Tail Risk Killers: How Math, Indeterminacy, and Hubris Distort Markets

CONCLUSIONThe Future of Fixed Income: Past as Prologue?

If there is one thing I’ve learned in my few years on this planet, it is that ultimately we are all full of it when it comes to predicting how markets will move in the future. Yet we continue to make predictions over and over again about how political, social, and economic events affect these markets, simply because it gives us some sense of control and justification for our actions.

Just as prediction is the sibling of control, so the need for control is the driving force that spurs the transformation of more and more of finance into mere adjuncts of mathematical discovery. This is because natural selection has chosen reason, logic, and the scientific method as the best way to go about ...