Brant and Walt are discussing, simplistically, the causes of current economic woes.
Brant: Finance is run by quants, people from a maths-physics background.
Walt: Like you.
Brant: That’s my point. It’s time to be humble. We thought we could apply the laws of physics to markets and expect them to behave. Produce predictable outcomes.
Walt: But economics isn’t just about resources. The world is full of people. Trying to use maths to predict human behavior will end in tears.
Brant: Human confidence, human fear, that’s what took us up and took us down. We need models, but we need to include the qualitative as well as the quantitative.
Walt: A role for quants and, dare I say it, qualts, as well?
Quants, those who follow a numbers approach. Qualts? Someone trained in the human sciences?
Some quants, like Emanuel Derman, are beginning to suggest both approaches are needed.