The Connections Between Physics and Finance

UBC Physics & Astronomy Department Colloquium on March 11, 2021. Presented by Tom Davis (FactSet Research Systems). The connection between physics and finance goes back hundreds of years, and the names of the earliest physicists who studied finance may be surprising. In the 18th century Bernoulli discovered Euler's constant e when investigating compound interest; more recently Jim Simons – of the Chern-Simons QFT fame – runs one of the most successful hedge funds of all time, and Nigel Goldenfield – who pioneered renormalization group theory in condensed matter – founded a financial-derivative software company. Today many PhD graduates find a natural home in the financial industry. This talk will attempt to shed light as to why the fit is so natural, by exploring three facets of finance through the investment narrative: how does an investor choose their portfolio, how do they gauge the success of their investments, and