Principal of David S. White & Associates, a real estate and general business law firm, West Los Angeles.
I want to let you in on a little secret. Once upon a time, the Wizards of Wall St. took risks with their own money and, when those risks paid off, they earned handsome rewards. Somewhere in the not too distant past, that changed to the newer model, which nearly sank the world’s financial ship in the Fall of 2008 and likely will again, unless Congress addresses the heart of the problem.
Somewhere around the time that the Glass-Steagall Act was repealed (November 12, 1999, to be precise, by the Gramm-Leach-Bliely Act) the Wizards of Wall St. had a revelation. This light bulb suddenly illuminated, as in the old comics and cartoons, greatly assisted by a major shift of graduate-student-level physicists, weary of stuyding arcane String (Superstring, Membrane, ad nauseum) theories, and math geeks, tired of not making any real money using their mental gymnastics, were looking to escape the hallowed halls of academia.
It was also made possible by the power of modern computing, featuring exponentially increasing memory storage and computing power, enabling billions of calculations in microseconds, all emanating from a computer chip the size of a postage stamp. These academic émigrés were snapped up by the Wizards of Wall St., who called them “Quants,” and set to work, sweating over hot computers, cooking up exotic financial instruments, the understanding of which lay far beyond the ken of mere mortals, to whom an algorithm is a very hard-to-spell word for some kind of math that you did not pay much attention to decades ago when somebody tried to teach it to you. “[A]n algorithm is an effective method for solving a problem using a finite sequence of instructions,” say our pals over at Wikipedia, the People’s Encyclopedia.