Summary
Uncertainty breeds panic among people who seek to quantify risk, whether they do so judgmentally or with complex, elaborate "predictive risk models." There is a dislocation taking place among the world's economies and the markets are simply struggling to quantify the meaning of the structural changes underway. My opinion is that under circumstances like these reasoned, deliberative judgment is to be favord over emotionalism or models that are difficult to understand or assess. The times challenge the best minds and lesser minds will lose their way and lose money as well.
Analysis
I'm an actuary with a long career in insurance and risk management. Building models can help the decisionmaker to come to grips with the nuances of risk but no one is wise enough to properly quantify each element entering into a complex model. At the end of the day, judgment is far more likely to take into account critical, informative discontinutiies. Those are more the provenance of the historian than the expertise of statisticians or economists with their love of regression.
