Trillion Dollar Bet is a documentary that tells the story of the Black-Scholes-Merton options pricing model, discovered by three economists of the same name. The formula had a far-reaching effect on the financial market.
Following the discovery, Scholes and Merton joined forced with John Meriwether, a bond trader at Salomon Brothers. With 13 other partners, they launched a new hedge fund, Long Term Capital Management, which promised to use mathematical models to make investors huge returns with little risk. Whilst at first it delivered, in 1998 the fund’s losses were so large that it became a systemic threat and had to be bailed out.
Trillion Dollar Bet offers a fascinating and thought-provoking insight into the world of financial markets, trading and speculation. It gives an informative view of the market from both academic and practitioners perspectives and shows how events can have an impact on the financial markets that mathematic models cannot incorporate.
Difficult concepts are explained well in clear terms and the film uses common sense examples to fully explain the impacts. It also contains interviews with Merton and Scholes, as well as traders working in the industry giving viewers a further understanding of investing and the associated risks.
The film will be of interest to people wanting to further their knowledge on the stock markets, finance, economics and investing.