Julio asks" "The quibbling about quant models implies that they are flawed or wrong. This begs the question -- flawed or wrong compared to what? Flawed compared to some superior, yet to be developed, quant model? Or flawed compared to no quant modeling in general?" -----------
Models are of course tools to help manage risk and without risk there would be little incentive for arbitrage or other forms of casino capitalism. I suspect that even the use of quantitative models themselves are factored in as risk variables in the most advanced models. Models will continue to be used as Julio points out, so the appropriate question seems to be who will bear the cost when models fail? So long as the costs are socialized rather than individualized the use of models will likely continue. Jayson Funke Graduate School of Geography Clark University 950 Main Street Worcester, MA 01610 -----Original Message----- From: PEN-L list [mailto:[EMAIL PROTECTED] On Behalf Of Julio Huato Sent: Friday, August 24, 2007 10:33 AM To: [email protected] Subject: Re: [PEN-L] the glories of financial engineering
