Is the world going quants mad? Dr Paul Wilmott

Keynote Speaker Dr Paul Wilmott discusses:
"Imagination is more important than knowledge: street smarts vs book learning in financial markets"

[@boringmanager9559]

In first 8 minutes he reinvented my experience of leaving academia

[@loupgaroux9587]

As a speculator, all of this leaves me contemplating whether or not any of these guys ever really understood what was going on back then, and to some extent, is still going on. I'm sure many do, but a lot of these academics seem to think the markets were not sophisticated enough to comprehend them. When the truth is, they were not sophisticated enough to comprehend the markets.

[@edwardmitchell6581]

This is great. I'm learning how run models on the cloud and needed some inspiration. I had always assumed that Wall Street had it all figured out and hadn't bothered to research it.

[@pjakobsen]

Fantastic presentation. My finance prof would say "Extraordinary claims requires extraordinary evidence".

[@byronwilliams7977]

I think that that may also be a tenet in the sciences as well.

[@bonob0123]

Newton's equation of gravity is an idealized model. doesn't mean it's useless. now if a rocket engineer at NASA started using that equation inappropriately without correction to build rockets and complains that it doesn't work and "the world is not ideal", I would say that is the NASA engineers fault not Newton's. the idealized equations are useful for understanding some underlying concept, but doesn't mean they perfectly reflect the world and should be used in a plug-and-play manner.

[@maxhaughton1964]

You don't need general relativity to do pretty much anything in rocket science other than GPS (which even then has nothing to do with putting the satellites there). In fact, you can get an awfully long way using things called patched conics which are an egregious over-approximation sometimes but will usually get you to the right postcode if not the right house.

[@StephenOzor-sl8eq]

Still trying to know quant involvement to African scenery

[@shukailu6731]

Great speech! Can't believe this has only 1.5k+ views

[@josephbohme7917]

Because it is an intellectual engagement. Enough said.

[@inventacreata7062]

Very true, quant trading is very overrated

[@venkatchait007]

honestly the system needs changes at almost every level, the market is mainly designed to drain money from schmucks using death by a million charges while we move money amongst ourselves.

[@darceysinclair8929]

his analogy with the case of beer is only applicable to equities, not foreign currency or crypto

[@StephenOzor-sl8eq]

True

[@artemistrading]

Really? I get where you're coming from but can't non-linear dynamics exist in any market so long as there's a cause and an effect? If you take forex for example, there might be nonlinearity in the way a cut of x basis points affects a pair vs 2x or 3x. The point being that there are so many variables that depend on each other and influence the price that non-linear dynamics are almost certain to be found. This fact is true independent of whether the price represents some anticipation of earnings growth or other macro-economic factors that are not exclusive to equities.

[@TheU2ubert]

20:57 How can hedgefund managers "game" circuit breakers?

[@youcanknowanything8489]

Because the proximity of certain computer hardware to the "place" where the trade signal originates affects the actual real time in which the HFT trades occur. In HFT everything is measured....the length of the cables, the location of each piece of hardware and the energy required to complete the trades and how to make sure they get there first. That's why forex traders who are major full time traders own their own generators, so as not to be affected by yet another factor outside of their personal control while trading.

[@andorealc6218]

TheU2ubert something called magnet effect. If a stock is approaching to threshold of triggering circuit breaker, people who has inventory would like to clear it on their book, once enough people do that it will trigger the circuit breaker (where it could’ve been avoided) It’s been documented in exchanges that implement these mechanism

[@jickovonrozentuin7370]

If Carla is right? Then I think bitcoin will be a good thing.

[@mayukhdifferent]

KZbin algo gone wierd on this video..how come so less views and likes??

[@h3um]

@Snow 123 Can you provide a bit more context?

[@tobias2688]

It's "so few", not "so less".

[@kevintravelsgram]

@Polish Charcuterie you're a taleb stan huh. Cringe.

[@TheSandyKale]

@@tobias2688, grammar Nazi alert.

[@annajones9701]

He is smart and BS artists do not like him. Cnbc does not like him as he will not be forced to give BS predictions with simple answers that their producers want.

[@emmanuelameyaw9735]

Academia is brutal😀

[@user-or7ji5hv8y]

Is that why Deutsche Bank is in trouble?

[@billyrobertson6979]

He only gets his bonus if the entire fund makes a profit, and for the firm to make a profit more than half of the coin-toss-traders must win their toss. The probability that more than m/2 out of m traders win a coin toss is equal to the probability that less than m/2 do, by symmetry. So the probability the firm makes a profit is 0.5 ぐらい, effectively halving the expected profit of all his strategies were he to otherwise act alone. Cooked

[@closingtheloop2593]

his first example of probability is flawed

[@Alarsonen]

Was just about to say this.

[@damnsonwhere277]

I think he is right. And if he is wrong how so?

[@jlo3349]

Tier 1 US Bank quant here: Got to say he is one of the most arrogant guy in the industry. There are many top quants in the industry and he clearly thinks everyone is stupid...

[@davidc4408]

Because he is smart

[@RicardoVladimirWong]

Who said economics says 100 bottles sell for $100.get your facts right

[@prashantrai1240]

9 likes

[@josephbohme7917]

My gosh, he is so changed from a decade + ago. He was so socially inept is a way, hard to describe, but he seems so much more "personal". I bet he has had some relationships (close) and it has rounded him out. Money may have burnt him. He sees a weird dimension of the world that most will never have an interest in even listening to, But he can speak to a lay person, or is it mean lame. So we are all being outmodeled by geeks, we are now living in an algorithm. We are all handcuffed by a non existing illustration of what - ifs. We never had control in the past, nor will we own any part of the future. We are screwed here and now. Here is a guy who is leaps and bounds above are intellectual cube. And he still likes wearing a corduroy sport coat, at least he has not added the elbow dressings. What should we bet he spent >$1000 for it for the image and awareness, or he cheaped out and spent the $800 elsewhere. Is it game theory. Or common sense based on his net worth. We need more data. He has these classes down pat, notice he is not falling asleep and pacing back and forth like a fox in amongst hen cages. He is excited and his audience is being played, like a maestro at the symphony, he awaits the accolades. He would be an interesting person to pose good questions to. Not useless trivial ones.

[@BLUEGENE13]

u know him?

[@auslander1026]

@@BLUEGENE13 he doesnt. he just sells snake oil

[@bonob0123]

13:13 lol why would the probabilities multiply : 50% x 75%? wouldnt the alternative then be 50% x 50% which is worse still? the job of the academic economist isn't to understand the intricacies of your workplace, it's to incrementally better understand the MARKET, to show you that diversifying should even be a goal or not. Believe it or not, they don't then have time to come do your job for you and navigate your workplace politics.

[@NnamdiNw]

bonob0123 I thought the probability of making a bonus would be [1/n *(0.75)] + [((n-1)/n)*(0.5)] from the example he’s given. And yes academic economist, I think he’s anger is that those in the workplace don’t use the models as the author intended.

[@bonob0123]

@@NnamdiNw His anger seems very much directed at academics and "idealized" models. The probabilities in his scenario should add, not subtract and basically for more than a handful of people, the probability of a bonus will be ~50% no matter what he does in his scenario (just the way your equation behaves). But figuring that out should be up to him or whoever works in his workplace, not an academic. Im an academic (but not an economist). I'm tired of lazy arguments and lazy thinking and the current culture's tendency toward anti-science and anti-academia. Its not academics' fault and it doesn't make their findings/work less important if people don't understand how to properly apply results (maybe because of dumbing down of science literacy).

[@edwardmitchell6581]

Why are you taking things so personally? Believe it or not there are academic economists that study incentives.

[@emmanuelameyaw9735]

Academic economists don't know anything about quantitative finance...just microeconomics, macroeconomics and econometrics. Finance is not even a course in many economics departments...unless the economics department is inside some sort of business school.

[@emmanuelameyaw9735]

But does the model work? If you simplify equations and the plane doesn't fall, what's the problem? People ain't stupid...if they put billions into simple models...chances are because it works. They are not trying to be santa claus throwing money about, I guess...🙂

[@bonob0123]

lot of salty ex-academics giving talks on youtube. just do your thing, why so much hate towards academics? they do their thing, no one is twisting your arm to use their "useless" idealized models. if you misinterpret an idealized model, thats on you.

[@ZubinB]

The problem IS the idealised models. The world is far from ideal.

[@bonob0123]

@@ZubinB Newton's equation of gravity is an idealized model. doesn't mean it's useless. now if a rocket engineer at NASA started using that equation inappropriately without correction to build rockets and complains that it doesn't work and "the world is not ideal", I would say that is the NASA engineers fault not Newtons. the idealized equations are useful for understanding some underlying concept, but doesn't mean they perfectly reflect the world and should be used in a plug-and-play manner.

[@josephbohme7917]

I only make ideal trades because I choose Ideal moments in time. I establish a trailing stop below an an ever advancing top. Now the acute variation between the magnetic flux of the earth's poles may have some positive or detrimental effects for that trading day, but the proper method to utilize would be the exiting volume found at any major venue that day in New York luncheonettes , followed by Chicago, and lastly San Francisco. Choosing the value of that sum of three locations and dividing by two would give us a definition of the historic circumstance. Everyone in the Quant world would quickly come to the same conclusion. Their employers would not know; but they had just been given an extended, and fully paid lunch break, for creating the reality that could be transposed into a possibly good working model. One that could be used to assume quantitative numeric facts of yesterday. Facts that could be used as a basis for establishing a three day trading & most importantly, eating pattern. One that reflects the market sentiment in a gutteral way. Now on the 3rd day we eat again and suggest a directed trade on day four. The hold or exit, or the cover.

[@edwardmitchell6581]

"if you misinterpret an idealized model, thats on you." I feel like you've entirely missed the point. "Too big to fail" changed everything.

[@sachin-mavi]

he clearly doesn't know the difference between Trillion and Quadrillion ...

[@illuminati9478]

1 Quadrillion = 1000 Trillion… Please use your head and not your behind.. He perfectly exposed the inflated values as compared to the world’s GDP..

[@Lalit-yw2tb]

Even I was shocked, maybe he made by calling the number in Quadrillion but nope, he is right. The Derivatives market of the world has a notional value of over $1 Quadrillion.