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Comment by Confusion | Hacker News Reader

The following quote illustrates the article pretty well:

   [..] advances that had earned their discoverers several
   shelves of Nobel Prizes

Hyperbole as a style form is all and well, but this is just misrepresenting the truth. This journalist didn't rethink what he was writing for even a second.

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There are lots of examples of techniques that won their inventors Nobels in Econ (and sometimes even sciences) going on to being used to make lots of money in finance.

A famous example being the Black Scholes model for option pricing, which won its inventors the Nobel Prize in Econ. Myron Scholes went on to create one of the first 'quant' funds (LTCM) back 1994 (which flamed out spectacularly during Russia's crisis in 1998.)

Lots? Can you name a few beyond Black-Scholes that are applicable to derivatives trading? From looking at the list of Nobel prize winners, I can't.

Interestingly, in a course on statistical physics, the prof showed that by performing the correct transformations on the central equation of the Black-Scholes model, you can actually reduce it to a plain diffusion equation. He wondered whether it was reasonable to hand out a Nobel prize for that.

To name a few: Engle, Granger, Merton, Markowitz, Miller, Sharpe. Shortly, they're used frequently in the area of risk management.

With some good faith you can also take into account the assymetric informations study, so Akerlof, Spence, Stiglitz, Vickrey; also, if you're big enough to move the prices by your orders, the game theory applies: Selten, Nash, Harsanyi.

As for the Black-Scholes, from what I understand, the biggest insight is that the volatility of the stock is basically the risk.

The problems with the non-constant volatility, led to studying different (ARCH, GARCH) models and work appreciated by a Nobel in 2003.

Interestingly, when Markowitz invested his own money, he invested 50% in stocks, and 50% in bonds. If the creator did not believe in his own creation, I don't think anyone should. BTW, Engle's work is kind of useless in the real-world...

The article struck me as anti-intellectualism run amok. I didn't even see a hint of anything indicating that quants were especially to blame.

The OP source is one of the organs of record for a specific political set and this is probably the outlines of the (official) emerging sacrificial goat theory for the collapse. The "anti-intellectual" aspect is likely incidental beyond its nice fit with a strategy designed to deflect the certain anger and energy of the ripped off population.

I see this as a scape goating of the quants. Not the mismanagers who hired and profited from the quants. The culpability of the mismanagerial classes are being whitewashed away.

I feel the same way. They make it sound like quants are these high falutin half-Gordon Gekko/half-Charlie Epps figures who use their sheisty siren call of maths to seduce the otherwise noble and innocent investors into foolish endeavors. That's simply not the case: it was the other way around.

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