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The derivatives industry is built on arcane, often impenetrable ideas. Instead of publishing papers full of math, we decided on a no-equations policy. The challenge was to get leading theorists to talk about their ideas in a way that could be understood by any MetroNorth commuter. We also tried hard to relate how theory leads to practice.

"Over the past couple of years, new kinds of predictabilities coming into play. I think that's because there are a lot of unsophisticated investors entering the market, thanks to the raging bull market."
- Andrew Lo, professor of finance at MIT's Sloan School of Management
"The resemblance between the Long-Term Capital Management affair and the 1987 crash was uncanny. In both cases, the potential difficulties for the economy were enormous; and in both cases, the Federal Reserve felt it necessary to call investment bankers or corporations together to save the day."
- Mark Rubinstein, professor in the Haas School of Business at the University of California at Berkeley





"You don't want to turn powerful mathematical procedures loose on your best estimates without some control and caution, because you might get some silly answers."
- William Sharpe, professor of finance at Stanford University's Graduate School of Business
   
"You need to have traders understand and be frequently reminded of the assumptions built into the models. And you need to give them as much insight as possible about where those models break down and about the potential errors associated with the models."
- Eric Reiner, managing director at Warburg Dillon Reed
"There is a view on the part of some folks that the insurance people are unsophisticated. That view is misguided. Insurance is a subtle business. It's possible to write a lot of bad business that seems quite profitable, because the losses come in after you write the business."
- Steve Ross, professor of finance and economics at MIT
Plus
The World According to Robert Jarrow
The World According to Emanuel Derman
The World According to John Hull
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