Money Penny

Black Swans, Real Estate and Financial Stocks

I think quant models are another set of tools in investment decision toolbox (similar to black swan thinking, it cannot be totally discounted). Now individual investors can make use of it to make informed decisions for adapting/tweaking their portfolios. Whether good or bad, it will depend on perspective !! A billionaire will not bat an eye lid for betting $1000 for 50/50 chance of doubling it. But for hourly worker this 50/50 chance is not worth the risk and ignores it. But may be at 90/10 chance for doubling will make him jump to it. It is all matter of perspective on how you use your tools. The modeling approach can be questioned (a separate topic), but relativeness remains same for calculating 50/50 or 90/10. From my perspective, I prefer continuously adapting quant models as opposed to monte carlo simulation (a separate topic of discussion).