Quants are the mathematical wizards and computer programmers in the engine room of our global financial system who designed the financial derivatives products that almost crashed Wall Street and destroyed our economy.
These mathematical scientists are the financial geniuses, who instead of evaluating individual companies and their performance, management and competitors, use mathematical formulas to make bets on which stocks are going up or down. In essence, they attempt to quantify human (economic) behavior through the use of computerized mathematical models.
The credit crunch, the Wall Street crash, and the ensuing global meltdown has already proven these computerized mathematical models and financial engineers flawed. But still they persist. As I’ve said here before, one cannot use science to successfully quantify human behavior (fear and greed).
Now the quants are at the heart of yet another technological revolution in finance: trading at the speed of light. What are the future risks of treating the economy and its markets as a complex machine? Who monitors the quants? Will we be able to keep control of this model-based financial system, or have we created an inescapable monster?
Quants: the Alchemists of Wall Street created by VPRO Backlight, a part of the Dutch broadcasting system, presents these and other questions through very enlightening discussions with some of these quants in a documentary about greed, fear and randomness from the insides of Wall Street.
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