A Quote by Charlie Munger
Black-Scholes works for short-term options, but if it's a long-term option and you think you know something [about the underlying asset], it's insane to use Black-Scholes.
Related Quotes
Black-Scholes is a know-nothing system. If you know nothing about value - only price - then Black-Scholes is a pretty good guess at what a 90-day option might be worth. But the minute you get into longer periods of time, it's crazy to get into Black-Scholes. For example, at Costco we issued stock options with strike prices of $30 and $60, and Black-Scholes valued the $60 ones higher. This is insane.
The longer-term the option, the sillier the results generated by the Black-Scholes option pricing model, and the greater the opportunity for people who didn't use it.
My principal contribution to the Black-Scholes option-pricing theory was to show that the dynamic trading strategy prescribed by Black and Scholes to offset the risk exposure of an option would provide a perfect hedge in the limit of continuous trading.
The most important thing that a company can do in the midst of this economic turmoil is to not lose sight of the long-term perspective. Don't confuse the short-term crises with the long-term trends. Amidst all of these short-term change are some fundamental structural transformations happening in the economy, and the best way to stay in business is to not allow the short-term distractions to cause you to ignore what is happening in the long term.
I don't use the term "black" very often. I use the term African-American more than I use "black".
I hate the term 'black' because it doesn't bring to life who we are as a people. The term 'black' has more negative synonyms than the term white.
We don't really look at the stock, you know? Because for us, it's about the long term. And so we're very much focused on long-term shareholder value but not the short-term kind of stuff.
I have no hesitation in putting a name to the embodiment of all that I think is best about football. It's Paul Scholes. In so many ways Scholes is my favourite.
Debasing your currency sometimes works in the short term, it has never worked in the long term and does not even usually work in the medium term. Lots of politicians like to do it because it is an easy way.
Business is all about learning to balance the short-term, medium-term and long-term and I think it's when things are going well it covers up a lot of mistakes and bad decisions because you're growing so quickly.
I think a lot about intergenerational justice. Short-term versus long-term helps to explain a lot of the policy disagreements that happen between the parties, and I would argue that in most ways, we are the party with more long-term thinking.
…“white supremacy” is a much more useful term for understanding the complicity of people of color in upholding and maintaining racial hierarchies that do not involve force (i.e slavery, apartheid) than the term “internalized racism”- a term most often used to suggest that black people have absorbed negative feelings and attitudes about blackness. The term “white supremacy” enables us to recognize not only that black people are socialized to embody the values and attitudes of white supremacy, but we can exercise “white supremacist control” over other black people.
Looking into it a bit, Jamie found that the model used by Wall Street to price LEAPs, the Black-Scholes option pricing model, made some strange assumptions.
We have to preserve it and use it sustainably. And the short-term use of resources at the destruction of the long-term heritage of this country is not a policy that we can pursue.
The dominance of short-term perspectives has led to routine decisions in the markets that sacrifice the long-term buildup of genuine value in pursuit of artificial, short-term gains.
Like I tell people they wind up having short term pleasure and long term pain. I'm a tell what Minister Louis Farrakhan said, "Black people ain't poor, they just don't spend wisely" and that's the truth.
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