Ep. 772: Wake Up and Think with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
00:00
The Differences Between Finance and Physics
A finance paper looks much more formal than most physics papers these days. Most financial models don't predict the future, it's not the way people in the trading will use them. Black Sholes tells you if you know the price of a short term bond interest rates,. and if you knowThe price of a stock, it'll tell you roughly what the price of an option should be. A lot of finance is really glorified in circulation. That's not an insult, it's just a fact. I kind of like to say that all financial models are really short volatility - they're going to do badly when volatility increases.
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