Comment Re:Spreadsheets hide the Black Swans (Score 1) 407
You can actually read Taleb? After reading Fooled by Randomness I was hoping The Black Swan would be intelligent and not full of self-serving pseudo-intellectual garbage. I was wrong.
His arguement, for example, that the current financial crisis is a result of a "black swan" is utterly silly. It didn't come out of nowhere, for gods sake the research areas at banks were saying it would happen while the banks still sold and bought the toxic crap. What you really have is too many people piling into one trade, which results in a historically predictable outcome.
The real problem is poor risk management. The spreadsheet tells you something, and something extremely useful, but not you still have to use your head. Goldman Sachs didn't get hit by Subprime CDO because they had a risk management meeting where they discussed escalating losses on their book, and decided to get out. Its not the fault of econometrics, its the fault of misusing tools.
His arguement, for example, that the current financial crisis is a result of a "black swan" is utterly silly. It didn't come out of nowhere, for gods sake the research areas at banks were saying it would happen while the banks still sold and bought the toxic crap. What you really have is too many people piling into one trade, which results in a historically predictable outcome.
The real problem is poor risk management. The spreadsheet tells you something, and something extremely useful, but not you still have to use your head. Goldman Sachs didn't get hit by Subprime CDO because they had a risk management meeting where they discussed escalating losses on their book, and decided to get out. Its not the fault of econometrics, its the fault of misusing tools.
