Finance's Wrong Turns: A New Foundation for Financial Markets, Asset Management, and Social Science

Active investment strategies and traditional institutional quantitative technologies have failed to provide superior risk-adjusted, cost-adjusted returns over investment relevant horizons, leading to a foundational crisis in financial theory and professional investment practice. This book proposes a rational and intuitive framework for understanding financial markets and economic behavior, using Monte Carlo simulation methods, modern statistical tools, and U.S. patented innovations to redefine portfolio optimality and procedures for enhanced professional asset management. It also traces the major historical developments of theory and institutional asset management practice and their limitations over the course of the 20th century to the present.

Format: Paperback / softback
Length: 138 pages
Publication date: 17 December 2023
Publisher: Springer International Publishing AG

The current state of financial theory and professional investment practice is facing a significant crisis, with little to no credible evidence supporting the effectiveness of active investment strategies and traditional institutional quantitative technologies in delivering superior risk-adjusted and cost-adjusted returns over investment relevant horizons. This crisis has been ongoing for over fifty years, and it is the root cause of the persistent ineffectiveness of professional asset management.

Contemporary sociological and economic theory, agent-based modeling, and a deeper understanding of the social context for preference theory offer a rational and intuitive framework for understanding financial markets and economic behavior. The author, with extensive experience in both practical and quantitative roles in institutional asset management and Wall Street, shares his insights into the limitations and potential resolutions of traditional quantitative asset management tools.

The book delves into the introduction of Monte Carlo simulation methods, modern statistical tools, and U.S. patented innovations to redefine portfolio optimality and procedures for enhanced professional asset management. It also explores a novel social context for expected utility theory, which leads to a fresh perspective on modern equity markets as a financial intermediary for purchasing power constant time-shift investing, particularly suited for meeting investor long-term investment objectives.

Throughout the book, the author traces the major historical developments of theory and institutional asset management practice, highlighting their limitations throughout the 20th century and into the present. This includes the contributions of Markowitz and the birth of modern portfolio theory. The book aims to address the limitations and provide indicated resolutions for more useful financial theory and more reliable asset management technology. It serves as a valuable resource for professionals, researchers, and investors seeking to improve their understanding of financial markets and achieve better investment outcomes.

Weight: 254g
Dimension: 235 x 155 (mm)
ISBN-13: 9783031218651
Edition number: 1st ed. 2023