The quantitative community has certainly taken its lumps recently. They were blamed for the woefully correlated performance of hedge funds, among other things, as the crisis unfolded. Now there's more thrashing from an interesting source: Scientific American. "These lapsed physicists and mathematical virtuosos were the ones who ... invented these oblique securities ..." The article then offers some advice: "The quant community needs to undertake a search for better models--perhaps seeking help from behavioral economics, which studies irrationality of investors' decision making, and from virtual market tools that use 'intelligent agents' to mimic more faithfully the ups and downs of the activities of buyers and sellers." If only it were that simple.

For more:
- here's the article

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