IN THE TIME it takes you to read this sentence, investment banks, hedge funds, and other investors around the world will have traded about $80 million in stocks.
That adds up to more than $200 billion per day, or nearly $70 trillion total last year, according to the World Bank. “These are huge, enormous amounts of money,” says mathematician Cornelis Oosterlee of Centrum Wiskunde & Informatica, a national research institute in the Netherlands. “Some single trades involve numbers that are scary to imagine”—part of a company’s pension fund, say, or a university endowment.
With great stacks of cash comes great responsibility. To satisfy government regulations and hedge their own losses, financial institutions devote substantial resources to predicting how much their assets will be worth in the future. “It’s not gambling,” says Oosterlee, who, as an academic, has worked with both banks and their regulators. “That’s a common misconception. If financial institutions were gambling, they would not make so much profit.”
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