Quote from ljyoung:
Thanks martinghoul. That was very illuminating.
As for the 99/1 efficacy of the current modelling of market 'happenings', it sounds suspiciously like a Taleb scenario where the wings start to fail the model-builders. I am not a mathematician but power series would seem to suffer from the same disease as a Fourier transform which is that anything can be modelled if one includes enough terms.
However we must do something, I agree, and perhaps enlightened empiricism is as good as anything else, where the 'enlightened' term refers to the fact that the builders appreciate their construction is not the Rosetta stone for the markets and as such can be adjusted (or dumped) if conditions merit it.
lj
