History

 by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc.

www.RSSsolutions.com

info@RSDsolutions.com 

 

How many students of risk study history?  In particular how many risk students study the history of risk?  How many financial engineering programs have a risk course as a core course or even as an elective?

 

We all know the well worn saying that “those who ignore history are condemned to repeat it”.  Studying history helps us to avoid the mistakes (and also learn from the successes) of the past.  Furthermore, studying history humbles us in that the more history we delve into the more we learn that others have struggled with the same issues and worked out solutions very similar to our current ones.  A classic example of this is the options research of Louis Bachelier whose work on Brownian motion went relatively unnoticed for several years.

 

Perhaps instead of concentrating on a new statistics package, the profession of risk might be better off if the occasional history book was cracked.  Peter Bernstein’s, “Against the Gods: The Remarkable Story of Risk” http://tinyurl.com/3cfpzar is a decent place to start.

 

Einstein

by Rick Nason, PhD, CFA

Partner, RSD Solutions Inc

www.RSDsolutions.com

info@RSDsolutions.com

 

 

I am currently sitting in my hotel room in a relatively small Midwestern town waiting for a conference to start tomorrow at which I am speaking.  Not really feeling all that great so I decided to take a break and read a book that I picked up last week titled “The Quantum Ten”, by Sheilla Jones.  I am really enjoying the book (so far).  It is about the birth of quantum mechanics and the personalities of the people who created this very important paradigm shift in physics.

 

As I was reading along I read the following quote by Einstein who is talking about his well known days in the Swiss Patent Office, where he had to go as no one would accept his thesis(s) and thus he could not get a position as a physics professor or researcher.

 

“  “In a way”, said Einstein, “this saved my life; not that I would have died without it, but I would have been intellectually stunted.”  “

 

Upon reading that I thought about what the outcomes might be if we take all of the people coming out of MBA programs and Financial Engineering programs and give them jobs that are quite different for what they have been groomed for.  That would allow for maturation of the knowledge, development of a better world view, and especially in the case of risk would avoid academic group think.

 

How many of our graduates are “intellectually stunted” because they are pushed into a specific line job too early – before they have had time to develop.  Every wine drinker will get this concept.