Roger Lowenstein Quote
The risk models developed by private firms, whether hedge funds, rating agencies, or banks, are not reliable guides to the future. Even when these models are applied by government regulators, their application is flawed, because they look to past market history as received truth. But markets, we must emphasize, are imperfect; they are the agglomeration of myriad investors, most of whom usually act rationally - usually, as history has shown, but not always. Even perfectly logical investors will panic, as will theatergoers at the mere possibility of fire, so as not to be last to the exit; this threat of contagion renders financial markets inherently unstable.
The risk models developed by private firms, whether hedge funds, rating agencies, or banks, are not reliable guides to the future. Even when these models are applied by government regulators, their application is flawed, because they look to past market history as received truth. But markets, we must emphasize, are imperfect; they are the agglomeration of myriad investors, most of whom usually act rationally - usually, as history has shown, but not always. Even perfectly logical investors will panic, as will theatergoers at the mere possibility of fire, so as not to be last to the exit; this threat of contagion renders financial markets inherently unstable.
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About Roger Lowenstein
He is also a director of Sequoia Fund. In 2016, he joined the board of trustees of Lesley University. His father, the late Louis Lowenstein, was an attorney and Columbia University law professor who wrote books and articles critical of the American financial industry.
Roger Lowenstein's latest book, Ways and Means: Lincoln and His Cabinet and the Financing of the Civil War, was released on March 8, 2022, and won the 2022 Harold Holzer Lincoln Forum Book Prize.