MarketWatch: How Wall Street's army of quants controls your mind, money

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Warning: Quants love the 'predictably irrational'
By predicting your behavior, quants control your mind, money, the markets

By Paul B. Farrell, MarketWatch


ARROYO GRANDE, Calif. (MarketWatch) -- Warning: Quants, the grand magicians of the illusionary arts of neuroeconomics, behavioral finance, investment psychology and the "new science of irrationality," are working with Wall Street in a massive conspiracy to scam America's 95 million investors.

They are your worst enemies. You cannot trust them. Their new books are deceptive and misleading, part of Wall Street's secret efforts to dominate, manipulate and control your mind, money and the markets.

This is not a review of Hollywood TV thriller like "24" involving corrupt politicians and corporations. Rather, we are targeting an emerging culture that's far more dangerous than we just read in "Recipe for Disaster: The Formula That Killed Wall Street," Wired magazine's fascinating analysis of how "Wall Street turned to quants -- brainy financial engineers -- to invent new ways to boost profits. Their method for minting money worked brilliantly ... until one of them devastated the global economy."

Just one? No, the real story is far worse than in Wired: Maybe the "one quant and his one formula" did create a lethal virus that triggered the subprime-credit meltdown and devastate the global economy. But that's old news. Moreover, Wired suggests it will never happen again "if" we just increase data transparency, "empowering all investors," thus creating "an army of citizen regulators."

Laudable, but unlikely. Not with 40,000 Washington lobbyists and Wall Street the biggest political donor: They hate transparency. ..........(more)

The complete piece is at: http://www.marketwatch.com/news/story/How-Wall-Streets-army-quants/story.aspx?guid=%7BEE40E7E0%2DF205%2D4A61%2DB2D3%2D66C37E6B3862%7D&dist=hplatest