Mr. Lo is confident that his adaptive-markets approach can help model and quantify liquidity crises in a way traditional models, with their narrow focus on expected returns and volatility, cannot. “We’re going to see three-dimensional financial modeling and eventually N-dimensional modeling,” he said.
MBAs aren't good enough at math as it is. Now, some academic thinks that modeling markets in N dimensions is going to help?
A question that is beginning to interest FLG more and more is the extent to which financial models influence the market and consequently make themselves irrelevant. FLG thinks it might be some sort of recursion or uncertainty principle.
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