Are our models too complex?

Gillian Tett is a well-respected writer for the Financial Times and frequently picks up the topic of complexity in financial markets.

In a recent article (see here) she makes a case that the era of number crunching is over, and that the world of investments is back again firmly in the domain of human relationships and evaluations.

Once upon a time we would measure credit risk with a numbers like survival probability stripped from CDS market prices. Once upon a time we were all happy to value a transaction with models that almost no-one other than the quants understood.

Her view is that these times are gone.

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