The Glories of Financial Engineering
Wall Street has been hiring mathematicians and physicists to devise sophisticated computer models to beat the market. Here is Goldman Sachs explanation about how its fund lost 30%:
“Goldman Sachs … said that its funds had been hit by moves that its models suggested were 25 standard deviations away from normal. In terms of probability (where 1 is a certainty and 0 an impossibility), that translates into a likelihood of 0.000…0006, where there are 138 zeros before the six.”
Anon. 2007. “The Game Is Up.” The Economist (16 August).