Ep. 913: Two Math Guys with Michael Covel on Trend Following Radio
Michael Covel's Trend Following
00:00
How to Estimate Risk
I've tried hard to distinguish epistemologically, somehow between the idea of the theory and a model. I don't think finance has any theories. If you look at efficient market models or black shoals, finance models are saying stock prices behave like smoke diffusing. And that would be the real risk if stocks really did behave like particles of dust being bumped around under Brownian motion,. It's not a bad analogy to give you a feel for what things are like, but it's actually not true.
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