Mathematical equations that seek to calculate risks in financial markets, especially in options trading. Since there will always be a residual risk due to external shocks, a residue of uncertainty remains, causing all calculations to collapse in the event of an emergency. – This was very clearly demonstrated in 1998 with the collapse of Long-Term Capital Management (LTCM), a hedge fund advised by leading financial mathematicians, which in this case was derailed by the Russian debt moratorium with its domino effect. LTCM had only been founded in 1993 and never had more than 190 employees. But its profits of $2.1 billion in 1996 were already higher than those of many large companies in the world. Before the collapse, LTCM had assets of 140 billion USD, and investors were promised a return of forty percent (!!) with minimal risk. Within only five weeks, nothing remained of all this. – Also after the Islamist attack on the World Trade Center in New York on September 11, 2001, most of the relevant calculations were overturned. – See Investment Model, Behavioural Finance, Valuability, Daimonion, Fibonacci Sequence, Financial Engineering, Financial Market Analysis, Financial Mathematics, Financial Psychology, Modigliani-Miller Theorem, Factual Design, Shocks, Structural, Sell-in-May Effect, Casino Doctrine, Theorists.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/