Term Project 1 The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb Random House 2007, revised 2010 Since the economy began to falter in Summer 2008, the press in news briefings and commentaries has given considerable exposure to the negative role of “quants” in the near collapse of the entire financial system. Two examples of the above listed articles are 1) “Risk Mismanagement: WERE THE MEASURES USED TO EVALUATE WALL STREET TRADES FLAWED? OR WAS THE MISTAKE IGNORING THEM?”, J. Nocera, New York Times Magazine Cover Story January 4, 2009 (see below) 2) Buffett Accepts Blame and Faults Others”, D. Segal, NY Times, March 1, 2009, The definition of “quant” as given in “The Black Swan” (page 19) is: A “quant” is a brand of industrial scientist who applies mathematical models of uncertainty to financial (or socioeconomic) data and complex financial instruments. (P 19). In his book Mr. Taleb references/discusses a wide range of quantitative topics and tools that we will be discussing in this course including: Topic Page(s) Confidence Intervals 138-140 Optimization, Game Theory 184 Linear Regression 186-187 Randomness 197-198 Network Theory 226 Normal Distribution 231 Standard Deviation, σ 239, 250 Mean Deviation 249
