Priced to Fail: The Arrogant Mathematics of the Capital Asset Pricing Model
Risk, Variance, and the Flawed Formulas Disregarding Human Panic on Wall Street
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Beschreibung
Wall Street relies on a beautiful mathematical formula to calculate risk, conveniently ignoring the fact that global markets are entirely driven by irrational human panic.
Since the 1960s, the entire foundation of modern corporate finance has relied on a single, elegant mathematical equation: The Capital Asset Pricing Model (CAPM). It calculates the exact expected return on an investment based on its inherent risk (Beta). There is only one problem: the formula assumes human beings are perfectly rational, emotionless calculating machines.
This highly technical financial reference deconstructs the arrogant mathematical purity of CAPM. By strictly defining "risk" as historical price variance, the model completely ignores the catastrophic realities of human behavior—panic, herd mentality, and irrational exuberance.
We explore how billions of dollars are managed by quantitative algorithms relying blindly on this theoretical equation. The book exposes the structural flaws that cause these models to spectacularly fail during severe market crashes, precisely when investors desperately need them the most.
Challenge the dogma of the financial establishment. A deep dive into the mathematical models that dictate global capital while actively ignoring the volatile reality of human fear.
Autor*in
Michael Richardson
Author
Themen in »Priced to Fail: The Arrogant Mathematics of the Capital Asset Pricing Model«
capital asset pricing model capm financial risk modeling modern portfolio theory quantitative finance flaws behavioral economics investing wall street algorithms beta coefficient math