Nerd, meet Black Swan. Swan, meet Math Nerd.
They are the powerful, cerebral and offstage actors of Wall Street. They are the math geniuses of the quant funds.
Their complex and sophisticated mathematical models replace instinct. They try to turn historical trends into predictive science, using elegant mathematics seemingly above the comprehension of your average 401(k) participant or Wall Street fund manager.
Instead of veteran, market-savvy traders waving fistfuls of sell slips, the elite quant funds employ Nobel nerds with math PhDs, often divorced from the real world.
But the 387-point drop in the Dow Jones industrial average Aug. 9 and the continuing turmoil in the markets, in part attributed to massive sell-offs by the quant funds, have tarnished some of the quants' glimmering intellectual credentials and shown that, when push comes to shove, they can rush toward the exits as fast as a novice investor.
... The press-shy Simons would not comment for this article, and a Renaissance spokesman could not be reached for a comment.
