Lay a good foundation first, what you want to say is later. Everybody be patient.

There is one of the cleverest stories.

In the water margin, the wise man Wu Yong is a star.

Teacher Wu is smart, thoughtful, restless, likes to try new things, and is willing to change the status quo and seek breakthroughs.

Seven-star gathering righteousness, birth class, wisdom named mansion, outsmarting jade unicorn, interlocking hands, stirring the forest into the fire, merging with Wang Lun and Zengtou City, ranking in no particular order ... Teacher Wu has designed one crime after another with high IQ, which is great! Everyone knows that you can't just mess with him.

Teacher Liang Liang also chose Wu's time accurately. "(Chen to recruit for the first time) even if you woo, you will treat us like dirt. This fellow leads an army and teaches him to do bad things. He will be afraid in his dreams, and then he will be popular and tolerant. "

Unfortunately, harness is a point of no return. What's the use of the wisdom of many stars when the building is about to collapse? Sweep Wang Qing, but do not enter the city; Conquering Fang La resulted in heavy losses. The last one died, the last one died, and the rest were scattered. It may be the best choice to bury Song Jiang with Mr. Wu.

In Wolf Totem, it's those wolves.

Wild spirit, smart to make people tremble. Although it is a beast, every attack has reconnaissance, disposal, ambush and surprise attack, and its tactics are superb. The most classic scene: wolves use climate and terrain to drive horses to a small lake, drown them, and then quickly freeze horse meat. They are not only clever, but also dead and bleeding. What a great thing! Inside and outside the forest, everyone knows not to provoke casually.

It's a pity that Jin Luo: Wolf Brigade can't enjoy the living space. Herdsmen are super-living and occupy the space of wolves; The high IQ resistance of wolves is even more frightening. As a result, automatic rifles are hunted by legions. It may be the noblest choice for the Wolf King to die after he breathed his last.

In these stories, there is another role.

In the Water Margin, there is a Cai Jing.

Teacher Cai is different among the four traitors. He neither died with Liangshan nor advocated blind wooing; You can send Guan Sheng to encircle Liangshan, or you can "send books to Liang Zhongshu to teach truth and save the lives of Lu Junyi and Shi Xiu, so as to cheat". Don't jump out if you should hide behind the scenes; Pretend you don't know when to kill someone. In the end, Qin Zong "did not add his crime" and resigned.

In Wolf Totem, there are a group of foxes.

Stealing food and biting chickens, although it also tickles herders' teeth, is by no means like a wild wolf. Its IQ and ruthlessness are full of fear. So foxes are occasionally beaten by herders and will not be driven away.

2

What am I trying to say?

There is a proverb in English that describes a species like "Wu Yong and the Wolf": "Being clever is mistaken by being clever". It means that cleverness is mistaken by cleverness. Too smart people tend to cut their own destiny.

Every subversive discovery and innovation in history is a masterpiece of "Wu Yong and Wolf". They have wild, unconstrained and powerful brains and can create "change". There are many such species around me.

The problem is that being able to thrive in every "small game" does not mean winning the big game. " Because the local optimal solution is often not the global optimal solution, it will even drag the global hind legs. The smarter people are, the easier it is to fall into "local optimum". This is the problem of "Wu Yong and the Wolf": customs clearance is like blowing dust, but it must not be them who eat chicken tonight.

Then why do "Cai Jing and Fox" always appear together?

Because the new game created by "Brave and Wolf" will break the old game; In this process, smoke and fire are everywhere, and it is easy to attract scammers, thieves and second-hand dealers. They are not smart enough to play new games; But I can't help but think of a few things. I like to fish in troubled waters and play with fire. Petty theft can't satisfy them, nor can petty theft satisfy them. They will be greedy to the last minute.

Until the new game breaks down. Liangshan became a thorn in the imperial court, and wolves became targets of human weapons. This is the sad story of Wu Yong and the Wolf, and Cai Jing and the Fox is well deserved. But when the game is clear, no one cares.

This is why "innovation" always ends in tears.

Especially financial innovation.

three

There is really nothing new under the sun.

According to historical records, all "financial innovation" is actually two things: 1) trying to sell things that cannot be sold. Also known as "securitization"; 2) Try to make something that doesn't grow up. Also known as "leverage". When two things are mixed into the same game, with a pile of ignition capital, there is a very clever cooking method created by "Wu Yong and Wolf": a financial innovation is completed.

This is my teacher, financial engineering geek Salih Neftci's favorite opening remarks. Unfortunately, he passed away several years ago.

With the four roles of Teacher Wu, Teacher Cai, Wolf and Fox, we can make up the story of 2008 again.

17 years ago, when the methods of "securitization" and "leverage" were found, a game of 10 trillion dollars began.

The first one was Wu Yong and the Wolf.

Let's welcome Xianglin Li, the financial mathematics engineer who once ruled the whole financial world, and the pride of Chinese on Wall Street.

Teacher Li built a default correlation model with a simple and beautiful mathematical formula: as you know, it is the "Gaussian Copula formula" (Gaussian connection dependence function) that laid the theoretical foundation for weapons of mass destruction such as CDS and CDO.

It is necessary to explain the most critical concept "relevance" in the model before advancing the plot. Let me use an example from Chalmont's famous report Wired to explain.

Suppose that the probability of four things happening to Maruko's classmates is 5% respectively: parents quarreling, head lice, seeing the teacher slip on a banana skin, and being at the bottom of the exam.

Suddenly, you find that Maruko has a deskmate named Xiao Xin. You may have to reconsider these four probabilities: Will Xiao Xin's parents quarrel, and will Maruko's parents quarrel? Probably not, so the correlation between them is zero. Xiao Xin's classmates didn't wash their hair and got lice. The probability that he has lice on his deskmate's head may be 50%, and the correlation between them is 0.5. Xiao Xin's classmates saw the teacher slip on the banana skin, and the probability of meatballs was as high as 95%. Because they are deskmates, the correlation is close to 1. If Xiao Xin is the last in the exam, then the probability of Maruko being the last in the exam is zero, because there is only one at the bottom, so the correlation between them is negative 1.

If Maruko borrows money from you, will he still be determined by these four factors; Then we should price the "small ball bond", consider the existence of Xiao Xin and ignore the existence of Xiao Xin, and the result will be quite different.

A model, no matter how high its IQ is, is always a simplification of the complex real world. It is "neutral" in itself, and it will become an explosive only if it is separated from the abuse of hypothetical conditions.

Abuse by who? Cai Jing and the fox.

They borrowed Li Yanhong's model to cut and stratify the already complicated assets. If the IQ is not enough, suppose to make up for it: suppose to keep the correlation forever, and suppose that the house price will never fall. The rest of the levers will come together.

Bringing unrealistic things into reality is like the second brother pulling sister Chang 'e off the moon to be his wife, and the ending will definitely collapse. This truth, which can be understood without a high IQ, was lost by the magic performance of Cai Jing and the Fox. When Mr. Li Xianglin tried to warn, no one cared. Just as no one cares what the second half of teacher Keynes's "invisible hand" is.

Is it similar to our stock index futures? A plate of exquisite cake, and no one ate it in the end.

four

Do you remember anything when you came?

The wheel of history has run over and come back, and the "Gaussian model" of that year seems to be reincarnated into something now.

This time, "Wu Yong and Wolf" was born in the community of virtual space, with the wild idea of "de-authoritarianism", and created an amazing mathematical algorithm named blockchain. The "CDO" generated under the new rules of the game was named Bitcoin.

Bitcoin may be a big bubble or a revolution, but it helps me review the financial history starring Wu Yong, Wolff, Cai Jing and Fox every day.

"Wu Yong and the Wolf" will create a mathematical algorithm that can talk about "trust" with aliens, and then write a new game "Bitcoin" into the world in this new language.

Cai Jing and the Fox heard that there are two inner activities: 1) beautiful things, ups and downs and endless bets. You can do it; 2) Find a lever to "borrow" this thing first.

Then there is the familiar history of the development of Wall Street amusement parks: the emergence of exchanges and futures, the shorting of "borrowing amount" by "margin financing and securities lending", the repurchase and repurchase of institutional virtual currency, and various index funds and virtual currency hedge funds began to rank.

The industrial chain extends upstream, the mining end has a manufacturing style, and the mine is regarded as a factory, making a billion yuan; I can find electricity and resources, and go all the way out to sea to build mines. Downstream extension, bitcoin ETF is already at the intersection. Cai Jing and Fox soon discovered that the concept of "smart contract" in blockchain is an excellent raw material for making derivatives.

Bugs in the real world can become new chips in the virtual world. The "innovative thinking" that was almost suffocated by supervision in the last "subprime mortgage cycle" has sprung up in the virtual world.

Every time mega game ends, the flashing moment of Wu Yong and the Wolf also ends. There are also street beheadings as an example, such as Mr. Li, who was accused by Wall Street and returned to China in a daze, and Lehman and Bear Stearns, who were cracked by cars. But "Cai Jing and Fox" can change their vests at any time and attach themselves to new games at any time.

five

I don't know why, everyone expected the day when the animal keeper pulled the fox out and hanged him, and they never came again.

So the saddest story appeared:

Stories that start with innovation and end with abuse will always appear. Caesar's belongs to Caesar and God's belongs to God. But the result always strengthens a kind of power. This power does not kill foxes, but cares about the Wolf Totem Group and the idea that "innovation" would rather kill by mistake than escape the net. They want to see well-behaved pigeons.

Teacher Wu Yong and the wolf totem changed the world forever, but "when the book of Pompeii was sealed for me, Pompeii was in ruins."