<p>You guys missed my point. </p>
<p>Take the Capital Asset Pricing Model in finance. It assumes that “risk” can be measured as past volatility. Having taken enough statistics, I know that the CAPM is useless. Yet I’m tested on it. Great. Then as you get further in finance, you learn about a multifactor model that is also uselss and no market practitioner would ever use. It assumes movements in the market move in linear relation to inputs, when the market is a non-linear, adaptive system. Also, variance in returns is assumed to be normally distributed, when really there’s too much kurtosis to be able to use a normal distribution to measure degrees of risk/volatility. Really, I should be learning stochastic calculus and reading philosophy to try to develop a better model for pricing risk/return. Yet there’s no discussion of how the market really aggregates information, and there’s no inquiry. </p>
<p>My point: if I was truly smart, I would have studied something broader. Also, this is why I don’t respect MBAs within the academic arena.</p>