The Trillion Dollar Equation

The most famous equation in finance, the Black-Scholes/Merton equation, came from physics. It launched an industry worth trillions of dollars and led to the world’s best investments. Go to and use the code Veritasium for $200 off your Pod Cover. If you’re looking for a molecular modeling kit, try Snatoms, a kit I invented where the atoms snap together magnetically - ▀▀▀ A huge thank you to Prof. Andrew Lo (MIT) for speaking with us and helping with the script. We would also like to thank the following: Prof. Amanda Turner (University of Leeds) Owen Maher (Electrify Video Partners) ▀▀▀ References: The Man Who Solved the Market: How Jim Simons launched the quant revolution, Gregory Zuckerman. Penguin Publishing Group. - The Physics of Finance: Predicting the Unpredictable: Can Science Beat the Market? James Owen Weatherall. Short Books. - The Statistical Mechanics of Financial Markets, . Springer. - Black, F., & Scholes, M. (1973). The pricing of options and corporate liabilities. Journal of political economy, 81(3), 637-654. - Cornell, B. (2020). Medallion fund: The ultimate counterexample?. The Journal of Portfolio Management, 46(4), 156-159. - Images & Video: Ed Thorp on The Tim Ferris Show - Jim Simons on TED - Jim Simons on Numberphile - ▀▀▀ Special thanks to our Patreon supporters: Adam Foreman, Anton Ragin, Balkrishna Heroor, Bill Linder, Blake Byers, Burt Humburg, Chris Harper, Dave Kircher, David Johnston, Diffbot, Evgeny Skvortsov, Garrett Mueller, Gnare, I.H., John H. Austin, Jr. ,john kiehl, Josh Hibschman, Juan Benet, KeyWestr, Lee Redden, Marinus Kuivenhoven, Max Paladino, Meekay, meg noah, Michael Krugman, Orlando Bassotto, Paul Peijzel, Richard Sundvall, Sam Lutfi, Stephen Wilcox, Tj Steyn, TTST, Ubiquity Ventures ▀▀▀ Directed by Will Wood and Derek Muller Written by Will Wood, Emily Zhang, Petr Lebedev and Derek Muller Camera operation by Raquel Nuno Additional research by Gregor Čavlović Edited by Jack Saxon and Trenton Oliver Animated by Fabio Albertelli, Jakub Misiek, Ivy Tello, David Szakaly and Will Wood Produced by Will Wood, Han Evans and Derek Muller Thumbnail by Ren Hurley Additional video/photos supplied by Getty Images and Pond5 Music from Epidemic Sound