“I have come to believe that the whole world is an enigma, a harmless enigma that is made terrible by our own mad attempt to interpret it as though it had an underlying truth.”
― Umberto Eco, Foucault’s Pendulum
A couple of weeks ago, I had the pleasure of a short correspondence with Lars Kestner, a well known quant and derivatives trader, and creator of the thoughtful K-ratio as a measure of risk adjusted performance. We connected on the definition of alpha, and how the term has been so abused in media and marketing as to become almost meaningless. To help make his point, Lars quoted a passage from his recent whitepaper, “My Top 8 Pet Peeves“, which I’ve taken the liberty of copying below:
It’s that time of year again. Yup, that jolly, happy time of year when the soothsayers of Wall Street start trumpeting their views on what’s going to happen in 2015, and how to position portfolios to profit. Esteemed Wharton professor, Jeremy Siegel, author of the permabull bible, Stocks for the Long Run, recently joined the merry parade with his own forecast that Dow 20,000 ‘could happen’ in 2015. Astute investors might take stakes now in large manufacturers of confetti, party horns, and streamers.
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