Finance: The Biggest Scam in History

Finance = "Faffin INtuition using chANCE"

The world of Finance is one big scam. They have made money out of making other people look like a constipated monkey tied to the kitchen sink. From the outside they make us believe them to be superior lifeforms who seem to know where the money is.

They help in reducing the rich-poor gap by constantly making the rich people poorer thus doing their bit for the society. So what if that costs us employment ! What's better than seeing somebody's life savings' going down the drain and all they get is "Economy is bad" ! By the way who the jackass in the universe controls the economy ? Let me know if you find out.

Coming back to Finance, take a look at Finance courses in a B-School and you'll understand the dirtiest practical joke played on humanity. Nothing is certain. Everything is assumed and then theories are built on that assumption and then they'll relax those assumptions, subtly prove the assumptions were no good and conclude by saying that the base assumption was an act of god.

You can manipulate every assumption as per your own convenience. Tweak the cash flows and you have a new NPV. Make big equations with lot of terms such that people cannot come to terms with that equation. Clout your lack of capability using Probability. Call everything expected and then expect the unexpected. Blame it all on idiosyncrasy. Tell people that the need to make these assumptions is to build intuition. Hurray !! Now I am a genius with a foundation of false knowledge based on unrealistic assumption. Gotta take one for Intuition. The survival of the human race depends on my sacrifice.

Lets look at something called the one factor model:

Expected Return = alpha + (beta*Factor of shock) + idiosyncratic error

Now take any historical data including your grades since kindergarten and tell me if you cannot fit it into this equation. First you make a prediction. And then based on it make a estimate. And them make up for your lack of understanding with the error term. So in totality you need to be a astrologer and not a MBA grad.

Pivot quite a few of your numbers on Historical data and then use the same historical data to prove how wrong the historical data is i.e. do not use the past to judge the future. No wonder Mutual Funds say "Past performance is not an indicator of future performance" which in English is "Dude somehow the guy who broke the coconut, broke it at an auspicious time and hence it all worked out well but don't you think that you are going to get this lucky".

In the end I guess everyone needs to earn a living by hook or by crook. So be it by pulling a fast one on the countless number of people who believe Finance is something to do with money. Everybody who can count himself to be a decent Astrologer can be good Finance professional. So all you Finance hopefuls, start listening to Bejan Daruwala more intently .... you just might pick up Intuition !