You'll want to check out Steve Keen, of "Debunking Economics" fame, for the gory details. He has a blog (debtdeflation.com or something) with a couple of finance class videos on it, and he runs or used to run a talk all over, a version of which you'll find in the Google Talks channel.
In short though, the entire thing is based on the idea that finance is based on guassians, whereas the evidence overwhelmingly suggests it's based on power laws instead. (And intringuingly, the consequence of the latter would mean that portfolio risk increases when you're diversified in many asset classes.)
In short though, the entire thing is based on the idea that finance is based on guassians, whereas the evidence overwhelmingly suggests it's based on power laws instead. (And intringuingly, the consequence of the latter would mean that portfolio risk increases when you're diversified in many asset classes.)