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Are you implying software isn't complex? Or that imperative languages have low complexity? Haskell takes the complexity of software and provides useful constr

Are you implying software isn't complex? Or that imperative languages have low complexity? Haskell takes the complexity of software and provides useful constructs to generalize and abstract some of these complexities. Does it take time to learn? Absolutely. Is it easy for newbies to understand? Definitely not, because it's hard to appreciate their value until you have encountered these issues time and again in software. But it's most definitely not complexity for complexity sake. It can vastly simplify software in practice by restricting the domain in which you are working with a very powerful type system. That is the entire point of it all after all. I'm not sure which models you are talking about - but models such as Modern Portfolio Theory, or Black Scholes, while inherently flawed have been massively useful in the real world. Claiming they aren't useful is simply not true. But again, you don't mention any specific models so it's hard to even know what you are talking about.

totalZero 6y ago
> I'm not sure which models you are talking about - but models such as Modern Portfolio Theory, or Black Scholes, while inherently flawed have been massively useful in the real world. Many finance professors strike me as the kind of people who critique the design of a hammer without having ever built anything themselves. Every tool has perks and limitations, and the challenge of using that tool is to figure out what those things are and get them to bend to your favor. BSM is the lingua franca of the options market and can be tweaked in practice to accommodate many limitations (skew, event volatility, etc). The point is to make money. If the tool helps you do that, then it's a good tool.
hogFeast 6y ago
You have demonstrated my argument. I mean all of them. Black-Scholes was used in industry before academia, and is only used in a heavily adjusted form (for example, option MMs have never used it as the only pricing input). MPT isn't useful: volatility doesn't describe risk to any degree (possibly as you move to the limit of retirement age...but then, not really), the empirical relationship is actually the inverse of that predicted by MPT (i.e. the model is not only wrong, it is misleading and will cause you to lose money), and it is easy to construct superior models that beat MPT models in every way (and even those aren't very good because they often use the same theoretical underpinning...again, most of these models exist because the subject needs to be taught in universities and needs to build on stuff learned earlier...the practical use is zero, which is why no-one really uses these theories...the only place I have seen them used at scale is in investment consultancies, and most of these places are clueless).

totalZero 6y ago

> I'm not sure which models you are talking about - but models such as Modern Portfolio Theory, or Black Scholes, while inherently flawed have been massively useful in the real world. Many finance professors strike me as the kind of people who critique the design of a hammer without having ever built anything themselves. Every tool has perks and limitations, and the challenge of using that tool is to figure out what those things are and get them to bend to your favor. BSM is the lingua franca of the options market and can be tweaked in practice to accommodate many limitations (skew, event volatility, etc). The point is to make money. If the tool helps you do that, then it's a good tool.

hogFeast 6y ago

You have demonstrated my argument. I mean all of them. Black-Scholes was used in industry before academia, and is only used in a heavily adjusted form (for example, option MMs have never used it as the only pricing input). MPT isn't useful: volatility doesn't describe risk to any degree (possibly as you move to the limit of retirement age...but then, not really), the empirical relationship is actually the inverse of that predicted by MPT (i.e. the model is not only wrong, it is misleading and will cause you to lose money), and it is easy to construct superior models that beat MPT models in every way (and even those aren't very good because they often use the same theoretical underpinning...again, most of these models exist because the subject needs to be taught in universities and needs to build on stuff learned earlier...the practical use is zero, which is why no-one really uses these theories...the only place I have seen them used at scale is in investment consultancies, and most of these places are clueless).