Saturday, 4 February 2017

Quantitative versus Qualitative Analysis. Lessons from Isaac Newton's South Sea's debacle.

Isaac Newton’s South Seas debacle is typically told as a parable of the dangers of market manias, which can consume even the brightest of investors. 

That is true. However, Newton’s South Seas adventure also illustrates another, less commonly acknowledged point: 

1.  Many critical investment questions cannot be solved by math. 

2.  And devoting too much attention to matters quantitative, while giving insufficient attention to issues such as judgment and data quality, can be outright harmful to portfolio results.

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