Comments on: What is Keplerian Finance? http://keplerianfinance.com/2013/05/what-is-keplerian-finance/ exploring the boundaries of quantitative finance Wed, 14 Aug 2013 02:24:36 +0000 hourly 1 https://wordpress.org/?v=4.1.41 By: オークリー サングラス http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-38 Mon, 24 Jun 2013 23:41:41 +0000 http://keplerianfinance.com/?p=45#comment-38 オークリー サングラス…

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]]> By: Scott Solomon http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-19 Tue, 21 May 2013 20:27:32 +0000 http://keplerianfinance.com/?p=45#comment-19 I would offer (possibly) that while admire this blog immensely, might not the task it sets for itself “suffer” from a hedge fund manager bias of focussing on prediction?

It seems to me that the tasks Economics should set for itself should be to eliminate human misery and the impediments to human development caused by economic factors — eliminate sovereign debt, unemployment, business cycles, poverty, lack of proper sanitation, etc . . .

Prediction would play a role from the standpoint of coming up with better models for how various proposed approaches at intervention would succeed at this task . . .

I also suggest that the state of Economics could be described (humorously) as Anatevka-ian . . .

If things are pre-Keplerian, how have we kept our balance? Tevya explains it clearly in this vignette:

]]> By: Robert J Frey http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-16 Fri, 17 May 2013 02:03:16 +0000 http://keplerianfinance.com/?p=45#comment-16 Don’t take my analogy too far. The solution, when it comes, will not resemble the solution realized by Newton for astrophysics. It has to be something new and unimagined; otherwise, we would already have the tools at hand!

]]> By: Weekly Wisdom Roundp #197 – May 13th 2013 | The Weekly Roundup http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-15 Thu, 16 May 2013 18:37:21 +0000 http://keplerianfinance.com/?p=45#comment-15 […] What is Keplerian Finance? – via Keplerian Finance – During a discussion with a well-known colleague about the state of the art in finance and economics, he observed that we were in a state similar to that of physics during the lifetime of Kepler. We lack an equivalent theory of gravitation to enlighten us. Econo-physics, despite some interesting correspondences, is often just a reformatting of existing results. The foundational homo economicus is not quite right, but not quite wrong either. Behavioral economics and finance seem to describe individual decision making with greater fidelity but materially better predictions of economic and financial events have not been forthcoming. And the mathematical tools we possess are not up to the task. Perhaps developments such as agent-based simulations and cellular automata offer hope, but they are still infants awaiting further development #Quantitative Finance […]

]]> By: Steve http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-14 Wed, 15 May 2013 19:40:48 +0000 http://keplerianfinance.com/?p=45#comment-14 My thoughts parallel Visitor above, that physics may have a certain Platonic reality not possessed by economics. Hence the achievements of physics could not be replicated in a subjective discipline such as economics.

But what if the universe does not possess this reality, and it is just that out ability to model physical processes has had a few hundred years’ headstart ??

]]> By: Samuel Lee http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-13 Wed, 15 May 2013 16:25:05 +0000 http://keplerianfinance.com/?p=45#comment-13 I find it hard to be optimistic that a new kind of math will yield a Newtonian or Einsteinian revolution in finance. I suspect it’s more a problem of data: there just isn’t enough of it and in high enough quality. Current mathematical techniques seems to do pretty well when there are rich, high-quality data sets (i.e. tick-level data). This isn’t a strongly held position, and I’m speaking from the layman’s position of abject ignorance.

]]> By: Robert J Frey http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-12 Tue, 14 May 2013 06:36:45 +0000 http://keplerianfinance.com/?p=45#comment-12 My main argument is that we can’t make predictions effectively. This isn’t because the problems we are dealing with are stochastic. There are many stochastic systems that we understand well and predict with a high degree of accuracy. Naturally, those predictions are in the form of conditional probabilities rather than a single number, but there are nevertheless good predictions. In finance and economics we don’t yet know how to do that.

]]> By: Robert J Frey http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-11 Tue, 14 May 2013 06:33:44 +0000 http://keplerianfinance.com/?p=45#comment-11 Better math is probably going to be different math. Just as calculus revolutionized mechanics, there is some yet to be developed mathematical theory that will allow us to deal with complex systems. As with the case with calculus, there seems to be some suggestive developments, but how they will mature into something truly paradigm breaking is impossible to predict.

]]> By: Robert J Frey http://keplerianfinance.com/2013/05/what-is-keplerian-finance/#comment-10 Tue, 14 May 2013 06:30:47 +0000 http://keplerianfinance.com/?p=45#comment-10 While I cannot claim to predict my spouse’s behavior, I have been far more successful with my own: It usually ends with me apologizing…

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