Can financial engineering cure cancer? It is an outlandish question, and many might find it distasteful, but the answer might be "yes". It is worth trying to find out. This is the argument of Andrew Lo, a brilliant and entrepreneurial finance professor from the Massachusetts Institute of Technology's Sloan School of Mangement, who convened a conference to float his idea for a cancer-fighting "super fund" this weekend, following a tour to London to present his ideas.
In a question and answer with Business Insider's Rob Wile, Professor Lo speaks about the state of the markets, why investing must now be treated like exercise, and what we can expect from his latest work.
After a global economic slump caused by seemingly reckless financial market activity, a period of calm might appear welcome. But moribund markets spell bad news for bank employees, and schadenfreude by others would be misplaced if they were being lulled into a false sense of security.
A professor of finance at MIT, Andrew W. Lo is an editor of the RSF volume Rethinking the Financial Crisis. The volume addresses important questions about the complex workings of American finance and shows how the study of economics needs to change to deepen our understanding of the financial sector.
Andrew Lo, a professor at MIT Sloan School of Management and investigator at MIT’s Computer Science and Artificial Intelligence Lab, has been seeking to find out why so many bad decisions were made on Wall Street leading up to the financial crisis. Lo, along with Thomas J. Brennan, a law professor at Northwestern, says the evolution of the human mind may explain a blind faith that housing values will rise and that mortgage securities and stocks would not fall in value as well as the opposite view.
Andrew Lo, the Charles E. and Susan T. Harris Professor of Finance at the MIT Sloan School of Management, who has been on the MIT faculty since 1988, last year accepted a secondary appointment in EECS and became a primary investigator in CSAIL. Recently, Lo has used techniques borrowed from computer science to mine credit-bureau data and data about the transactions conducted by customers of financial institutions to more accurately predict the risk of default or delinquency. Lo is one of the researchers at bigdata@CSAIL, a new initiative led by professor of computer science and engineering Sam Madden.
Professor Andrew Lo and MIT colleagues, Jose-Maria Fernandez and Roger Stein, have proposed the creation of a $30bn “megafund” that would invest in early-stage biomedical research and drug development. Investing in as many as 150 experimental compounds at one time increases the chances that a few of the ventures will succeed, and generate enough profit to make up for those that fail. Prof Lo recently talked to the FT about his idea.
MIT finance professor and hedge fund manager Andrew W. Lo has another idea about how to further the cause — by harnessing the power of financial wizardry. Lo wants to create a “megafund” that would raise billions of dollars for early-stage research in cancer drugs.