CFA CFA General Where’s my Nobel Prize?

Where’s my Nobel Prize?

  • This topic has 9 replies, 6 voices, and was last updated Apr-17 by christine.
  • Author
    Posts
    • Marc
      Participant
      Up
      0
      Down

      This has been bothering me for a few weeks now. Has anyone else noticed that Sharpe, Markowitz, Arrow, Modigliani, Miller, et al. have it completely wrong?

      Systematic risk? Broad, market-wide risk exposure that cannot be diversified away? Excuse me? I think you’ll find that should be referred to as Systemic risk.

      I am no longer able to do any readings without getting angry. It’s like the Emperor has no clothes. I wonder if at some point, one of them realized this mistake and said something like “Guys, we’ve totally used the wrong word to describe one of the fundamental aspects of our work. Are we supposed to issue a correction or something?” And the others said,”Let’s just not say anything and hope nobody notices.”

      Well, I noticed. Where’s my Nobel Prize? What have I done to earn it? Oh, I don’t know, how about “for having pointed out the schoolboy error that has been blindly regurgitated by generations of economists and practitioners.” Is that good enough for you?

    • Sarah
      Participant
      Up
      1
      Down

      I’ve been thinking of the nonsense theory that was forced down my throat and then I had an epiphany. They tried to confuse the majority of finance disciples so they try to get their head around these nonsensical theories and apply them to the real world while the big guys laugh at the rest of us and earn all the “alpha”.

      …wait @marc what is wrong with systematic risk?

    • Marc
      Participant
      Up
      1
      Down

      From the very useful website run by Washington State University:

      By far the more common word and the one you should use if you are in doubt is “systematic.” It refers to things that are arranged or dealt with according to some system or organized method. “Gerry systematically sorts his socks into piles: those that are still wearable and those that are too smelly.”

      Often “systematic” and “systematically” are used metaphorically to imply that something is done so consistently that it almost seems there must be a system behind it: “Tom systematically leaves the toilet seat up.” If you need a synonym for “consistent,” the word you need is “systematic.”

      “Systemic” is a much rarer scientific and technical term referring to parts of a body or system. It is frequently used in medicine and biology. A systemic disease affects many parts of the body. A systemic herbicide may be sprayed on the leaves of a weed, but it spreads down to its roots to kill the whole plant. A systemic problem in banking affects many parts of the banking system.

      If you’re talking about how something is done according to a system, the word you want is “systematic.”

      If you’re talking about something happening to or inside of a system, the word you want is “systemic.”

      public.wsu.edu/~brians/errors/systemic.html

    • Marc
      Participant
      Up
      3
      Down

      @diya Based on the above definitions, I think systemic is much more appropriate.

    • Vijay
      Participant
    • Sarah
      Participant
      Up
      1
      Down

      @marc seems like you’ll have to take a rain-check on the noble prize. Seems like the professors have their bases covered. :p

    • Sophie Macon
      Keymaster
      Up
      2
      Down

      Aww man, I was hoping to attend the award ceremony!

    • Zee Tan
      Keymaster
      Up
      1
      Down

      Urgh. Having pretty much first-row seats to the Lehman collapse, I never want to see a systemic risk event up close ever again.

    • Marc
      Participant
      Up
      4
      Down

      While we’re on the subject of words, what is the correct way to describe one who is not ruthless? Ruthful?

    • christine
      Participant
Viewing 9 reply threads
  • You must be logged in to reply to this topic.