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Lecturing Birds on Flying

Can Mathematical Theories Destroy the Financial Markets?
in: Investing
Summary:

The book critically examines the reliance on complex mathematical models in financial markets, arguing that these models can lead to catastrophic consequences due to their inability to account for real-world unpredictability and human behavior. It advocates for a more pragmatic approach to finance that respects the limits of theoretical models and emphasizes the importance of experience and common sense in decision-making.

Key points:

1. Math Model Overreliance: Triana warns that overreliance on complex math models like Black-Scholes-Merton can create a false sense of security and lead to market crashes.

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