The turmoil at AIG is likely to fan skepticism about the complicated, computer-driven modeling systems that many financial giants rely on to minimize risk. As chief executive of Berkshire Hathaway Inc., which owns insurance companies, Warren Buffett has been sounding the alarm about the issue for years. Recently, he told PBS interviewer Charlie Rose: “All I can say is, beware of geeks…bearing formulas.”
...On a rainy morning last week, Mr. Gorton briefly discussed with his Yale students how perplexing the struggles of the financial world have become. About 30 graduate students listened as Mr. Gorton lamented how problems in one sector caused investors to question value all across the board. Said Mr. Gorton: “There doesn’t seem to be a fundamental reason why.”
My comments
Geek, idiot, imbecile, over-paid bozo, misleading liar, LaLa land guru, Larry, Curly & Moe all rolled into one, moron with a degree, Menace to society - teaching future menace’s to society, and more…
Personally, I feel this guy was so dumb, that they should have watered him twice a week.
Yep, It’s hard to believe that people can rely in computer models to determine anything. So when someone talks about Efficeint frontier, Capital Asset Pricing Model, Black-Scholes, Nobel Prize winning theories, Black Box, for your sanity - please tune them out!
Remember the more formulaes - the more BS
