"Any intelligent fool can make things bigger and more complex... It takes a touch of genius - and a lot of courage to move in the opposite direction." Albert Einstein
1950s: Optimization (Markowitz)
1960s: Capital Asset Pricing (Treynor, Sharpe etc)
1970s: Attribution (SIA UK)
1970s: Arbitrage Pricing Theory (Ross)
1980s: Heuristics and behavior (Kahneman & Tversky)
1990s: Stochastic (Wiener, Black, Scholes, Merton)
1990s: Rise of Value at Risk based models (VaR)
2000s: Asset-liability strategies (ALM, aka LDI)
2000s: Fluid dynamic models (Navier-Stokes)
2000s: ARCH-based models (Engle)
2000s: Extreme Value models, organic (ongoing)
There is no holy grail in predicting future financial markets from the price movement of previous ones..
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