One who intends to leave others better off for his having existed.


Monte Carlo

… a "Monte Carlo" simulation, commonly used in financial planning

estimates the odds of reaching retirement financial goals.


Though these tools typically run through hundreds or thousands of potential market scenarios,

they often assign minuscule odds to extreme market events.


Yet these extreme events seem to be happening more often.


If causes, actions or winners have effects, reactions or losers

and A is caused, allowed, accelerated, held back or prevented

is it better to pre-think what could happen to B, C and D

than not?


The questions about Monte Carlo tools

reflect broader concerns about mathematical models

for gauging portfolio risks


These models were supposed to help quantify and manage the risks

of...complex instruments


If achievement takes less time with a rational plan

can you get farther faster than those without

and vice versa?


But given the events of the past couple of years

it appears that the models often gave big institutions

as well as small investors, a false sense of security


Critics emphasize that the problem isn't Monte Carlo itself

but the assumptions that go into it


If some financial estimates and hypothetical illustrations

assume perpetual levels of varying data

can probability be manipulated?


Is the present you the only who

who’s going to care for the future you?



Since no standard approach exists

one user might plug in a range of assumptions on interest rates

inflation or volatility that is different from another user


Some industry participants and academics

are pushing for Monte Carlo tools to more clearly illustrate

the scarier scenarios


Eleanor Laise

The Wall Street Journal, May 2, 2009


If there are at least 15,000 professional American Economists

and less than 1% foresaw the financial crisis

and many mathematical based financial prognostications

were relatively useless

which if left in place

could negatively affecting the future

should some try to fix what’s probably broken?

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