In The Pillars of Finance, author and finance expert
Guy Fraser-Sampson challenges the fundamental
conventions of modern finance. He asserts that, at its
core, finance is not the highly scientific, modern
discipline that most would claim, but has in fact stood
still for the past 50 years. Central to the book are the
main pillars of the financial markets - risk, return,
and value - pillars of financial practice that are not
properly understood by the industry, as began to become
clear in 2007. Instead, the industry is blinded by a
quantitative maze, obsessed with mathematical solutions,
stochastic models, and normal distributions, which,
although they have a place, should not provide the
bedrock of the global marketplace. The author also looks
at the industry's overreliance on past performance.
Historical data is the foundation of financial
forecasting and derivatives pricing, and while much can
be gleaned from the past, it cannot and should not be
seen as a mirror of the future. Finally, the author
provides solutions to these issues, which include the
need for the industry to undergo a transformation
similar to that which occurred in the Modernist movement
in other fields. He argues for a return to more
qualitative and informed approaches to finance, bringing
back intuition, skill, responsibility, and competency.
Drawing from many fields of knowledge, including
philosophy, psychology, and history, he encourages
readers to question everything, rather than tamely
accepting conventional wisdom. The Pillars of Finance is
a lively and provocative read, challenging some of the
core beliefs of modern finance. It will spark fierce
debate and prove a popular read for anyone interested in
modern finance. |
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