Veritasium: The Trillion Dollar Equation

Science • Views: 12,294

The most famous equation in finance, the Black-Scholes/Merton equation, came from physics. It launched an industry worth trillions of dollars and led to the world’s best investments.

If you’re looking for a molecular modeling kit, try Snatoms, a kit I invented where the atoms snap together magnetically - ve42.co

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A huge thank you to Prof. Andrew Lo (MIT) for speaking with us and helping with the script.

We would also like to thank the following:
Prof. Amanda Turner (University of Leeds)
Owen Maher (Electrify Video Partners)

References:

Click to Reveal

The Man Who Solved the Market: How Jim Simons launched the quant revolution, Gregory Zuckerman. Penguin Publishing Group. - ve42.co

The Physics of Finance: Predicting the Unpredictable: Can Science Beat the Market? James Owen Weatherall. Short Books. - ve42.co

The Statistical Mechanics of Financial Markets, J.Voigt. Springer. - ve42.co

Black, F., & Scholes, M. (1973). The pricing of options and corporate liabilities. Journal of political economy, 81(3), 637-654. - ve42.co

Cornell, B. (2020). Medallion fund: The ultimate counterexample?. The Journal of Portfolio Management, 46(4), 156-159. - ve42.co

Images & Video:
Ed Thorp on The Tim Ferris Show -
Jim Simons on TED -
Jim Simons on Numberphile -

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Special thanks to our Patreon supporters:
Adam Foreman, Anton Ragin, Balkrishna Heroor, Bill Linder, Blake Byers, Burt Humburg, Chris Harper, Dave Kircher, David Johnston, Diffbot, Evgeny Skvortsov, Garrett Mueller, Gnare, I.H., John H. Austin, Jr. ,john kiehl, Josh Hibschman, Juan Benet, KeyWestr, Lee Redden, Marinus Kuivenhoven, Max Paladino, Meekay, meg noah, Michael Krugman, Orlando Bassotto, Paul Peijzel, Richard Sundvall, Sam Lutfi, Stephen Wilcox, Tj Steyn, TTST, Ubiquity Ventures

Directed by Will Wood and Derek Muller
Written by Will Wood, Emily Zhang, Petr Lebedev and Derek Muller
Camera operation by Raquel Nuno
Additional research by Gregor Čavlović
Edited by Jack Saxon and Trenton Oliver
Animated by Fabio Albertelli, Jakub Misiek, Ivy Tello, David Szakaly and Will Wood
Produced by Will Wood, Han Evans and Derek Muller

Thumbnail by Ren Hurley
Additional video/photos supplied by Getty Images and Pond5
Music from Epidemic Sound

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46 comments
1
darthstar  Mar 3, 2024 • 11:41:50am

Hard to argue with this.

Mastodon

2
PhillyPretzel ✅  Mar 3, 2024 • 11:43:26am

re: #1 darthstar

I agree. Mike Johnson should vacate the chair.

3
darthstar  Mar 3, 2024 • 11:44:27am

re: #1 darthstar

Mastodon

4
darthstar  Mar 3, 2024 • 11:45:55am

Seriously, pass a budget and aid and Republicans can jerk off for the cameras.

5
sizzzzlerz  Mar 3, 2024 • 11:47:17am

The recipe called for 2 cloves of garlic. This should do it.

6
FormerDirtDart 🍕🐀 No Capt'n 😷 Trips  Mar 3, 2024 • 11:48:12am

re: #5 sizzzzlerz

The recipe called for 2 cloves of garlic. This should do it.

[Embedded content]

Should definitely do something

7
PhillyPretzel ✅  Mar 3, 2024 • 11:48:31am

re: #5 sizzzzlerz

Elephant garlic? That looks a little on the large side.

8
Unabogie  Mar 3, 2024 • 11:54:01am
I think the next phase now is to bring Hunter [Biden] in for a public hearing, and hear from the other Biden associates. And let’s determine then who the American people think are telling the truth because we’ve got the bank records, bank records don’t lie.

~ James Comer

I might be addled but didn’t Hunter Biden ask for a public hearing and Comer rejected the idea?

9
Joe Bacon ✅  Mar 3, 2024 • 11:54:11am

re: #5 sizzzzlerz

OK that’ll keep Bela Lugosi away!

10
Joe Bacon ✅  Mar 3, 2024 • 11:55:55am

re: #8 Unabogie

~ James Comer

I might be addled but didn’t Hunter Biden ask for a public hearing and Comer rejected the idea?

Please Please let DARK HUNTER appear before Comer Pyle’s committee on live TV. Unleash DARK BRANDON’S SON on every fucking Republican on that committee!

DO IT! PLEASE DO IT!!!!

11
GlutenFreeJesus  Mar 3, 2024 • 11:56:26am

Checked Elena Cardone’s Dump GoFundMe scam. Just short of a month and they’ve raised $1.3m. Only 355 more months to go!

12
Joe Bacon ✅  Mar 3, 2024 • 11:58:17am

re: #11 GlutenFreeJesus

the fine goes up
the fine goes up
compound interest gets bigger every day
la da da da de
la da da da da

trumpdebtcounter.com

13
GlutenFreeJesus  Mar 3, 2024 • 11:58:25am

re: #8 Unabogie

~ James Comer

I might be addled but didn’t Hunter Biden ask for a public hearing and Comer rejected the idea?

Comer etc. can’t seem to do anything by lying to us about what’s going on behind closed doors. Their last resort is throwing red meat to the rubes in public now.

14
Teukka  Mar 3, 2024 • 12:00:27pm

re: #5 sizzzzlerz

The recipe called for 2 cloves of garlic. This should do it.

[Embedded content]

Now, those are proper cloves of garlic…

15
FFL (GOP Delenda Est)  Mar 3, 2024 • 12:03:16pm

nbcnews.com

An issue affecting a number of resort towns. Especially in the US West. Property prices such that the local workforce cannot afford to live in the town.

16
BlueSpotinAL ✅  Mar 3, 2024 • 12:12:04pm

re: #7 PhillyPretzel ✅

Elephant garlic? That looks a little on the large side.

Trump holding regular size garlic cloves.

17
Unabogie  Mar 3, 2024 • 12:13:13pm

Trump has finally gone full anti-vax. He’s now threatening to withhold funds for any school that requires vaccinations for any disease. Barbara Comstock, a Republican, opines that she never thought leopards would eat her face.

lawyersgunsmoneyblog.com

18
PhillyPretzel ✅  Mar 3, 2024 • 12:13:37pm

re: #16 BlueSpotinAL ✅

lol. DT has small hands.

19
mmmirele  Mar 3, 2024 • 12:16:11pm

re: #15 FFL (GOP Delenda Est)

nbcnews.com

An issue affecting a number of resort towns. Especially in the US West. Property prices such that the local workforce cannot afford to live in the town.

People can’t even afford to live in dumpy old Mesa, AZ. Two bedroom apartments cost around $2000/month. And these are places that were built in the 1980s and 1990s. I couldn’t even afford to buy my place at this point. Housing prices everywhere are unbearable.

20
jeffreyw  Mar 3, 2024 • 12:18:12pm

pileated

21
William Lewis  Mar 3, 2024 • 12:19:51pm

At one of my photo web sites the subject of inflation came up. Now some of the usual talking points came about - government interference, printing too much money for unproductive people during COVID, yada yada. Bad enough. But then up from the slime at the bottom we got someone unironically spewing forth Friedrich Hayek and Austrian school nonsense. I eagerly < rolls eyes hard > await the gold bug noise next.

The usual quotes seem appropriate at this point…

“There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.”

[Kung Fu Monkey — Ephemera, blog post, March 19, 2009]”
― John Rogers

“Capitalism was reasonably content under Hitler, happy under Mussolini, very happy under Franco and delirious under General Pinochet.”

— John Ralston Saul

22
jaunte  Mar 3, 2024 • 12:27:22pm

@laprofmme.bsky.social

Amazing. French TV news leading its Super Tuesday coverage with a lengthy review of the violence of January 6, the criminal consequences for the perpetrators, and tfg’s promise to pardon himself and his followers

23
nines09  Mar 3, 2024 • 12:29:42pm

re: #22 jaunte

@laprofmme.bsky.social

I think they’ve seen this movie before.

24
Jay C  Mar 3, 2024 • 12:35:16pm

re: #13 GlutenFreeJesus

Comer etc. can’t seem to do anything by lying to us about what’s going on behind closed doors. Their last resort is throwing red meat to the rubes in public now.

Yeah, well that “red meat” is getting pretty rancid by now: having basically had every shed of anything like *factual* evidence of any wrongdoing by either Biden, pére or fils, discredited to the max, Comer would be much better-off by simply shutting down his little witch-hunt and moving on. Since the next act in the circus is just going be more of him getting pantsed in public by Jamie Raskin, AOC, et.al. Who have managed (IMO) the rare feat in DC of robbing the GOP of the spotlight their BS “investigations” usually produce for them, and (for once) grabbing the narrative.

I wonder WTF these “bank records” are that Comer is harping on about? The shocking revelation that Hunter Biden has a bank account!
And he put money in it, AND took it out!!!!
SCANDAL!!!!!

25
retired cynic  Mar 3, 2024 • 12:40:22pm

California rains resurrect a long-dead lake in dry Death Valley

wapo.st (gift link)

Amazing! Thousands of people are coming to Death Valley to wade in Lake Manly, or to kayak on it.

26
sizzzzlerz  Mar 3, 2024 • 12:40:43pm

re: #24 Jay C

I wonder WTF these “bank records” are that Comer is harping on about?

I don’t know but I suspect you’ll find them along side of Joe McCarthy’s list of 200 communists in the State Department, Nixon’s plan to get the US out of Vietnam, Iraq’s WMDs, and Trump’s 2016 tax returns.

27
ckkatz  Mar 3, 2024 • 12:40:48pm

From downstairs:

re: #269 Captain Ron

I understand that CalTrans cleared up the mess after a 5 hour wait.

(No comment on whether bbq’s were involved.)

And, of course…

28
PhillyPretzel ✅  Mar 3, 2024 • 12:42:00pm

re: #25 retired cynic

Enjoy it while you have it.

29
Eclectic Cyborg  Mar 3, 2024 • 12:42:22pm

re: #15 FFL (GOP Delenda Est)

nbcnews.com

An issue affecting a number of resort towns. Especially in the US West. Property prices such that the local workforce cannot afford to live in the town.

Our resident telemark skier has commented on this many times as many Ski resorts in CO have been affected by it.

30
sizzzzlerz  Mar 3, 2024 • 12:42:55pm

re: #25 retired cynic

California rains resurrect a long-dead lake in dry Death Valley

wapo.st (gift link)

Amazing! Thousands of people are coming to Death Valley to wade in Lake Manly, or to kayak on it.

[Embedded content]

Look at all that snow up on Telescope Peak! It’s gonna to be another wildflower spectacular in the Mohave in a few weeks.

31
GlutenFreeJesus  Mar 3, 2024 • 12:43:17pm

re: #24 Jay C

It’s the loan repayment to Joe from his brother. Why it ties into Hunter, only Comer imagines it.

32
FFL (GOP Delenda Est)  Mar 3, 2024 • 12:44:24pm

re: #29 Eclectic Cyborg

Our resident telemark skier has commented on this many times as many Ski resorts in CO have been affected by it.

That article caught my eye since my brother-in-law still lives near Steamboat Springs and I’ve been there a number of times and thus have more familiarity with that region than other resort towns.

33
retired cynic  Mar 3, 2024 • 12:48:55pm

re: #32 FFL (GOP Delenda Est)

That article caught my eye since my brother-in-law still lives near Steamboat Springs and I’ve been there a number of times and thus have more familiarity with that region than other resort towns.

I have a dear friend with a “ranchlet” there, in a valley above the town. Her views are glorious. The snow boggles my mind. Shoveling snow off the second story roof, for instance! I think I would like the summer.

34
wrenchwench  Mar 3, 2024 • 12:56:26pm

Mastodon

35
FFL (GOP Delenda Est)  Mar 3, 2024 • 12:57:26pm

re: #33 retired cynic

I have a dear friend with a “ranchlet” there, in a valley above the town. Her views are glorious. The snow boggles my mind. Shoveling snow off the second story roof, for instance! I think I would like the summer.

I’ve thought the area was pretty in all four seasons.

Most of the horse pictures I’ve posted were from the ranch west of Steamboat that my sister and brother-in-law had where they raised Clydesdales.

36
PhillyPretzel ✅  Mar 3, 2024 • 1:00:27pm

re: #35 FFL (GOP Delenda Est)

Beautiful horses.

37
darthstar  Mar 3, 2024 • 1:01:38pm

Mastodon

38
nines09  Mar 3, 2024 • 1:04:43pm

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

39
The Ghost of a Flea  Mar 3, 2024 • 1:06:31pm

re: #15 FFL (GOP Delenda Est)

Houses used to be for employees and hotels for guests. Now houses are for guests and hotels are for employee housing,”…”We have a lot of great staff who are early in their careers or have young families, but they just aren’t able to put down those roots.”

Wealthy people twisting the dial labelled “Feudalism” slowly to the right while periodically checking to make sure a peasant rebellion isn’t breaking out.

40
DodgerFan1988  Mar 3, 2024 • 1:09:41pm
41
Dave In Austin  Mar 3, 2024 • 1:13:36pm

What Charles needs…..
facebook.com

42
Colère Tueur de Lapin ✅  Mar 3, 2024 • 1:17:58pm

re: #5 sizzzzlerz

The recipe called for 2 cloves of garlic. This should do it.

Looks about right.

43
retired cynic  Mar 3, 2024 • 1:24:08pm

re: #35 FFL (GOP Delenda Est)

I’ve thought the area was pretty in all four seasons.

[Embedded content]

Most of the horse pictures I’ve posted were from the ranch west of Steamboat that my sister and brother-in-law had where they raised Clydesdales.

Here is my friend on one of her Arabian mares. Her own land looks a lot like this.

44
jeffreyw  Mar 3, 2024 • 1:27:39pm

mas.to

45
sagehen  Mar 3, 2024 • 2:28:35pm

re: #25 retired cynic

California rains (temporarily) resurrect a long-dead lake in dry Death Valley

wapo.st (gift link)

Amazing! Thousands of people are coming to Death Valley to wade in Lake Manly, or to kayak on it.

[Embedded content]

That lake will be dry again soon enough.

46
GlutenFreeJesus  Mar 3, 2024 • 2:54:36pm

Back in 2003, when Star Wars aired on Chilean TV, they edited in their commercials instead of taking breaks.

star wars cerveza cristal 1


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