Hey everyone,
I always wondered/debated whether (knowing a formula and knowing how to interpret a formula) is more significant than actually understanding how to derive/prove a formula. To be successful, do you think it is enough to know the formula and know how to interpret it?
Can you tell me a bit more about hedge fund managers or successful traders with respect to this question?
It depends on what you are doing. I need to be confident in my reccomendations before I implement them with my clients. Sometimes that includes a deeper understanding of the analysis tools I use. My clients aren’t analysts. As a fiduciary it is my job to understand what is happening. If that means understanding how to prove the formula, then I do it. Now, I don’t use a lot of new advanced strategies for my clients so 99.9% of the time, I only need to understand and interpret the formulas to justify my reccomendations. I did the proofs in college 20 years ago. Also, there isn’t a lot of math beyond basic algebra in financial planning and wealth management. I use software developed by real quants… The outputs have to make sense so I still need to know and understand the math used. I also have to know how to use the tools an apply them to the situation. So the application has to make sense too.
I developed a failed hedge fund years ago. I’m not a trader though. I only trade in my own account.
Thank you for your explanation.
I trust you mean you developed a hedge fund that failed, rather than a failed hedge fund…
If that makes you happy, Whatever. lol!
If that makes you happy, Whatever. lol!
I am client facing…so have not touched those things for years. But I say having a high level of understanding of the trading strategies or “so-called-alpha-driver” of any strategy is they key in my manager visits. For all these years, my CFA charter has served as a BS beacon for me, and as a BS deterrent for the managers I speak to.