The Trillion Dollar Equation

"I can calculate the motions of heavenly bodies, but not the madness of people" this gotta be one of the hardest quotes.

When a physics channel explains F&O better than any finance channel 🙏🏻

I've never fully grasped how options worked until now, I swear other people go out of their way to make it appear more complicated than it really is.

I love that his answer about whether this helps or not is basically "when things are good it's fine, but when things go bad it makes things much worse". Which...yeah.

It's so fascinating to see the dots being connected from finance to math to a physics breakthrough, science is beautiful

You are better at explaining financial economics than most econ/finance channel on youtube

It's worth mentioning that Merton and Scholes, who were champions of the efficient market hypothesis, were part of the board of directors of a hedge fund called Long-Term Capital, which ironically sought to exploit market inefficiencies to make money. The fund ended up collapsing less than 4 years later and receiving a huge bailout. In the years before, Ed Thorp's fund was making record profits until it was dismantled by the US gov. Source: Fortune's Formula, very interesting read

Unless I missed it, they didn't mention LTCM (Long Term Capital Management). It was a multi-billion dollar investment firm founded in 1994 by two Nobel laureates using the Black-Scholles model -- and it went bankrupt in 1998.

I don't think that there is any other channel that brings such kind of interesting technical content in such lucid terms.

A young economist and an old economist are walking down the street, and the young economist says, "Look! A $20 bill!". The old economist says, "Nonsense. If there were a $20 bill just laying on the ground, someone would have picked it up already."

you have such a gift to explain these things. Your video on Fourier transformation helped me immensely in my PhD dissertation actually (i still had to find "legit" sources cause a veritasium video doesn't count, but I understood it better from you than from any "proper" papers). Please never stop making these, you explain complicated things so well

Stocks are falling and bond yields are rising, but markets still don’t seem convinced the Federal Reserve will pursue plans to keep increasing interest rates until inflation is under control. I'm still at a crossroads deciding if to liquidate my $117k stocck portfolio, what’s the best way to take advantage of this bear market?

In case Derek or anyone on his team reads this, $100 in the medallion fund does not compound yearly at 66%. It yields 66% per year. The size of the medallion fund is limited by the size of the options market. If the fund grows too large, their edge experiences diminishing returns. By this fundamental limitation of their strategy, the fund only scales with the efficacy of their edge and the rest is liquidated for employees and original shareholders. If it was truly compoundable, then the fund wouldn't be closed and an efficient market would infinitely allocate to it until itintroduced price distortions that arbitrage the edge. The initial statement about $100 becoming billions in decades is not true.

The style of this video is brilliant. It reminds me of a film where there are multiple plot lines and these seemingly unrelated subplots satisfyingly come together at the end.

Obviously none of them heard of Nanci Pelosi

One of the best descriptions of options I’ve ever heard, the olive press is so easy to understand

As a pure math undergrad turned math teacher turned stats masters turned actuary... just wow. I had a smile across my face throughout as you connected the dots across the history of this topic. Fantastic as usual

Veritaseum videos are like a Nolan movie. It goes through multiple different story lines, and finally converges into one thing that finally lets you make sense of the whole story.

This is such a beautifully intricate breakdown of the Black Scholes model and Derivative pricing. I have an exam in a few weeks that includes 6 chapters on the mathematics and economics of derivatives so thank you for this video. Talk about right on time!

Love the illustrations of the "radiation of probabilities" (and everything else) 👏👏