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September 05, 2012

Lecture Spotlight: Finance May Heal What Ails You

By Jocelyn Duffy

LoCould finance one day find the cure for cancer?

Not exactly, but Andrew W. Lo, director of MIT's Laboratory for Financial Engineering, argues that financial engineers could harness the power of global markets - in a manner similar to the way large amounts of money was made available for mortgages, leading to the recent financial crisis - to open up the billions of dollars needed to support the next generation of medical research.

Lo, one of Time magazine's 100 Most Influential People in the World for 2012, will discuss this topic in this year's Nash Lecture, "Can Financial Engineering Cure Cancer?" The lecture will be held at 4:30 p.m., Thursday, Sept. 27 in Porter Hall 100 (Gregg Hall), with a reception following.

Lo is an expert in portfolio theory and financial engineering, which uses mathematical and computational technology to create diversified portfolios that balance monetary risks and rewards.

Lo and collaborators argue that current methods of funding biomedical research don't provide enough financial resources to sufficiently find cures for some of the most pervasive diseases such as cancer. They have proposed that multibillion-dollar pools of funding can be created through public and private investment and long-term debt, and used to support medical research.

Lo is the Harris & Harris Group Professor of Finance at the MIT Sloan School of Management and a principal investigator at MIT's Computer Science and Artificial Intelligence Lab. He received his Ph.D. in economics from Harvard University in 1984 and taught at the University of Pennsylvania's Wharton School from 1984 to 1988.

He has published numerous articles in finance and economics journals, and has authored several books including "The Econometrics of Financial Markets," "A Non-Random Walk Down Wall Street" and "Hedge Funds: An Analytic Perspective."

Lo is founder and chief investment strategist of AlphaSimplex Group, LLC, an investment advisory firm in Cambridge, Mass.

The biennial Nash lecture is named after John F. Nash, Jr., who in 1948 earned his bachelor's and master's degrees in mathematics from then Carnegie Institute of Technology and his doctoral degree from Princeton in 1950. In 1994, Nash, along with John Harsanyi and Reinhard Selten, received the Nobel Prize in Economic Sciences for their pioneering analysis of equilibria in the theory of non-cooperative games. This work, sometimes called the Nash Equilibrium, has greatly influenced research in economics and finance.

Who: Andrew W. Lo, director of MIT's Laboratory for Financial Engineering  
What: "Can Financial Engineering Cure Cancer?"
When: 4:30 p.m., Thursday, Sept. 27
Where: Porter Hall 100 (Gregg Hall)

Lo is director of MIT's Laboratory for Financial Engineering.