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Big Saturday Interview: Andrew Lo of MIT’s Laboratory for Financial Engineering

  • February 22, 2010
  • Andrew Lo

Editor’s note: This is a reprint of our February 2010 interview with of Andrew Lo conducted by David Penn. We thought you’d enjoy reading it this evening.

Click here to access our Big Saturday Interview with Andrew Lo!

From Massachusetts Institute of Technology, where he is director of the Laboratory for Financial Engineering to the halls of the U.S. Congress, where his deep understanding of how financial markets behave has been sought by legislators grappling with a brave new world of hedge funds, leveraged super derivatives and systemic risk, Andrew Lo this weekend provides TradingMarkets with his insights on everything from trading and technical analysis to our current economic climate and the challenges that Treasury Secretary Tim Geithner and the Obama administration are facing.

Author of The Econometrics of Financial Markets and, most recently, The Heretics of Finance: Conversations with Leading Practitioners of Technical Analysis, Andrew Lo’s status as a top academic economist provides him with a perspective that many traders do not have but can surely benefit from understanding. In an interview conducted by e-mail over the past few weeks and compiled here, Lo points out that the ability to spend extended time focused on single issues as an academic economist has made it possible to, in his words, “develop a broader understanding of market dynamics” that often takes traders “many years” to learn.

Perhaps most fascinating is Andrew Lo’s discussion of what he calls the Adaptive Market Hypothesis. Lo calls his AMH “a new view of financial markets from a biological perspective … within an evolutionary framework,” and shows how this way of thinking about market behavior may help to “reconcile many of the apparent contradictions between efficient markets and behavioral expectations.”

Thank you for visiting TradingMarkets. We hope you enjoy this weekend’s Big Saturday Interview with Andrew Lo of MIT’s Laboratory for Financial Engineering.

Click here to access our Big Saturday Interview with Andrew Lo!

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