Bulgarian mathematician predicts the market cataclysms
Reuters published an extensive article “Assessing the risk of a cataclysm”, based on the researches of the Bulgarian mathematicians Svetlozar Rachev.
He opposes the thesis that the cataclysms of the market can not be predicted. Rachev also presented statistic models which help him to predict the unstabilities of the market.
The author of the unique statistics model claims that it uses financial data from several sources. Thus, it gives a complete assessment of the risks and helps the optimization of the possible strategies for a maximum return of investments.
Thanks to the model of prof. Rachev, presented for the first time in 2002, the cataclysms of the market have become predictable.
Rachev decided to calculate the possibility for disasters for the first time after the crisis in 1987. Back then, just for a day, stock market shares lose 22% of their worth. None of the existing models could explain the crisis. The model of the Bulgarian warns that crisis of such magnitude can happen every 30 years.
The evaluations of Rachev use various mathematic and statistical tools and are of great use to his clients that believe in such predictions.
His model warned investors for the sharp fall in the Dow Jones Industrial Average among other markets: the Dow fell from a life high in November 2007 to a 12-year low in March 2009, sliding sharpest after Lehman Brothers failed in September 2008.
The company “Henderson capital management” used these formulas to determine the most risky investment foundations of 2008.
Of course, any statistical model of financial markets faces scepticism. Mathematical sophistication, as experts said in a March review for British regulators, “ended up not containing risk but providing false assurance that other prime facie indicators of increasing risk could be safely ignored”.
Who is he?
Svetlozar Rachev: Mathematician. Professor, doctor of mathematical sciences. Born in 1951. Graduated the Sofia University “St. Kliment Ohridski”. Leading professor in the University of California, Santa Barbara. Field of work – theory of probabilities, mathematics and statistics for the economy and business.
“Practically everything I’ve worked on started back in Bulgaria… The basis of my mathematical knowledge helped me a lot in every direction I took afterwards. It was recognized everywhere in the world. In Russia, they were very pleased to know that I understood more than the standard mathematical methods like the Hausdorff space. In Bulgaria, the alternative methods were covered in the education, thanks to Blagovest Sendov and his students… The National mathematics gymnasium was a huge borderline for many… I’ve never seen such a thing in America… I don’t know if there’s such a thing in Russia, maybe in the school of Kolmogorovo. But I can hardly believe that it exists anywhere else – teaching an unorthodox method to a child… Treating him like an adult mathematician. What was given to me by Bulgarian education made me accepted everywhere.”