A polemic for us competitive intelligence types...
The financial blog ZeroHedge
points out that JP Morgan has now taken out a $3 billion reserve
to hedge against the potentially faulty judgments of their quantitative analysts.
For those of us in the world of largely qualitative analysis, this is a fairly unprecedented move, one that cuts across the grain of most schools of modern managerial thought. After all, wouldn't you say that numbers, spreadsheets, ATTRACTIVE PIE CHARTS, no matter how fallacious, are still better to most executives than incisive, effective, insightful analysis? Or, in the words of our dear colleague August Jackson, fake numbers will trump real insight almost every time
Surely, as intelligence mavens, we're not against hard numbers, but you should be able to analyze the assumptions behind those numbers. Speaking of which, the ZeroHedge article pulls a shocking statistic out of the history of the subprime debacle. Check out what the quantitative model predicted subprime losses to be, as opposed to the actual losses, factors of 100 greater
. Holy cats...
Given all the fake numbers in forecasts lately, what do you think of the future between quantitative and qualitative analysis?