Financial markets have grown too dependent on mathematicians who use models to anticipate price moves and need to start injecting “common sense” into the equation, said Paul Wilmott, a London- based author and quantitative-finance instructor.
Wilmott has warned that so-called quants who use mathematics to forecast how markets will behave can overlook errors in the models, leading to flawed predictions. In a New York Times column July 28, Wilmott also said so-called high-frequency trading, where hedge funds and other firms use advanced computers to buy and sell thousands of shares a second, threatens to destabilize the market.
“People just rush into these things without any thought for what the consequences might be,” Wilmott said in a Bloomberg Radio interview. Bloomberg News
