean that the women run around in skimpy mini skirts and pushup bras? (Cause that's totally better than frumpy clothes on the eyes). :)

Re:You can't blame it all on the qunats.

[tjstork]

***Use Gaussian if you have an idea of what the parameter probably is but aren't exactly sure, rectangular if you really have no idea. A rectangular distribution says "I have no idea, the parameter could be anywhere within this particular range."

Guassian : So, make up three numbers, and assume that the middle number is -really- most likely.

Rectangular : make up two numbers, assuming that any number in between them is good.

In which case you will be doing the kind of work that people who make 500 grand a year do

ROTFLOL. Yes, but they dress more nicely.

Doh!

[elgol]

As an engineer with a healthy skepticism of models even on things that are relatively well understood, all I have to say is "No shit, Sherlock!"

John