Andrew Lo
Andrew Lo
Andrew Wen-Chuan Lois the Charles E. and Susan T. Harris Professor of Finance at the MIT Sloan School of Management. Lo is the author of many academic articles in Finance and Financial economics...
ProfessionEconomist
engaged good horrified people
Most people are overconfident about their own abilities. That is probably a good thing. But we would be horrified if a physician's aide engaged in heart surgery.
answer brain economic finance hit inside people questions research running understand
Finance and economic research has hit a wall. We can't answer any more questions by running another regression analysis. Now, we need to get inside the brain to understand why people make decisions.
amount create fact fair flip function funds problems side
The fact that hedge funds have become so important is really the flip side of problems that could be generated. If they ceased to function in the way they are designed, that would create a fair amount of systemic risk.
mother cancer years
My mother died of lung cancer last year. I felt helpless. As an economist, I thought, What can I do?
reality thinking may
Many of us like to think of financial economics as a science, but complex events like the financial crisis suggest that this conceit may be more wishful thinking than reality.
simple psychological-disorders law
Economists suffer from a deep psychological disorder that I call 'physics envy'. We wish that 99 percent of economic behavior could be captured by three simple laws of nature. In fact, economists have 99 laws that capture 3 percent of behavior. Economics is a uniquely human endeavor ...
impact greed study
While neurological studies have tried to identify components responsible for fear and greed, the impact on finance is less clear.
risk appreciated assets
The risks facing hedge funds are non-linear and more complex than those facing traditional asset classessuch risks are currently not widely appreciated or well-understood
probability-theory risk management
Maybe we should teach schoolchildren probability theory and investment risk management.
technology labor cheaper
Labor is getting more expensive and technology is getting cheaper.
money intuition needs
Great investors need to have the right combination of intuition, business sense and investment talent.
financial modern crisis
Financial crises are an unfortunate but necessary consequence of modern capitalism.
opportunity doe bags
The United States has the most sophisticated financial markets in the world, which does not leave much room to maneuver. But it also offers investors the greatest access to information and the ability to execute trades quickly and efficiently. So it is a mixed bag of opportunity.
comfort event few gm industry jury large next seen shocks small whether
Just because we didn't see an event (after GM and Ford) is small comfort. There are large exposures out there we haven't seen yet. I'd say the jury is still out on whether the industry can withstand the shocks that may come out over the next few months.