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Home » Behavioral Finance » James Montier (GMO) on the Flaws of Finance

James Montier (GMO) on the Flaws of Finance

James Montier ( GMO ) on the Flaws of Finance and VaR in specific (CFA presentation May 2012) 

Some takeaways:

  • VaR is radioactive material because you’re not looking at the risk that matters most. Tail risk!
  • CAPM is CRAP (Completely Redundant Asset Pricing)…
  • Economists envy science and mathematics…
  • Optimization (e.g. leverage) is mathematically beautiful, but in business downright dangerous…mother nature works with extensive redundancies…(two lungs kidneys etc.)

At GMO’s website (free registration required) you can find a paper based on the speech Montier delivered at the 65th Annual CFA Institute Conference in Chicago on May 6, 2012:

https://www.gmo.com/Europe/CMSAttachmentDownload.aspx?target=JUBRxi51IIBygYyITBInjNA2F%2f9X3Sdy1%2bKjwsV6N%2bX2pD6sXa1S85tJ0F7avyzmVC%2bWr%2bQ5rfRFT2VzSooE4IjewKtjeYGp%2bYF%2b1%2bgJIcZbKMKOAxKRrw%3d%3d


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