Practical analysis for investment professionals

Emanuel Derman

Knowing the World: Intuition, Theories, Models, and Data

The new buzzword nowadays is big data, the fashionable term for capturing and analyzing the vast collections of information that people reveal about themselves when shopping online at and Travelocity or when writing about themselves on Facebook and Twitter. Big data involves a mix of computer science, information technology, mathematics, and applied statistics. It is increasingly used to sell us products or to persuade us to vote for politicians by tailoring the products’ or politicians’ images to our particular data-generated personas. Some talking heads like to say that computer-aided analysis of patterns will soon replace our traditional methods of discovering the truth in many fields, including medicine, the social sciences, and physics.

Emanuel Derman: The Discrepancies between Models and Behavior (Video Interview)

In part two of this video interview, Emanuel Derman reflects on the trajectory of his own career and discusses the books that helped shape his thinking.

Emanuel Derman: Quantitative Investing and the Limits of Financial Models (Video Interview)

The author and quant investor discusses his latest book, Models.Behaving.Badly; the origin and application of "The Financial Modelers' Manifesto," which he cowrote with Paul Wilmott; and the limits of quantitative finance.

Book Review: Models.Behaving.Badly

Emanuel Derman spent two decades at Goldman Sachs, making valuable contributions to financial modeling. Before that, as recounted in My Life as a Quant (John Wiley & Sons, 2004), he was a physicist. Today, Derman is the head of risk management at Prisma Capital Partners and directs Columbia University’s financial engineering program. He also devotes energy to combating the belief that security markets can be analyzed with the same mathematical precision as heavenly bodies and subatomic particles.

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