The Equation That Beat Wall Street

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How the Black-Scholes/Merton equation made trillions of dollars. Sponsored by Henson Shaving - Don’t forget to check out http://hensonshaving.com/derek and enter code “derek” at checkout to get a FREE pack of 100 blades (2+ years worth) with the purchase of a razor. Just make sure both products are in the cart for the code to take effect. Special thanks to our Patreon supporters! Join this list to help us keep our videos free, forever: https://ve42.co/PatreonDEB If you’re looking for a molecular modeling kit, try Snatoms, a kit I invented where the atoms snap together magnetically - https://ve42.co/SnatomsV ▀▀▀ 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: The Man Who Solved the Market: How Jim Simons launched the quant revolution, Gregory Zuckerman. Penguin Publishing Group. - https://ve42.co/GZuckerman The Physics of Finance: Predicting the Unpredictable: Can Science Beat the Market? James Owen Weatherall. Short Books. - https://ve42.co/FinancePhysics The Statistical Mechanics of Financial Markets, J.Voigt. Springer. - https://ve42.co/Springer Black, F., & Scholes, M. (1973). The pricing of options and corporate liabilities. Journal of political economy, 81(3), 637-654. - https://ve42.co/BlackScholes Cornell, B. (2020). Medallion fund: The ultimate counterexample?. The Journal of Portfolio Management, 46(4), 156-159. - https://ve42.co/Medallion Images & Video: Ed Thorp on The Tim Ferris Show - https://www.youtube.com/watch?v=CNvz91Jyzbg Jim Simons on TED - https://www.youtube.com/watch?v=U5kIdtMJGc8 Jim Simons on Numberphile - https://www.youtube.com/watch?v=QNznD9hMEh0 ▀▀▀ 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