The Black-Scholes Formula - 5/5

[CarrieGraham1967]

I can't help but notice that the guy is sitting in a very posh mansion with Persian rugs, talking about all of other people's money that he lost. I guess it's easy to forget all the people who were driven to suicide through your mismanagement when you're sipping Chablis.

[tangiblephoton]

That was cool!

[schonkeren]

The thing with a corporation going bankrupt is... The money they owe is lost.

Now look at this company... Totally integrated in the WORLD economy, having outstanding dept of 1*[10]^9 US dollar... It must have made a few people nervous :>

[koneye]

Booms and Busts,Booms and Busts,Booms and Busts, sound familiar

[VoteCliffHutchison]

"The entire global market would've crashed if LTCM wasn't bailed out by the Fed". How oddly similar to the crash of 2008 & all those bailouts. We are rightly outraged about those, yet I never heard about this bailout back in 1998.

The real lesson wasn't learned back then: that attempting to eliminate risk simply puts it on someone else, multiplied. Instead the mistake was repeated immediately.

Also, the arrogant Nobel winners at LTCM couldn't have done it without all the worshipful investors.

[sciencemobster]

@VoteCliffHutchison The Nobel winners at LTCM were not actually part of the "inner circle" of the company--they where partners but they did not actually run it. It was run and set up by various Wall Street "legends" who brought them on board. They had also expressed concern about the level of borrowing/leverage and where aware of the limits of their models. Also LTCM was not bailed out: It was gradually wound down. Ten years later the same things happened (but worse). Noone learned from this.

[VoteCliffHutchison]

@sciencemobster Thanks for filling me in on the details. I should not have been so presumptuous in my comments without finding out more about LTCM. Your correction of me is also gracious. Though you could have responded in like manner to my sarcastic tone, you didn't.

I sincerely thank you. I will try to be more constructive in my comments.

[mappingtheshit]

Laplace disliked the video

[ABisopht]

great summation.

[MegaBhatti1987]

i wonder who would be the one to dislike this video?

[SalsaTiger83]

Risk is a fact of daily living. Even in the most "down to earth" kind of industry, subsistance agriculture, farmers gamble what little they have on the next harvest. Today "only" a fifth of the world's population faces the risk of starvation, two thousand years ago it was almost the complete world.

[T1Brit]

Awesome documentary. Horizon is class A shit.

[lvgcoolman13]

Guys don't diss the Black-Scholes-Merton model. Explore it to see what the mistakes are by proof and then publish it. Ovbiously there are mistakes to the model and why not be you the one who fixes it and add your name to the model.

[T1Brit]

@lvgcoolman13 The documentary seems to wind up with the conclusion that there is nothing wrong with the model but that no model can ever encompass every possible real world scenario.

[jovelnom]

@lvgcoolman13 this is what I was just thinking. If the model used basing on the normal behavior of the market had an extraordinary results; it means that there is also a way to make tremendous results on the worse times.

[badsign1980]

so basically what these motherfuckers do is take the savinfgs from the ppl who work and blew them in a casino right? and then when they go banrupt they borrow more money so that gov will bail them out? so basically the rich bankrupted the usa right? and also the world? so thats why wars and invasions happehn and why world will hang these motherfuckers in the end? nobel prize my ass these ppl are idiots, its like putting laws in casino, everybody knows the house always wins

[Downfurlife]

@badsign1980 Yes..... And what "we" do about it is nothing. The absolute proof is 2-3 years later not one of the key players has been placed in jail. Until we(all of us) demand change... Like it has many times in the past it will continue to happen in the future. Myron is very successful making millions despite he lost billions and was possibly responsible for the losses of tens of trillions. But, he is wealthy and happy - are we happy for him/

[TheSaintsal]

I agree with Furnace, this video deserve more view, so many to learn. thank you mallen235

[gandhistears]

jail not nobel

[Thedreamshaperabc]

@gandhistears

Yes, and lets also jail the guys who produce bullets for hanguns ?

[FurnaceSparks]

Only 5000 views? This documentary deserves more, much much more... So much to learn.

[carpediem345]

This is a very bad documentary. Black Scholes Merton is quite simply the diffusion equation from physics. Never the question is asked whether this "magical formula to tame risk" is quite simply completely inapplicable. It fails when it is actually needed.

[beltane3]

excellent, thank you ~~~!



[beltane3]

excellent, thank you ~~~!

[currypata]

we never learn

[faunflynn]

Mr mallen235

Kudos for posting this.

I wanted to see this again for years.

Students didn't believe me about this shit in spite of the documentation.

So.. KUDOS !

[lancefiasco]

"In a time of crisis, cash is king." (NOT GOLD)

[metalreign81]

If only we had paid attention back in 1997-98 maybe the U.S. and the world could have avoided the economic collapse of 2007-2008-2009

[theflyingblues]

Wow! Brilliant documentary. English documentaries seem to inform at a higher level than others.

[akscldn]

@theflyingblues If you enjoyed this I suggest you also watch a documentary named MONEY MASTERS.

[vishcanada]

thanks for uploading this. fascinating analysis of what went wrong.

[guankaijilindanrong]

Very nice video! Thanks!

[00Whysoserious00]

Cheers for the video mate - really helpful :)