A workshop sponsored by America's National Science Foundation at which economists explored the potential of "agent-based models" (ABM) is highlighted. Professor Lo presented a model of the American housing market, inspired by ABM approaches, which showed how a fateful conjunction of rising house prices, falling interest rates and easy access to refinancing created an awesome burden of debt.
Andrew Lo likes the diversification that timberland investments bring, saying that the returns correlate less with, say, United States stocks than Western European stocks would. As a result, timberland might help to prop up the value of a portfolio during a bear market.
...Many of us are in deep mourning—for big stock losses going back to 2008. And our sorrow is so similar to what we feel after divorce or death in the family that we're likely working through the five stages of grief, says Andrew W. Lo, a finance professor at MIT who has studied investor behavior.
A central challenge to the efficient markets hypothesis is the existence of stock market anomalies. Andrew Lo says: "If the Efficient Markets Hypothesis in its classical form seems to be violated so often, maybe we economists ought to re-examine our theory instead of arguing that the world is crazy."
There's high-frequency trading, and now there's high-frequency crashing. But identifying the causes of the 6th May 2010 'flash crash' has proved to be a relatively slow process. Bob Giffords goes in search of causes, outcomes, explanations and lessons to be learned. Andrew Lo gives his take on it.
The Retirement Income Summit, a gathering of financial advisers this spring, confirmed that employers committed to educating workers about saving for retirement have a lot on their plate, both now and in the years to come. Andrew Lo, a professor at MIT, cited a study that found as people age they begin to make poor financial decisions.
"We need a vibrant OTC swaps market for the global economy, but there are systemic issues that need to be considered," says MIT Sloan Prof. Andrew Lo in a story on the methods big banks use to price over-the-counter derivatives, potentially to their own advantage...
When the rest of the world was busy buying second homes with no money down, MIT professor Andrew Lo was busy beating the drum over a coming financial crisis. For a while, he was playing to an empty room, but now his prescience makes him a voice of authority as we deal with the meltdown and its aftermath. Fortune recently spoke with Lo about the goods and bads of financial reform, how to prepare for calamities to come, and the "holy grail" of good regulation...