The science behind Wall Street
The latest episode in the Perimeter Public Lecture Series webcasts is called The Physics of Wall Street. It focuses on how the underpinnings of our financial system were developed by physicists. The speaker is James Weatherall of the University of California, Irvine, in this live streaming event.
Modern finance is built on complex mathematical tools developed by “quants”, a different breed of investor with expertise in fields such as physics, mathematics, and computer science. These models have been the basis for both new trading strategies and new financial products, leading to untold wealth.
In some cases, however, these models have done more damage than good, making markets less stable and introducing new systemic risk.
In his Perimeter Institute Public Lecture, James Weatherall, Professor of Logic and Philosophy of Science at the University of California, Irvine tells the story of how, in the aftermath of World War II, some innovative physicists and mathematicians saw surprising connections between physics, gambling, and finance, and put those connections to use to become the first quants. He will introduce some of the ideas behind modern quantitative trading and show how the history of mathematical reasoning in finance reveals that these models can be extremely useful — but only if we understand their limitations.