WEBVTT - Derman: no simple models to replace bell curve

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<v Speaker 1>This is Bloomberg Surveillance. China has again and again reacted

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<v Speaker 1>to hawkish talk from the FETE by allowing more currency depreciation.

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<v Speaker 1>Cashes a legitimate asset class. It insulates you from the

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<v Speaker 1>clients m capital markets, both bonds and stock. China is

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<v Speaker 1>not just a commodity power hies driving commodity prices. It's

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<v Speaker 1>a manufacturing power hives and has been putting in manufacturers

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<v Speaker 1>all through its supply chains in a Southeast Age or

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<v Speaker 1>in East Asia. Bloomberg Surveillance your link to the world

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<v Speaker 1>of economics, finance, and investment on Bloomberg Radio. Good morning everyone,

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<v Speaker 1>Michael McKee and Tom keene Berry Rid Holts in this

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<v Speaker 1>week coming up, I'm really thrilled to bring you uh

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<v Speaker 1>someone who with Paul Wilmot change quantitative finance. Emmanuel Derman

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<v Speaker 1>will join us in this hour. There's gonna be a

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<v Speaker 1>geeky physics. Our two hands on the steering wheel for

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<v Speaker 1>those of you driving. If you're at your desk, children

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<v Speaker 1>must leave the office as we speak to Derman of Columbia.

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<v Speaker 1>We will do that here in a big David Wilson's

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<v Speaker 1>shaking his head, going Tom calm down the four X

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<v Speaker 1>break this morning, but you by Interactive Brokers, winner of

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<v Speaker 1>f X Weeks two thousand fifteen award for the best

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<v Speaker 1>Retail for X trading platform visit ib at I b

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<v Speaker 1>k R dot Com slash four x. The last number

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<v Speaker 1>of days, I was going, nothing's happening, nothing sleepy, it's quiet,

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<v Speaker 1>cherry yell and changed that yesterday week or dollar d

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<v Speaker 1>X Y that blended index ninet six down to a

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<v Speaker 1>ninety four hand nine point nine nine yen stronger one

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<v Speaker 1>nine uh, the euro one thirteen o nine all sorts

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<v Speaker 1>of movement. I mentioned dollar when men be the Chinese,

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<v Speaker 1>Uh you want uh strengthening? Uh here substantially off that

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<v Speaker 1>move six point four seven seven seven. On currency, we

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<v Speaker 1>can talk for an hour in currency. But always interesting

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<v Speaker 1>stuff in the equity markets. David Wilson's what do you

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<v Speaker 1>have morning, Tom? I mean we have energy prices U

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<v Speaker 1>up and lots of dollar dynamics right, and ergy stocks

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<v Speaker 1>going along with them. Exxon Mobiles up half a percent

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<v Speaker 1>in early trading, Chevron and Conical Phillips with one percent

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<v Speaker 1>gained so far, Valiant Pharmaceuticals up four percent. The drug

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<v Speaker 1>maker asked lenders for an extension to file last year's

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<v Speaker 1>results until May thirty one. Now Valiant went into technical

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<v Speaker 1>default on some loans last month after failing to file

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<v Speaker 1>by March fifteen, and more defaults may follow if the

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<v Speaker 1>company doesn't deliver by April twenty nine, so that they're

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<v Speaker 1>looking to get out from under uh that pressure. Lulu

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<v Speaker 1>m Athletic of six percent. The yoga ware maker and

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<v Speaker 1>retailer posted fiscal fourth quarter earnings to beat the average,

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<v Speaker 1>anlessestment in the Bloomberg survey. Lulu Lemon benefited from cost

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<v Speaker 1>cuts and new products. Op Co Health, though down nine percent.

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<v Speaker 1>The drug maker said another company that manufactured its proposed

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<v Speaker 1>kidney treatment, Royaldi, was cited for deficiencies. Op Co has

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<v Speaker 1>filed for US approval of Royalty and said the production

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<v Speaker 1>issues don't directly affect that drug. Now Variant System down

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<v Speaker 1>fourteen percent. The data analysis software maker report of fiscal

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<v Speaker 1>fourth quarter property and revenue that were far below estimates.

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<v Speaker 1>Various forecast for this year showed it expects little or

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<v Speaker 1>no growth in its top and bottom lines. Land Star

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<v Speaker 1>System down five percent. The truck and company cut forecast

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<v Speaker 1>for first quarter earnings and sales to reflect falling revenue

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<v Speaker 1>per load. The drop amounts to about ten percent from

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<v Speaker 1>a year earlier. At Katia Pharmaceuticals up A US advisory

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<v Speaker 1>committee voted to support at katie is proposed treatment for

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<v Speaker 1>psychosis associated with Parkinson's disease. All Scripts Healthcare up four percent.

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<v Speaker 1>The medical software maker was raised. Equivalent can buy from

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<v Speaker 1>Hold Morgan Stanley Sonic up six and a half percent.

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<v Speaker 1>The drive in restaurant chains earnings and sales for the

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<v Speaker 1>fiscal second quarter receated projections UH Terraform power well, this

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<v Speaker 1>is it. This is the power plant owner created by

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<v Speaker 1>son Edison was cut. The equivalent of news from by

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<v Speaker 1>JP Morrigans and Shares sank fifty five percent yesterday after

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<v Speaker 1>its Terraform glow bull units start up filing that as

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<v Speaker 1>Parents faces substantial risk of bankruptcy. And I'll point out

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<v Speaker 1>Terraform Global down six Doing a value is what we call.

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<v Speaker 1>David Wilson, thank you so much, okay, folks, this is

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<v Speaker 1>a real pleasure. UM I will be direct. Paul Wilmot

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<v Speaker 1>changed the accessibility of quantitative finance, along with a lot

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<v Speaker 1>of other people. Bruno Dapierre, who were honored to say

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<v Speaker 1>works at Bloomberg LP. A guy named Taleb i'd throw

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<v Speaker 1>in their kent Osben who had a classic book. And

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<v Speaker 1>our next guest, Professor Dermot, Immanuel Dermot, Columbia University. Here's

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<v Speaker 1>what you need to remember. I will remember that I

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<v Speaker 1>didn't make the world, and it doesn't and it doesn't

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<v Speaker 1>satisfy my equations. Though I will use models boldly to

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<v Speaker 1>estimate value, I will not be overly impressed by mathematics.

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<v Speaker 1>And with that we welcome Emmanuel Dermant, professor. Wonderful to

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<v Speaker 1>have you on good morning, Good morning. I'm very glad

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<v Speaker 1>to be a I I look at Modelers of all Markets.

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<v Speaker 1>It's a classic. He's on the linkage of physics in

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<v Speaker 1>the finance. With great respect, I say, what did you

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<v Speaker 1>learn out of the crisis? The amplitudes that were mis

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<v Speaker 1>guests that you that you use every day, Now, what's

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<v Speaker 1>the new new for you? Seven years on? That's so

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<v Speaker 1>little has been learned in a way. I mean there

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<v Speaker 1>was a mass of failure, both of them. I think

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<v Speaker 1>of government and the FED after the after the crisis. Um,

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<v Speaker 1>you know, the crisis for me was was characterized by

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<v Speaker 1>several things. First of all, that piece you were reading

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<v Speaker 1>that Paul Wilmont and I wrote was called the modelers

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<v Speaker 1>and the financial modelers manifest that we were trying to

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<v Speaker 1>explain to people that social sciences and financial markets are

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<v Speaker 1>involved with people and not like physics systems, even though

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<v Speaker 1>the mathematics is similar, and people have to remember that, um,

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<v Speaker 1>that other people don't satisfy equations, even though you may

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<v Speaker 1>try to use equations to model them. In the end,

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<v Speaker 1>that's not the way they work. So um, that was

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<v Speaker 1>a good lesson, one that I actually learned ten years

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<v Speaker 1>before that, and nothing Paul Wood learned before that too.

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<v Speaker 1>But for me, the crisis has been so disappointing because

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<v Speaker 1>I'm we're sort of back in the same situation within

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<v Speaker 1>this is debate, and I want to stay away folks

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<v Speaker 1>from the mathiness and cross moments and blinding physics debates.

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<v Speaker 1>Token geek No, well, no, that rid Holes, very rid

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<v Speaker 1>Holes is here so he can be the token geek.

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<v Speaker 1>Are we have? We moved on from the simplicity of

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<v Speaker 1>the Gaussian or Bell curve distribution. It has been the

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<v Speaker 1>convenient model, going back to Fisher Black, even back to

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<v Speaker 1>bas Uh to mental block. But we've been doing the

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<v Speaker 1>Bell curve for years and we moved beyond the certitude

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<v Speaker 1>of that distribution. Yes, I think we have um The

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<v Speaker 1>trouble is there's nothing that replaces it was. What was

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<v Speaker 1>nice about the belt of was that it's a very

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<v Speaker 1>beautiful description of near what people call neoclassical finance, and

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<v Speaker 1>it would be great if the world worked that way.

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<v Speaker 1>It would be a beautiful system. But the world doesn't

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<v Speaker 1>work that way, and we've I think everybody knows that

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<v Speaker 1>the world doesn't work that way, but never really knows

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<v Speaker 1>what to replace it with. Professor tell Him has some

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<v Speaker 1>arguments about using fat tail distributions, but I think the

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<v Speaker 1>truth is people don't satisfy such simple there's no simple

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<v Speaker 1>model to replace it. So people have a hard time

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<v Speaker 1>mathematically with that. So when we're looking at models that

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<v Speaker 1>either depict the economy or an investment portfolio or any

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<v Speaker 1>specific asset class, how important is it for us not

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<v Speaker 1>to start out with assumptions that ultimately end up being disproven. Yes,

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<v Speaker 1>it's incredibly important all of those assumptions. A lot of

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<v Speaker 1>the models that the models that people make work for

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<v Speaker 1>a short time in a short regime when the markets

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<v Speaker 1>in a certain state, but as soon as things change,

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<v Speaker 1>it's driven by people. Obviously, that's almost the toutology, and

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<v Speaker 1>then all bets are off and there isn't some I mean,

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<v Speaker 1>part of what we were saying that exerved you read

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<v Speaker 1>was that there isn't a mathematics that describes people accurately,

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<v Speaker 1>and so you can't take solace in that. You have

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<v Speaker 1>to keep thinking, you have to stay aware. It's a

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<v Speaker 1>sort of human wish to find a formula that will

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<v Speaker 1>explain the market or explain what it's going to do,

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<v Speaker 1>but there isn't one, is my belief. Well, we certainly

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<v Speaker 1>can do worse than thinking about just basic mean reversion

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<v Speaker 1>as a way to think about different asset classes and

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<v Speaker 1>whether stocks, for example, are expensive or or inexpensive. Yes,

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<v Speaker 1>that's that's um. I think I think the right way

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<v Speaker 1>I agree with you, and I think the right way

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<v Speaker 1>to behave is is to use a mix of qualitative

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<v Speaker 1>and quantitative, not to be sort of blindingly quantitative. But

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<v Speaker 1>I don't think there's any I don't think there are

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<v Speaker 1>any permanent rules you look at the risk parity people.

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<v Speaker 1>I don't know if you're if your readers or your

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<v Speaker 1>listeners are familiar with rosparity. But that worked for a

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<v Speaker 1>long time. But that's not a solution either. Things. The

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<v Speaker 1>rule has change all the time within this and kent

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<v Speaker 1>osbin Folks has a fabulous book called Iceberg Risk. It

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<v Speaker 1>opens with two statisticians out at the tip of the

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<v Speaker 1>Titanic doing the Leonardo DiCaprio Kate Winslet act and the

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<v Speaker 1>Iceberg gets to cut to the chase. But Emmanuel Derman

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<v Speaker 1>the whole idea of binomial or conventional mathematics versus not

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<v Speaker 1>a chaos. I don't want to go to cast theory,

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<v Speaker 1>but a more disjoint mathematics. Which is right or do

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<v Speaker 1>we have to learn to use both? I think you

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<v Speaker 1>have to be I think you have to be disjoint.

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<v Speaker 1>I used to like to say, you know, quoting mau

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<v Speaker 1>Little thousand models bloom you know, or perverting mau Um

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<v Speaker 1>you have to do. It's good to think about as

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<v Speaker 1>many different models as you can that are consistent with

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<v Speaker 1>what you know, but have different futures, and be skeptical

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<v Speaker 1>of them all, but try to see which one works

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<v Speaker 1>best for now. So you know, prices over earnings models

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<v Speaker 1>or more complicated, you know, neoclassical binomial models. They all

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<v Speaker 1>have their fifteen minutes of fame, but they don't last forever.

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<v Speaker 1>We have fifteen minutes with you, which is a good thing.

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<v Speaker 1>Emmanuel Derman, please stay with us. Will continue with Professor

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<v Speaker 1>Derman of Columbia University his book of course, My Life

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<v Speaker 1>is a quant reflections on physics and finance. Coming back,

0:10:35.640 --> 0:10:38.480
<v Speaker 1>we'll talk to new Tonian mechanics Barry. I will not

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<v Speaker 1>mention s equals VOT plus one f GT squared. We're

0:10:42.200 --> 0:10:47.120
<v Speaker 1>not going there. We're not doing acceleration. Just did we

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<v Speaker 1>just did right? Futures up eleven and now for the

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<v Speaker 1>news Quatch free in New York. Here's Michael barn Thank

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<v Speaker 1>you very much, Tom Barry. The US is trying to

0:10:57.480 --> 0:10:59.760
<v Speaker 1>ease the concerns of its allies in Eastern Europe over

0:10:59.800 --> 0:11:03.719
<v Speaker 1>any increasingly aggressive Russia. Depending On announced today that it

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<v Speaker 1>will deploy an armored brigade combat team to Eastern Europe

0:11:07.240 --> 0:11:10.199
<v Speaker 1>along with a full set of equipment. There are about

0:11:10.880 --> 0:11:14.840
<v Speaker 1>soldiers in an armored brigade, along with dozens of heavy vehicles, tanks,

0:11:14.840 --> 0:11:18.320
<v Speaker 1>and other equipment. Donald Trump is defending his campaign manager,

0:11:18.480 --> 0:11:21.440
<v Speaker 1>who has been charged with simple battery after an incident

0:11:21.480 --> 0:11:25.560
<v Speaker 1>involving a female reporter. Trump says that campaign manager Curry

0:11:25.679 --> 0:11:29.280
<v Speaker 1>Lewandowski was just protecting him. It is a major blow

0:11:29.320 --> 0:11:33.319
<v Speaker 1>to Brazilian President Dilma Roussef, the country's biggest political party,

0:11:33.360 --> 0:11:37.080
<v Speaker 1>the Brazilian Democratic Movement Party, has left the governing coalition.

0:11:37.440 --> 0:11:40.320
<v Speaker 1>Russef has lost her key ally, just weeks before she

0:11:40.440 --> 0:11:43.959
<v Speaker 1>faces an impeachment vote in Congress. Global News twenty four

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<v Speaker 1>hours a day, powered by our twenty four in journalists.

0:11:47.000 --> 0:11:50.120
<v Speaker 1>I'm Michael Barr, Tom and Michael Thinks. So what's coming up?

0:11:50.200 --> 0:11:54.120
<v Speaker 1>We're going to talk about an interesting word within our investment.

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<v Speaker 1>Whether you're a sophisticate or not, the pain trade is

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<v Speaker 1>sometimes painful. With a manual Derman of Columbia. This is

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<v Speaker 1>Bloomberg Surveillance worldwide, counting down to the opening built brought

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<v Speaker 1>c m E Group US dot Indix Future is higher

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<v Speaker 1>futures up one hundred nine, and now's documented futures up

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<v Speaker 1>twenty eight. The acts in Germany's up one point eight

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<v Speaker 1>percent ten, Your treasury down six thirty seconds, the at

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<v Speaker 1>one two percent. Nine X screw oil up two point

0:13:06.200 --> 0:13:08.080
<v Speaker 1>two per cent, or eighty two cents to thirty nine

0:13:08.120 --> 0:13:10.640
<v Speaker 1>O nine. A barrel COMEX gold is down two tenths

0:13:10.640 --> 0:13:12.920
<v Speaker 1>per cent or two dollars fifty cents at twelve thirty

0:13:12.960 --> 0:13:15.400
<v Speaker 1>five an ounce. The euro and dollar thirteen O eight.

0:13:15.480 --> 0:13:18.840
<v Speaker 1>The end one twelve point six five. US Treasury Secretary

0:13:18.960 --> 0:13:22.440
<v Speaker 1>Jack lou is speaking in Washington this morning right now,

0:13:22.520 --> 0:13:26.360
<v Speaker 1>actually saying on justified sanctions may hurt business in the US,

0:13:26.440 --> 0:13:29.480
<v Speaker 1>and that's a bloomberg business flash. Tom and Barry Karen,

0:13:29.920 --> 0:13:33.320
<v Speaker 1>thank you so much, greatly appreciated. Bloomberg Surveillance, Berry, Ridholtz

0:13:33.920 --> 0:13:37.800
<v Speaker 1>and Tom Keane with the Sammanuel Derman of Columbia University

0:13:37.840 --> 0:13:42.920
<v Speaker 1>re having a spirited discussion on humility and quantitative finance, folks.

0:13:43.040 --> 0:13:46.760
<v Speaker 1>One of the great entry books on this for those

0:13:46.800 --> 0:13:50.080
<v Speaker 1>of you that don't know the Newtonian mechanics that gets

0:13:50.160 --> 0:13:55.040
<v Speaker 1>you to the conversation is Frequently Asked Questions in Quantitative

0:13:55.080 --> 0:14:00.360
<v Speaker 1>Finance by Paul Wilmot. It is short, sweet, beautifully clear,

0:14:00.920 --> 0:14:05.319
<v Speaker 1>page by page, frequently ask questions and quantitative funance. It

0:14:05.400 --> 0:14:08.680
<v Speaker 1>also happens to be a fun book as well. Emmanuel Dermott,

0:14:08.679 --> 0:14:11.000
<v Speaker 1>I want to talk about what we learned from failure

0:14:11.080 --> 0:14:15.000
<v Speaker 1>not seem to Leb wrote the brilliant Anti Fragile about

0:14:15.120 --> 0:14:19.160
<v Speaker 1>learning from our disorder, learning from when things break, how

0:14:19.240 --> 0:14:22.560
<v Speaker 1>to move on and do better. Explain to us from

0:14:22.600 --> 0:14:26.960
<v Speaker 1>the Emmanuel Derman world, how we get wiser from our

0:14:27.040 --> 0:14:34.120
<v Speaker 1>quantitative mistakes. You know how sort of take us off

0:14:34.160 --> 0:14:35.640
<v Speaker 1>to a point of view to it, and that is

0:14:35.720 --> 0:14:40.240
<v Speaker 1>that people are people are. Nutrition and finance are kind

0:14:40.280 --> 0:14:42.600
<v Speaker 1>of very simple and are very similar, and that people

0:14:42.640 --> 0:14:46.600
<v Speaker 1>are always looking for some little bit of data that

0:14:46.720 --> 0:14:49.120
<v Speaker 1>they can use to predict the future. So for yours,

0:14:49.320 --> 0:14:52.640
<v Speaker 1>if you look at nutrition, um, people thought you needed

0:14:52.680 --> 0:14:54.680
<v Speaker 1>a lower amount of vitamin D, and then I think

0:14:54.760 --> 0:14:57.600
<v Speaker 1>you need the U s D. A keeps changing the

0:14:58.240 --> 0:15:02.400
<v Speaker 1>bitimum recommended requirements or vitamins and for various kinds of food,

0:15:02.480 --> 0:15:05.360
<v Speaker 1>and ten years later they change everything. And that's because

0:15:05.400 --> 0:15:07.880
<v Speaker 1>people have the terrible need, which is understandable, to be

0:15:08.000 --> 0:15:10.760
<v Speaker 1>told what to do when there isn't always a clear answer.

0:15:10.880 --> 0:15:14.600
<v Speaker 1>And I think finance is very similar. People glom onto

0:15:14.800 --> 0:15:17.040
<v Speaker 1>some kind of quantitative model and they use it for

0:15:17.080 --> 0:15:19.640
<v Speaker 1>a while. You see this a lot in statistical arbitragety.

0:15:19.680 --> 0:15:21.440
<v Speaker 1>It may work for a while, but then it fails.

0:15:21.960 --> 0:15:24.800
<v Speaker 1>And I think the lesson is kind of a philosophical

0:15:24.880 --> 0:15:27.400
<v Speaker 1>one that you sort of shouldn't be an idolator. An

0:15:27.440 --> 0:15:29.440
<v Speaker 1>idolator in the sense that you think you can make

0:15:29.480 --> 0:15:33.480
<v Speaker 1>an image of society, of human the human mind with

0:15:33.680 --> 0:15:36.040
<v Speaker 1>a formula or a prescription, and that it's always going

0:15:36.080 --> 0:15:42.840
<v Speaker 1>to work. So given that constantly skeptical, constantly skeptical, constantly

0:15:42.880 --> 0:15:46.920
<v Speaker 1>trying out new models, but don't don't make the transision

0:15:46.960 --> 0:15:49.560
<v Speaker 1>into hubris where you think you found the permanent solution.

0:15:50.080 --> 0:15:53.520
<v Speaker 1>So so, given that, does that mean investors have to

0:15:53.800 --> 0:15:59.040
<v Speaker 1>constantly be rethinking their philosophy in light of how humans

0:15:59.200 --> 0:16:02.120
<v Speaker 1>behave and miss behave in the market or can we

0:16:02.280 --> 0:16:06.160
<v Speaker 1>come up with the belief system that recognizes both the

0:16:06.280 --> 0:16:10.120
<v Speaker 1>math half and the psychology half of what takes place

0:16:10.240 --> 0:16:14.800
<v Speaker 1>in capital markets? Yeah, I think that psychology is dominant

0:16:14.920 --> 0:16:17.600
<v Speaker 1>and the math is an attempt to describe the psychology

0:16:18.720 --> 0:16:23.200
<v Speaker 1>and to formalize it in mathematical terms. And there isn't

0:16:23.240 --> 0:16:26.120
<v Speaker 1>going to be a permanent answer because when when regimes

0:16:26.160 --> 0:16:29.720
<v Speaker 1>in the market change, things change. And um, I look

0:16:29.720 --> 0:16:33.080
<v Speaker 1>a lot of option pricing and the nature of options

0:16:33.200 --> 0:16:35.480
<v Speaker 1>on for example, on the S and P changed after

0:16:35.560 --> 0:16:37.880
<v Speaker 1>the seven crash, and it's never been the same sense.

0:16:37.920 --> 0:16:42.000
<v Speaker 1>I'm writing a book called the Volatility Smile excuse me,

0:16:42.080 --> 0:16:45.320
<v Speaker 1>which is all about that phenomenon. And then gold similar

0:16:45.400 --> 0:16:48.200
<v Speaker 1>the options on gold suddenly changed in the late nineties

0:16:48.240 --> 0:16:51.760
<v Speaker 1>when the Swiss Central Bank did something different. And so yeah,

0:16:51.800 --> 0:16:55.240
<v Speaker 1>you've got to constantly understand how people psychology is changing

0:16:55.280 --> 0:16:57.800
<v Speaker 1>and then use the relevant math for a while. The

0:16:57.920 --> 0:17:02.000
<v Speaker 1>relevant math has an anchor. It may be a philosophical

0:17:02.080 --> 0:17:04.760
<v Speaker 1>anchor which is too deep for our radio. We wouldn't

0:17:04.800 --> 0:17:06.760
<v Speaker 1>even do that on TV. I mean, that's something you do.

0:17:07.400 --> 0:17:10.680
<v Speaker 1>You know with that fancy bookstore by Columbia Universities around

0:17:10.720 --> 0:17:13.160
<v Speaker 1>having a cup of coffee. It is a great bookstore,

0:17:13.200 --> 0:17:15.639
<v Speaker 1>and I think it's a hundred and twelve street. Uh uh,

0:17:16.200 --> 0:17:20.760
<v Speaker 1>Professor Dermot. Everybody wants to know where Bill Sharp's risk

0:17:20.880 --> 0:17:25.359
<v Speaker 1>free rate is. Every sophisticated global Wall Street or listening worldwide.

0:17:25.840 --> 0:17:30.280
<v Speaker 1>Those less sophisticated, they foundationally know there's a thing called

0:17:30.320 --> 0:17:32.600
<v Speaker 1>the risk free rate? Do you know where it is

0:17:32.800 --> 0:17:35.520
<v Speaker 1>right now? Or have we so distorted the system We

0:17:35.600 --> 0:17:39.200
<v Speaker 1>don't have a clue where our anchor is a little

0:17:39.240 --> 0:17:41.159
<v Speaker 1>bit on the side of what you just said that

0:17:41.320 --> 0:17:45.439
<v Speaker 1>I'm as distorted the system totally. The risk free rate

0:17:45.560 --> 0:17:48.560
<v Speaker 1>is low because some people are very risk averse, but

0:17:49.080 --> 0:17:52.359
<v Speaker 1>it's being set by the Fed in some very artificial

0:17:52.440 --> 0:17:55.240
<v Speaker 1>way that we've all gotten used to. And um um,

0:17:56.000 --> 0:17:58.200
<v Speaker 1>I think nobody really knows is it negative? Is it

0:17:58.600 --> 0:18:02.080
<v Speaker 1>going to get more negative? It's become It's it's very

0:18:02.119 --> 0:18:04.440
<v Speaker 1>strange for me. I mean, interest rates on the price

0:18:04.560 --> 0:18:09.360
<v Speaker 1>of money, and we're always against manipulating, manipulating the price

0:18:09.440 --> 0:18:11.320
<v Speaker 1>of things, and yet we all live with the fit

0:18:11.400 --> 0:18:15.600
<v Speaker 1>manipulating the price of money. That is the standard background.

0:18:16.080 --> 0:18:19.760
<v Speaker 1>There's always going to be some force out there impacting

0:18:19.840 --> 0:18:22.760
<v Speaker 1>what takes place in the market. It's our job to

0:18:23.560 --> 0:18:27.240
<v Speaker 1>figure out how to navigate those waters, isn't it. Yes?

0:18:27.440 --> 0:18:29.879
<v Speaker 1>And these days, for the last five years, it's all

0:18:29.920 --> 0:18:33.359
<v Speaker 1>a risk on risk off situation where people either punge

0:18:33.440 --> 0:18:35.399
<v Speaker 1>in and think everything is going to be good because

0:18:35.480 --> 0:18:39.119
<v Speaker 1>the fit is in is doing something good, or um

0:18:39.560 --> 0:18:42.520
<v Speaker 1>risk off and everything's in trouble. Did you have a

0:18:42.640 --> 0:18:46.040
<v Speaker 1>cue full and as or slide rule? Excuse me? Did

0:18:46.080 --> 0:18:48.840
<v Speaker 1>you have a slide role when you were in school? Oh? Yes,

0:18:49.280 --> 0:18:51.640
<v Speaker 1>once treated a picture of one a few years ago. Yeah,

0:18:51.680 --> 0:18:54.200
<v Speaker 1>I've got this old fabric castell slide rule from the

0:18:54.320 --> 0:18:57.680
<v Speaker 1>seventies of the sixties. Am I right? In that we

0:18:57.760 --> 0:19:01.840
<v Speaker 1>sort of lost something without the physical feeling of logarithms

0:19:01.880 --> 0:19:04.800
<v Speaker 1>off a slide rule versus everybody today. All your kids

0:19:04.840 --> 0:19:08.360
<v Speaker 1>at school today are all wis bang. You know, that's

0:19:08.400 --> 0:19:10.240
<v Speaker 1>a that's a I never thought of that, but that's

0:19:10.280 --> 0:19:14.960
<v Speaker 1>a that's a great, great insight in that calculation used

0:19:15.000 --> 0:19:17.560
<v Speaker 1>to be a physical thing with the slide rule. Yeah, well,

0:19:17.600 --> 0:19:20.520
<v Speaker 1>you used to look up logarithmic tables before that. Exactly

0:19:20.560 --> 0:19:23.040
<v Speaker 1>high school, Yeah, exactly. I mean this has been wonderful.

0:19:23.080 --> 0:19:25.480
<v Speaker 1>Emmanuel Dermot. I hope we can do this again. He

0:19:25.640 --> 0:19:29.760
<v Speaker 1>is a Columbia University, which barely describes his contribution to

0:19:30.359 --> 0:19:34.119
<v Speaker 1>the underpinnings of finance. Things branted every day, ran the

0:19:34.280 --> 0:19:38.960
<v Speaker 1>infamous quantitative Strategies group at Dolman SATs yes, and had

0:19:39.359 --> 0:19:42.399
<v Speaker 1>a number of other um efforts, of course, out of

0:19:42.440 --> 0:19:45.359
<v Speaker 1>the University of Cape Town originally, and of course his

0:19:45.960 --> 0:19:50.119
<v Speaker 1>truly his Columbia University. It's a very Columbia university. It is.

0:19:50.240 --> 0:19:52.320
<v Speaker 1>Let me do a shameless plug for the masters in

0:19:52.400 --> 0:19:56.760
<v Speaker 1>business we did with him. It was phenomenal. Quantz still

0:19:56.840 --> 0:19:59.280
<v Speaker 1>up on iTunes, Still up on iTunes. Emmanuel Derman was

0:19:59.359 --> 0:20:06.159
<v Speaker 1>very Ridles and Tom Key. This is Bloomberg's surveillance. Counting

0:20:06.200 --> 0:20:07.600
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