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Making financial subjects into moral parables is not an effective way to deal with complexity. Simplicity will fall naturally out of the process of refining der
by MrMan 15y ago
Making financial subjects into moral parables is not an effective way to deal with complexity. Simplicity will fall naturally out of the process of refining derivatives markets. Insurance is a derivative. Options are derivatives. Common Stock is actually arguably a derivative as well. Welcome to capitalism!
Complexity is born of there being lots of people on Earth who trade goods and services. No way back except to wish calamity on us all?
- javascriptlol 15y agoTaleb would call you a "nerd". I think he'd be right. edit: FWIW he'd probably say the same about me.
- aangjie 15y agoAgreed Complexity is a living day truth. I do agree that progess in complexity has to be limited for safety. i.e: there must be some limits(ex:safety factor in civil/mech engineering design, testcases in s/w engg.??) that have to be held for a long enough time. Ofcoures NNT writes for the masses, so opts for limits that majority of people can understand. And that usually is a lot more orthodox.
- _delirium 15y ago> Simplicity will fall naturally out of the process of refining derivatives markets. Is there any empirical evidence that this is true?
- nandemo 15y agoHis point is not "all derivatives are bad", but rather that some derivatives are too complex and hence might have hidden risks that are potentially catastrophic (as in the mortgage-backed derivatives crisis). Stock options like standard puts and calls, though risky, are well understood in terms of the underlying.