At this point, there isn't an obvious place to park money, ... A number of strategies that produced good returns in the past are no longer profitable. A lot of the smart money is sitting on the sidelines right now just waiting for the direction to change.

Andrew Lo

Andrew Lo

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Finance and economic research has hit a wall. We can't answer any more questions by running another regression analysis. Now, we need to get inside the brain to understand why people make decisions.

Credit derivatives and hedge funds have grown fairly spectacularly over the last five years.

Credit derivatives and hedge funds have grown fairly spectacularly over the last five years,

The fact that hedge funds have become so important is really the flip side of problems that could be generated. If they ceased to function in the way they are designed, that would create a fair amount of systemic risk.

The short answer is, I don't know. Nobody knows. The reason for that is, we don't have enough data on the particular exposures we need to measure to answer that question.