Is there a Gauss or Einstein of investing?

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Heir-A-Parent
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Is there a Gauss or Einstein of investing?

Post by Heir-A-Parent » Mon Mar 26, 2012 10:02 pm

Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

The only names that come to mind are Walter Bagehot, Benjamin Graham, and maybe Jack Bogle or Warren Buffett.

I think the problem is that compared to highly theoretical fields like mathematics or physics success in investing is more about will power and consistency than intellectual sophistication. Once you understand the time value of money and the risk/return tradeoff most things fall into place.

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Re: Is there a Gauss or Einstein of investing?

Post by bob90245 » Mon Mar 26, 2012 10:14 pm

Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.

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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Mon Mar 26, 2012 10:31 pm

Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

The only names that come to mind are Walter Bagehot, Benjamin Graham, and maybe Jack Bogle or Warren Buffett.

I think the problem is that compared to highly theoretical fields like mathematics or physics success in investing is more about will power and consistency than intellectual sophistication. Once you understand the time value of money and the risk/return tradeoff most things fall into place.


Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy. In the past hundred years they have not learned that social phenomena are principally different from physical laws, let alone mathematics.

To get an interesting perspective on the economics giants, and particularly those who get the Prize in Economic Sciences in Memory of Alfred Nobel, read Nassim Taleb's books. He is not kind to Gauss either.

Jack Bogle stands out in that his creation of low-cost broad-based index funds is by far the most useful financial invention. Jack should really be invited to Stockholm...

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Re: Is there a Gauss or Einstein of investing?

Post by Wolkenspiel » Mon Mar 26, 2012 10:41 pm

bob90245 wrote:There are a dozen or so.

They may be " intellectual giants of investing", but Einstein was a singular figure in the history of science.

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Re: Is there a Gauss or Einstein of investing?

Post by 555 » Mon Mar 26, 2012 10:55 pm

Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

The only names that come to mind are Walter Bagehot, Benjamin Graham, and maybe Jack Bogle or Warren Buffett.

I think the problem is that compared to highly theoretical fields like mathematics or physics success in investing is more about will power and consistency than intellectual sophistication. Once you understand the time value of money and the risk/return tradeoff most things fall into place.


There can't be a Gauss or Einstein of investing.

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Re: Is there a Gauss or Einstein of investing?

Post by 555 » Mon Mar 26, 2012 10:56 pm

bob90245 wrote:There are a dozen or so. These two articles provide a listing:
http://www.ifa.com/12steps/step2/step2page2.asp
http://www.ifa.com/12steps/step2/step2page3.asp

There is no such thing as a Nobel Prize in Economics.

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Re: Is there a Gauss or Einstein of investing?

Post by Watty » Mon Mar 26, 2012 11:28 pm

At best some of the names mentioned might be more comparable to Newton or Galileo because what was once a ground breaking ideas now seems obvious and can be pretty well understood by a first year college student.

Even today I would bet there is a very limited number of people in the world that really understand what the heck Einstein was really talking about.

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Re: Is there a Gauss or Einstein of investing?

Post by xerty24 » Tue Mar 27, 2012 3:18 am

Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

yes, but rather than publish how the markets work he's worth $10B instead.

http://en.wikipedia.org/wiki/James_Harris_Simons
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Re: Is there a Gauss or Einstein of investing?

Post by Valuethinker » Tue Mar 27, 2012 3:27 am

Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

The only names that come to mind are Walter Bagehot, Benjamin Graham, and maybe Jack Bogle or Warren Buffett.

I think the problem is that compared to highly theoretical fields like mathematics or physics success in investing is more about will power and consistency than intellectual sophistication. Once you understand the time value of money and the risk/return tradeoff most things fall into place.


Graham and Buffett and Bogle would not count from an academic point of view.

Merton, Modigliani, Miller, Black, Scholes, Traynor, Sharp, Fama, French, Roll, Jensen.

I forget which one invented mean-variance analysis (Markowitz) but that's probably the fundamental discovery from the point of view of modern economics.

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Re: Is there a Gauss or Einstein of investing?

Post by kontango » Tue Mar 27, 2012 5:15 am

VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy. In the past hundred years they have not learned that social phenomena are principally different from physical laws, let alone mathematics.
Victoria


Certainly there is some truth to "physics envy" (at least in the early days of economics), but I think it's difficult to so easily discount the sheer amount of knowledge that has been gained in finance over the past six decades. What was known 60 years ago pales in comparison to what we know now. There's much more to be done, but I believe we'd all be much worse off we didn't have the accumulated knowledge of academic finance (and economics). Just my opinion, of course. :-)

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Re: Is there a Gauss or Einstein of investing?

Post by nisiprius » Tue Mar 27, 2012 5:59 am

Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.
1) No. It's too prescientific. John C. Bogle is a product innovator, perhaps analogous to Henry Ford, not to Gauss or Einstein. There might be some Carnots or Nicolaus Ottos in investing--early people working in thermodynamics and literally trying to figure out why there were limits to engine efficiency--but no Gausses or Einsteins. Ford just knew about engines and chain drives and thought he could put the pieces together to make a car, and, having done so, thought he could manufacture and sell them.

There are plenty of Tycho Brahes (data gatherers). Plenty of Franz Joseph Gall's (phrenology--an example of a good-faith attempted theory that was widely accepted as valid for quite a long time). Fama and French might be Johannes Kepler's (find valid patterns in the data but can't explain why, beyond saying they're really there). No Galileos.

2) But if we must, I'd nominate Charles Dow, whose Dow Jones Average of 12 stocks in 1896 was the first, or at least the first influential index of any kind. I defy you to find any other computational gizmo in investing that's been as universal, durable, or as solid a part of the collective mental furniture.

3) We said "investing," not "economics," right? People who have developed a rigorous quantitative theory that is actually used applied in investing? Harry Markowitz, and Fama and French, perhaps Myron J. Gordon of the Gordon Equation. But not in the Gauss or Einstein league. In fact if you search on "gordon equation" it is beaten by two other different equations, in physics and in math, of the same name. Their real importance is too recent to tell and because I'm personally skeptical of how important it is. How many mutual funds actually calculate efficient frontiers or factor loadings when constructing portfolios, or build products designed for people who do? Not zero, certainly, but DFA claims a grand total $213.7 billion under management, less than the PIMCO Total Return mutual fund alone.

4) Not sure what names are associated with the VaR (Value at risk) methodology. That's certainly a Wikipedia's article doesn't seem to mention a single name but suggests it was highly developed at J. P. Morgan (and the group that developed it was later spun off into a company called RiskMetrics. If we could find out who first used the unusual initialism VaR we might have a name. The problem with VaR is that it's like phrenology--which was, at least once, widely accepted and applied (e.g. in criminology) but whose validity is controversial.

And Charles Dow again. Developer of Dow theory, which is certainly the forerunner of modern technical analysis. Im sure as of 2012, there are more investors that believe in and directly make personal use of technical analysis than there are people using modern portfolio theory, and I wouldn't be surprised if there are more such investors doing that than investing in index funds.

P. S. It was a fantastic book by Paul Collins, The Trouble with Tom: The Strange Afterlife and Times of Thomas Paine, that got me tuned in to the importance of phrenology. Ever notice how often novels written in the late 1800s will describe character's "physiognomy" or countenance in a way that seems little odd, or off, as in Moriarty saying to Sherlock Holmes "You have less frontal development that I should have expected" or (google, click click) "The Labassecouriens must have a large organ of philoprogenitiveness?" Phrenology. They seriously thought you could analyze and diagnose people by examining the bumps on their skulls.
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Re: Is there a Gauss or Einstein of investing?

Post by Wagnerjb » Tue Mar 27, 2012 8:07 am

Valuethinker wrote:
Heir-A-Parent wrote:Graham and Buffett and Bogle would not count from an academic point of view.

Merton, Modigliani, Miller, Black, Scholes, Traynor, Sharp, Fama, French, Roll, Jensen.

I forget which one invented mean-variance analysis (Markowitz) but that's probably the fundamental discovery from the point of view of modern economics.



I agree with the list....those are the kinds of people that fundamentally changed investing in our lifetime.
Andy

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Re: Is there a Gauss or Einstein of investing?

Post by magician » Tue Mar 27, 2012 8:23 am

VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy.

Now you sound like Dick Purcell.

;)
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Re: Is there a Gauss or Einstein of investing?

Post by magician » Tue Mar 27, 2012 8:26 am

Valuethinker wrote:I forget which one invented mean-variance analysis (Markowitz) . . . .

I'm pretty sure that it was invented by . . . Harry Markowitz.

;)
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Re: Is there a Gauss or Einstein of investing?

Post by magician » Tue Mar 27, 2012 8:30 am

555 wrote:
bob90245 wrote:There are a dozen or so. These two articles provide a listing:
http://www.ifa.com/12steps/step2/step2page2.asp
http://www.ifa.com/12steps/step2/step2page3.asp

There is no such thing as a Nobel Prize in Economics.

Although properly known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, it is commonly known as the Nobel Prize in Economics. I suspect that the intent and meaning of the prize is more important than the name ascribed to it.
Simplify the complicated side; don't complify the simplicated side.

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Re: Is there a Gauss or Einstein of investing?

Post by tadamsmar » Tue Mar 27, 2012 9:17 am

magician wrote:
VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy.

Now you sound like Dick Purcell.

;)


Actually, she sounds like MIT's Andrew Lo:

" Warning: Physics Envy may be Hazardous to your Wealth. In this talk Andrew Lo addresses the problem of finding the right level of abstraction with which to think about economic phenomena. He compares economics to physics, with some surprising results."

http://mitworld.mit.edu/video/794

Also, see the paper:

http://web.mit.edu/alo/www/Papers/physics8.pdf

The grid on Page 51 is one of the best things I have seen for understanding risk and uncertainty. You do need to read some of the text to understand the grid, most likely.

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Re: Is there a Gauss or Einstein of investing?

Post by magician » Tue Mar 27, 2012 9:55 am

tadamsmar wrote:
magician wrote:
VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy.

Now you sound like Dick Purcell.

;)


Actually, she sounds like MIT's Andrew Lo . . . .

Given that Dick Purcell has used the phrase dozens of times here at Bogleheads, she sounds like Dick Purcell.

Maybe Dick Purcell sounds like Dr. Lo.
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Re: Is there a Gauss or Einstein of investing?

Post by momar » Tue Mar 27, 2012 10:11 am

Wolkenspiel wrote:
bob90245 wrote:There are a dozen or so.

They may be " intellectual giants of investing", but Einstein was a singular figure in the history of science.

Except for that Newton guy. I heard he was pretty sharp too.
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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Tue Mar 27, 2012 10:19 am

magician wrote:
tadamsmar wrote:
magician wrote:
VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy.

Now you sound like Dick Purcell.

;)


Actually, she sounds like MIT's Andrew Lo . . . .

Given that Dick Purcell has used the phrase dozens of times here at Bogleheads, she sounds like Dick Purcell.

Maybe Dick Purcell sounds like Dr. Lo.


I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo. I am decidedly not borrowing from Dick Purcell. Purcell has a strong anti-academic bias, and virtually every paragraph I have read derides the ivory tower, especially when he writes about Zvi Bodie. In contrast, I have a great respect for the academia in general and for Bodie's ideas in particular.

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Re: Is there a Gauss or Einstein of investing?

Post by magician » Tue Mar 27, 2012 10:37 am

VictoriaF wrote:
magician wrote:
tadamsmar wrote:
magician wrote:
VictoriaF wrote:Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy.

Now you sound like Dick Purcell.

;)


Actually, she sounds like MIT's Andrew Lo . . . .

Given that Dick Purcell has used the phrase dozens of times here at Bogleheads, she sounds like Dick Purcell.

Maybe Dick Purcell sounds like Dr. Lo.

I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo. I am decidedly not borrowing from Dick Purcell. Purcell has a strong anti-academic bias, and virtually every paragraph I have read derides the ivory tower, especially when he writes about Zvi Bodie. In contrast, I have a great respect for the academia in general and for Bodie's ideas in particular.

Victoria

I know; that's what prompted my post: you sounding like your antithesis was jarring.
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Re: Is there a Gauss or Einstein of investing?

Post by nisiprius » Tue Mar 27, 2012 10:57 am

momar wrote:
Wolkenspiel wrote:I heard [Sir Isaac Newton] was pretty sharp too.
His use of a strictly literal interpretation of the Bible to predict that the Apocalypse could not possibly occur before 2060 was certainly better than many.

Roger Babson was an early stock market statistician, and his September 5, 1929 statement that "sooner or later a crash is coming, and it may be terrific" was immediately followed by a 3% market drop, known as the "Babson break" and believed to be a direct reaction. He was a self-professed admirer of Newton, and the Babson Institute's website says
The one aspect of his studies at M.I.T. (1895-1898) that he valued throughout his life was learning about the British scientist, mathematician, and philosopher, Isaac Newton. Roger Babson was impressed by Newton's discoveries, especially his third law of motion--"For every action there is an equal and opposite reaction." He eventually incorporated Newton's theory into many of his personal and business endeavors.
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Re: Is there a Gauss or Einstein of investing?

Post by nisiprius » Tue Mar 27, 2012 11:08 am

VictoriaF wrote:I have indeed first encountered the concept of physics envy in Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.
Right. I thought it was a familiar term that Lo was referencing.

Google tells me of an influential 1992 book, More Heat than Light: Economics as Social Physics, Physics as Nature's Economics (Historical Perspectives on Modern Economics) by one Philip Mirowski that contains a chapter, Chapter 7, entitled "The ironies of physics envy."
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Re: Is there a Gauss or Einstein of investing?

Post by tadamsmar » Tue Mar 27, 2012 1:32 pm

nisiprius wrote:
VictoriaF wrote:I have indeed first encountered the concept of physics envy in Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.
Right. I thought it was a familiar term that Lo was referencing.

Google tells me of an influential 1992 book, More Heat than Light: Economics as Social Physics, Physics as Nature's Economics (Historical Perspectives on Modern Economics) by one Philip Mirowski that contains a chapter, Chapter 7, entitled "The ironies of physics envy."


See you 1992 and raise to 1986:

http://books.google.com/books?id=uqaGAA ... y%22&hl=en

http://books.google.com/books?id=o1JEAA ... y%22&hl=en

http://www.jstor.org/stable/20166525?seq=1

(Granted, not a reference to physics envy in economics)

Perhaps the term was first used by biologists.

Of course, Scrodinger evidenced what might be called "biology envy" in his book "What is Life", coveting Biology's tantalizing unsolved problem in 1944. Watson and Crick finished that one off.

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Re: Is there a Gauss or Einstein of investing?

Post by RobG » Tue Mar 27, 2012 5:00 pm

magician wrote:
Valuethinker wrote:I forget which one invented mean-variance analysis (Markowitz) . . . .

I'm pretty sure that it was invented by . . . Harry Markowitz.

;)


I was taking a class on solving sparse matrices and up pops Harry Markowtz's name.
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Re: Is there a Gauss or Einstein of investing?

Post by chaz » Tue Mar 27, 2012 5:21 pm

VictoriaF wrote:
Heir-A-Parent wrote:Is there an intellectual giant of investing comparable to a Gauss or an Einstein? Someone who remade the field and whose works are canonical.

The only names that come to mind are Walter Bagehot, Benjamin Graham, and maybe Jack Bogle or Warren Buffett.

I think the problem is that compared to highly theoretical fields like mathematics or physics success in investing is more about will power and consistency than intellectual sophistication. Once you understand the time value of money and the risk/return tradeoff most things fall into place.


Since the early twentieth century breakthroughs in physics, economists have suffered from the physics envy. In the past hundred years they have not learned that social phenomena are principally different from physical laws, let alone mathematics.

To get an interesting perspective on the economics giants, and particularly those who get the Prize in Economic Sciences in Memory of Alfred Nobel, read Nassim Taleb's books. He is not kind to Gauss either.

Jack Bogle stands out in that his creation of low-cost broad-based index funds is by far the most useful financial invention. Jack should really be invited to Stockholm...

Victoria

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Re: Is there a Gauss or Einstein of investing?

Post by rokidtoo » Tue Mar 27, 2012 5:28 pm

Peter L. Berstein's book "Capital Ideas, The Improbable Origins of Modern Wall Street" discusses the contributions of such notables as Alfred Cowles, Harry Markowitz, Paul Samuelson, Eugene Fama, James Tobin and others. A very good read.-----Jim

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Re: Is there a Gauss or Einstein of investing?

Post by madbrain » Tue Mar 27, 2012 5:39 pm

VictoriaF wrote:I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.


Let me guess, Taleb's The Black Swan ?

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Re: Is there a Gauss or Einstein of investing?

Post by bob90245 » Tue Mar 27, 2012 6:19 pm

rokidtoo wrote:Peter L. Berstein's book "Capital Ideas, The Improbable Origins of Modern Wall Street" discusses the contributions of such notables as Alfred Cowles, Harry Markowitz, Paul Samuelson, Eugene Fama, James Tobin and others. A very good read.-----Jim

I second the recommendation for Capital Ideas. A brief profile of these names can be found in my post upthread.
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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Tue Mar 27, 2012 7:36 pm

madbrain wrote:
VictoriaF wrote:I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.


Let me guess, Taleb's The Black Swan ?


I don't recall Taleb using this expression. It showed up in economics papers and blogs. One source was a paper by Herbert Gintis or a reference I traced from his papers.

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Re: Is there a Gauss or Einstein of investing?

Post by Karamatsu » Tue Mar 27, 2012 7:44 pm

I don't think there will ever be people recognized to be of that calibre (not that they aren't out there) because investing for profit is a dynamic social game, not a matter of discovering facts and relationships that (we presume) are true everywhere, all the time. Investing "principles" (beyond "buy low, sell high") will never have the kind of longevity that, say, modular arithmetic and relativity do. There will never be anyone who "figures it out" (and publishes) because once they do, the game will change. At best we will get what we have: people who provide insights valuable to investors in the near term, say a few decades or so (though that may be shrinking), that overturn previous assumptions. There I mean things like Graham on value investing, MVO and the notion of a portfolio of uncorrelated assets, the random walk, the impotence of active management, the insights of behavioral finance, etc.

There will always be people who have insights that give them an edge (or luck that looks like an edge) in the short-term, and some will become quite wealthy, but I think it's foolish to think they have it all figured out, or that their "methods" will be useful in the long term. Most fortunes are quickly lost when the game and/or market conditions change, and they always change, as many of us here have unfortunately verified for ourselves.

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Re: Is there a Gauss or Einstein of investing?

Post by madbrain » Tue Mar 27, 2012 9:05 pm

VictoriaF wrote:
madbrain wrote:
VictoriaF wrote:I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.


Let me guess, Taleb's The Black Swan ?


I don't recall Taleb using this expression. It showed up in economics papers and blogs. One source was a paper by Herbert Gintis or a reference I traced from his papers.


Not this specific expression, but he definitely made that point.

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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Tue Mar 27, 2012 9:27 pm

madbrain wrote:
VictoriaF wrote:
madbrain wrote:
VictoriaF wrote:I have indeed first encountered the concept of physics envy in the Andrew Lo's paper, but then I have seen it in other places, some of them dating pre-Lo.


Let me guess, Taleb's The Black Swan ?


I don't recall Taleb using this expression. It showed up in economics papers and blogs. One source was a paper by Herbert Gintis or a reference I traced from his papers.


Not this specific expression, but he definitely made that point.


Yes, Taleb made the points that the field of economics has become excessively mathematical and that the elaborate mathematical models obscure risks. He considers Paul Samuelson one of the culprits and states something to the effect that Samuelson was brilliant but should have applied his brilliance differently.

I have seen the expression "physics envy" applied to Samuelson (but not by Taleb).

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Re: Is there a Gauss or Einstein of investing?

Post by jpsfranks » Tue Mar 27, 2012 9:47 pm

VictoriaF wrote:To get an interesting perspective on the economics giants, and particularly those who get the Prize in Economic Sciences in Memory of Alfred Nobel, read Nassim Taleb's books. He is not kind to Gauss either.

Not kind to Gauss or critical of some applications of the normal/Gaussian distribution? I should think that Gauss' genius would be hard to deny, even for a perpetual iconoclast like Taleb.

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Re: Is there a Gauss or Einstein of investing?

Post by kontango » Tue Mar 27, 2012 10:01 pm

I'd have to say: Irving Fisher, Merton Miller, Franco Modigliani, Gene Fama, Michael Jensen, Harry Markowitz, Bill Sharpe, Fischer Black, Myron Scholes, and Robert Merton? Of course these are all speculation.

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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Tue Mar 27, 2012 10:28 pm

jpsfranks wrote:
VictoriaF wrote:To get an interesting perspective on the economics giants, and particularly those who get the Prize in Economic Sciences in Memory of Alfred Nobel, read Nassim Taleb's books. He is not kind to Gauss either.

Not kind to Gauss or critical of some applications of the normal/Gaussian distribution? I should think that Gauss' genius would be hard to deny, even for a perpetual iconoclast like Taleb.


The essence of Taleb's criticism is that the Gaussian distribution is applied in many situations where it is not appropriate. But sometimes his disdain seems to spill over to Gauss himself. For example, Taleb describes his astonishment that Gauss' portrait together with a picture of the bell curve were displayed on the old Deutsche Mark, the currency infamous for its outlier values in the early 20th century.

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Re: Is there a Gauss or Einstein of investing?

Post by Alex Frakt » Tue Mar 27, 2012 11:23 pm

Alfred Cowles is the Tycho Brahe. Louis Bachelier is the Gregor Mendel.

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Re: Is there a Gauss or Einstein of investing?

Post by gravlax » Wed Mar 28, 2012 12:20 am

IMO, Einstein wasn't worth much.

http://www.youtube.com/watch?v=aF8wLg5Asgo

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Re: Is there a Gauss or Einstein of investing?

Post by gkaplan » Wed Mar 28, 2012 7:03 am

I always viewed Modigliani as an intellectual giant of painting, not an intellectual giant of investing.
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Re: Is there a Gauss or Einstein of investing?

Post by nisiprius » Wed Mar 28, 2012 7:06 am

Karamatsu wrote:I don't think there will ever be people recognized to be of that calibre (not that they aren't out there) because investing for profit is a dynamic social game, not a matter of discovering facts and relationships that (we presume) are true everywhere, all the time. Investing "principles" (beyond "buy low, sell high") will never have the kind of longevity that, say, modular arithmetic and relativity do. There will never be anyone who "figures it out" (and publishes) because once they do, the game will change. At best we will get what we have: people who provide insights valuable to investors in the near term, say a few decades or so (though that may be shrinking), that overturn previous assumptions. There I mean things like Graham on value investing, MVO and the notion of a portfolio of uncorrelated assets, the random walk, the impotence of active management, the insights of behavioral finance, etc.

There will always be people who have insights that give them an edge (or luck that looks like an edge) in the short-term, and some will become quite wealthy, but I think it's foolish to think they have it all figured out, or that their "methods" will be useful in the long term. Most fortunes are quickly lost when the game and/or market conditions change, and they always change, as many of us here have unfortunately verified for ourselves.
Interesting. Is it analogous to asking "is there a Gauss or Einstein of politics," or "is there a Gauss or Einstein of advertising," or "is there a Gauss of Einstein of military strategy," or "is there a Gauss or Einstein of golf?"
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Re: Is there a Gauss or Einstein of investing?

Post by magician » Wed Mar 28, 2012 7:18 am

VictoriaF wrote:For example, Taleb describes his astonishment that Gauss' portrait together with a picture of the bell curve were displayed on the old Deutsche Mark, the currency infamous for its outlier values in the early 20th century.

As a rejoinder to Taleb, I'm pretty sure that neither of those phenomena (that Gauss' portrait appeared on the Deutsche Mark, and that the Deutsche Mark's value was unusually volatile) is Gauss' fault.
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Re: Is there a Gauss or Einstein of investing?

Post by tadamsmar » Wed Mar 28, 2012 7:47 am

Gauss is the Gauss of investing.

Fama is the Einstein if Markowitz is the Newton.

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Re: Is there a Gauss or Einstein of investing?

Post by stemikger » Wed Mar 28, 2012 8:29 am

Bogle and Buffett would be my vote.
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Re: Is there a Gauss or Einstein of investing?

Post by nisiprius » Wed Mar 28, 2012 8:56 am

gravlax wrote:IMO, Einstein wasn't worth much.
He's worth $1,000, inflation-indexed.
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Re: Is there a Gauss or Einstein of investing?

Post by SP-diceman » Wed Mar 28, 2012 9:16 am

tadamsmar wrote:Gauss is the Gauss of investing.



Are we grading on the bell curve?

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Re: Is there a Gauss or Einstein of investing?

Post by 555 » Wed Mar 28, 2012 9:27 am

magician wrote:
VictoriaF wrote:For example, Taleb describes his astonishment that Gauss' portrait together with a picture of the bell curve were displayed on the old Deutsche Mark, the currency infamous for its outlier values in the early 20th century.

As a rejoinder to Taleb, I'm pretty sure that neither of those phenomena (that Gauss' portrait appeared on the Deutsche Mark, and that the Deutsche Mark's value was unusually volatile) is Gauss' fault.

And it's not Gauss' fault if people invalidly presume Gaussian distributions.

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Re: Is there a Gauss or Einstein of investing?

Post by SP-diceman » Wed Mar 28, 2012 9:31 am

VictoriaF wrote:For example, Taleb describes his astonishment that Gauss' portrait together with a picture of the bell curve were displayed on the old Deutsche Mark, the currency infamous for its outlier values in the early 20th century.


Actually, when one thinks of fat tails, its not too far off the mark.

…or should I say Deutsche Mark? :)

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Re: Is there a Gauss or Einstein of investing?

Post by SimpleGift » Wed Mar 28, 2012 10:49 am

No female giants in the annals of investing or finance?

It seems like in many fields there is at least one unheralded woman who did groundbreaking research or came up with a pivotal theory, yet never got the kind of attention that was deserved at the time for her accomplishments. Years later, historical research turns up her contributions.

I'm thinking here of someone like Amalie Emmy Noether in mathematics and physics, or Rosalind Franklin in DNA and genetic research. Are we sure that Alfred Cowles or Harry Markowitz didn't have a shadow research partner who made all the breakthroughs, but hasn't yet received her due recognition? :wink:
Last edited by SimpleGift on Wed Mar 28, 2012 11:28 am, edited 1 time in total.
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Re: Is there a Gauss or Einstein of investing?

Post by Wolkenspiel » Wed Mar 28, 2012 11:17 am

momar wrote:
Wolkenspiel wrote:
bob90245 wrote:There are a dozen or so.

They may be " intellectual giants of investing", but Einstein was a singular figure in the history of science.

Except for that Newton guy. I heard he was pretty sharp too.
Yeah, but he was an, umm, not very nice person.

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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Wed Mar 28, 2012 11:54 am

gkaplan wrote:I always viewed Modigliani as an intellectual giant of painting, not an intellectual giant of investing.

Investing is about the big picture.

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Re: Is there a Gauss or Einstein of investing?

Post by VictoriaF » Wed Mar 28, 2012 11:58 am

tadamsmar wrote:Gauss is the Gauss of investing.

Fama is the Einstein if Markowitz is the Newton.


And who is the Heisenberg?

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WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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