Many statements are often true, but old. So that makes them really interesting if you discover them for yourself, but boring if you have seen it before. For example, Eric Carmen's
All By Myself is a beautiful melody, or a rip-off of Rachmaninoff's Piano Concerto No. 2, depending on your background. The Serenity Prayer is a profound saying of Protestant Christianity, or an old saying from Roman stoics. A perennial on the risk management conference circuit is the insight that "you can't replace common sense with mathematics", or something to that effect, as if independently discovered. Usually, this statement is made by either by an accomplished mathematician attempting to signal
he has common sense, or a Dilbert-style boss excusing why he does not know any mathematics.
Thus, I found the following quote by Nikola Tesla amusing, because I have read literally hundreds of people make this point as if it were really new:
Today's scientists have substituted mathematics for experiments, and they wander off through equation after equation, and eventually build a structure which has no relation to reality.
I take that to mean, moderation in all things.
4 comments:
Hilarious!
Reminds me of Till Guldimann's quote: "RiskMetrics isn't a substitute for good management, experience and judgement. It's a toolbox, not a black box".
So not only was VaR never intented to measure extreme events, the inventors actually pointed out the shortcomings of VaR as a general measure of risk from the very beginning.
And how many people come up with similar quotes these days and think they are extremely smart...
All true . . . but still people manage to forget it.
So in other words... there is nothing new under the sun? But I read that in the Bible!
Seriously though, having been introduced to debates about economics and markets on the internet, I eventually read some history and was astonished to discover that basically everything we debate on blogs today was debated in more or less the same terms two or three hundred years ago. It made the ahistorical pretensions of modern-day academic economics seem completely inappropriate to me.
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