This Dream Team Could Fix Drug PricingPrint | March 8, 2016
This MIT Professor Thinks Wall Street Can Fix High Health Care CostsPrint | February 24, 2016
"It was during the financial crisis that Andrew Lo had his epiphany: The way to save health care from ever-rising costs is by bringing in the banks. Specifically, by packaging drug development costs into securities to be bought and sold by Wall Street—the very, um, mortgage-bundling technique that blew up the economy in 2007. “The reason the financial crisis happened is not because securitization didn’t work. It happened because it worked way too well,” says Lo, a professor of financial engineering at MIT. Securitization injected a huge pool of money into mortgages—what if you could inject that pool of money into a worthwhile cause and, ahem, do it responsibly?
"So Lo, who has seen his mother and several friends die from cancer, wants to use the techniques of Wall Street to fix healthcare. In a new paper in Science Translational Medicine, he and his coauthors propose creating loans for patients whose insurance policies don’t cover ultra-expensive treatments like the cure for hepatitis C—loans that would be financed by bundling them and selling to Wall Street investors..."
Risikoaversion und Kapitalmärkte [Risk Aversion and Capital Markets]Print | December 22, 2015
Absolut | Report
Absolut | Report
"Risikoaversion ist eine der zentralen Annahmen der Wirtschaftswissen
schaften, aber auch eine grundlegen de Eigenschaft menschlichen Verhaltens. Trotz umfangreicher Forschung ist wenig über Nutzenfunktionen oder über die Gründe für unterschiedliche Risikopräferenzen von Individuen oder Gesellschaften bekannt."
[Risk aversion is one of the central assumptions of economics, but also a fundamental property of human behavior. Despite extensive research, little is known about the benefits or features of the reasons for different risk preferences of individuals or companies]
Indexing’s Brave New WorldPrint | November 24, 2015
Chief Investment Officer
Chief Investment Officer
"Indexes are becoming more than just market-cap-weighted portfolios, according to a new report from MIT. With new passive investment products continuing to emerge, Sloan Professor of Finance Andrew Lo proposed broadening the definition of an index to include “dynamic indexes” such as smart beta strategies..."
Redefining Indexes to Reflect RealityPrint | November 13, 2015
"The investment industry should be constantly looking at the impact of technology on the status quo. Just because indexes have been defined as cap-weighted portfolios, doesn’t mean that can’t change. In fact, the evolution in portfolio management necessitates a change in thinking with regard to the definition of indexes, in particular so risk management can be decoupled from alpha generation. In a new paper that argues for a new definition of what constitutes an index, Andrew Lo, professor of finance at MIT Sloan School of Management pushes the boundaries by not only suggesting change, but by demonstrating a new functional definition for indexes and the benefits, and pitfalls, of doing so..."
MIT’s Andrew Lo Touts Megafund to Tackle Cancer, Rare DiseasesPrint | October 26, 2015
"Economist, finance professor and investment manager Andrew Lo says some of the 'financial weapons of mass destruction' that helped trigger the 2008-'09crisis can be used for good. If deployed in megafunds by teams of savvy money managers and scientists, he believes, the securitization of intellectual property related to biomedical research could yield lucrative returns while also breathing life into what the biotechnology industry calls the valley of death - neglected early-stage, risky drug development projects for the rarest and most intractable diseases. But Lo, who has conducted several simulations that he says show this strategy could work, is just the idea guy..."
US NIH Translational Science Promotion Center of China National SeminarPrint | October 20, 2015
"In collaboration with Prof. Andrew Lo at MIT Sloan School of Management and Laboratory for Financial Engineering, Dr. Yang’s current research focus is developing and implementing novel business and financing models that utilize bond market capital for financing biomedical drug development..." [Original article is in Chinese]
A Case for Taking Risks on Drugs for the DyingPrint | October 6, 2015
The Boston Globe
The Boston Globe
"Right now, the Food and Drug Administration will not approve a drug if there is more than a 2.5 percent chance that it doesn’t work — no matter the disease or how poor the prognosis.
"There is a cold logic to this approach. And in a recently published paper, Massachusetts Institute of Technology finance professor Andrew Lo took the FDA to task for not being more flexible."
Markets: Can they really be tamed?Print | September 30, 2015
"Computer models designed to help investors navigate turbulence are accused of making things worse.
"Cobras are revered in Indian culture, but the British Raj took a dimmer view of the poisonous snake. Officials promised a lucrative reward for every dead serpent — a scheme that, according to economic lore, backfired horribly..."
Can Wall Street Cure Cancer?Print | September 24, 2015
"Andrew Lo, professor of finance at the MIT Sloan School of business and money manager (AlphaSimplex), believes that Wall Street-style financial engineering can hasten cures for cancer and other diseases while providing healthy returns to investors.
"During an MIT Sloan webcast on Thursday, Lo said that preliminary research conducted by him and his colleagues indicated that a “mega” primary research-focused fund could produce returns to bondholders of 5% to 8%, while equity shareholders could expect returns ranging from 8% to 12%. An investment fund with interests in perhaps hundreds of research projects could also provide investors with returns not correlated to the S&P 500..."