Quant analysis works, until it doesn’t. That’s the conundrum of public markets: once everyone is doing the same thing, its the wrong thing to do. I think, like the thread consensus is appearing to suggest, that strong quant skills will be more important in the future, but so will the big picture perspective that lets you examine any assumptions and try to understand when the current model is no longer valid.
Two factors will make those with quantitative abilities takeover most realms of finance in the future: 1) increased computing power dispersing competitive advantages of the old guards to start ups 2) entities reporting datasets rather than documents – read XBRL (eXtensible Business Reporting Language) --> each item in a document has an associated tag; whether proxies, annual/quarterly reports, loan docs, whatever. This is basically straight from source normalized data which reduces the premium for Third party software/data vendors. With the computing power and data, competitive advantages of a few are dispersed to the many.
Looks like you’ve got the world all figured out Keys! go for it!
By the way ‘people skills’ is a concept created by the mediocre and those with low IQs. Here’s why. You need good people skills and communication skills for professions like a doctor or professor. In investments, its all about BSing people and selling, marketing. If your best advice is something the client may not like you change your advice. When the technical guys tries to make his point he is told that he has got no people skills. Let Jim do the talking since he comes from an affluent background, went to Ivy league and has a dozen Italian suits. So Jim comes in and tells the client exactly what the client wants to hear. Jim is an instant hero and gets more of the client’s business. Hence, stupid people like having stuff sugar coated for absorption. Alas this is 98% of the clientele. In an honest world, there will be no need for the so called ‘people skills’.
American society promotes mediocrity. Hence the emphasis on team work. what is team work? team work is doing your job and then saying, well a group of 10 of us did this. in fact only you did that job. Since you have to be part of the society you play along. Otherwise you become an outcast. The average IQ of the society is far below what would be considered decent. This is where sociologists came up with concepts like team work, people skills, emotional quotient etc.
Keys Wrote: ------------------------------------------------------- > Two factors will make those with quantitative > abilities takeover most realms of finance in the > future: > > 1) increased computing power dispersing > competitive advantages of the old guards to start > ups > > 2) entities reporting datasets rather than > documents – read XBRL (eXtensible Business > Reporting Language) --> each item in a document > has an associated tag; whether proxies, > annual/quarterly reports, loan docs, whatever. > This is basically straight from source normalized > data which reduces the premium for Third party > software/data vendors. > > With the computing power and data, competitive > advantages of a few are dispersed to the many. Note: this is assuming by “Realms of Finance” you mean investment management (no IB, corp fin, or something). I am pretty quantitatively oriented and think this is asinine. Let me tell you why: investment management is largely a business of confidence. There are two ways to instill confidence: 1) Good performance backed up by a solid client base. 2) Speak with gravitas and instill trust with your clients. Conclusion: if your argument is that quant investing can bring good risk adjusted returns, Ok that is probably true, especially when blended with a “know when to stop mentality”. It is easy to over engineer your factors. Also, quant guys are as likely to fall in love with their factors/models as traditional guys are likely to fall in love with a stock. So, I think it becomes more important, but does not “take over”. If you are saying quants will dominate the business, witness the numbers 1 and 2 above. Neither require quantitative management.
Ok. Thread Summary: - Nerds say social skills are overrated. - Jocks say brainpower is overrated. - Nerds invent stuff, but suck at selling it. - Jocks can’t invent squat, but can sell ice cubes to Eskimos. - Both sides need each other in our imperfect world.
Lets break down the theory that the guy with the more pleasant and confident personality instills confidence and trust: This has behavioral bias written all over it. so a guys who speaks clearly instills confidence in you and you want to entrust that guy with your money instead of the guy who also can talk but perhaps not as succinctly and actually knows what he is doing? Why? Because the confident guy is pretty? Oh I see so you are looking for a pretty guy. Then you should be at a fashion show. Is it because he is tall, handsome? Because he can structure his sentences better. When you break it down its ridiculous. People skills is also to a great extent racial biases. Black guy and white guy say the same thing, and most white folk would listen to the white guy and call is people skills. It boils down to this: a wealthy man expects he will be conned by the investment world. He thus chooses to pick the pretty guy to smooth talk him into it. he is too racially and socially biased to go to the smarter guy who doesn’t look good. well in this case I suppose it serves him right to be conned. Bottom line is: this current crisis is a result of these so called people skills.
I should add that I have excellent people skills 
Or, is it a function of models that claim to explain the complexities real world but DON’T/CAN’T. Is this turing into the Mickey D’s thread all over again?
needhelp Wrote: ------------------------------------------------------- > Lets break down the theory that the guy with the > more pleasant and confident personality instills > confidence and trust: > > This has behavioral bias written all over it. so a > guys who speaks clearly instills confidence in you > and you want to entrust that guy with your money > instead of the guy who also can talk but perhaps > not as succinctly and actually knows what he is > doing? Why? Because the confident guy is pretty? > Oh I see so you are looking for a pretty guy. Then > you should be at a fashion show. Is it because he > is tall, handsome? Because he can structure his > sentences better. When you break it down its > ridiculous. People skills is also to a great > extent racial biases. Black guy and white guy say > the same thing, and most white folk would listen > to the white guy and call is people skills. > > It boils down to this: a wealthy man expects he > will be conned by the investment world. He thus > chooses to pick the pretty guy to smooth talk him > into it. he is too racially and socially biased to > go to the smarter guy who doesn’t look good. well > in this case I suppose it serves him right to be > conned. > > Bottom line is: this current crisis is a result of > these so called people skills. Dunno, the guys from LTCM instilled confidence with their credentials (they weren’t very pretty). All I’m saying is that you have to instill confidence somehow, and that is not a specifically quantitative domain. Nor is it a “people skills” domain. Thus, neither takes over, but instilling confidence/trust is still all that matters, whether through good relationship management, impressive credentials or good performance.
I am not siding with the quants. I am just disgusted at the ‘people skills’ aspect and what it really means.
sublimity Wrote: ------------------------------------------------------- > One thing I can say for sure is that: > > JOE2010 is DUMP. Dude, will you ever hold a civil conversation? I refuse to be drawn into this non sense for obvious reasons.
People skills are underrated. However, it is true that plenty of people without much talent (quantitative or otherwise) try to make it up for it by claiming they have people skills. A small fraction of those may actually have people skills. People skills seem to come in at least two flavors: 1) the ability to respond to what a client or other person genuinely wants in a way that builds trust, confidence, and a stronger relationship, and 2) the ability to manipulate people into doing what you want them to. The two flavors can be difficult to distinguish. Both are useful in business; only one is honorable. People with other talents AND people skills are rare and extremely valuable.
bchadwick Wrote: ------------------------------------------------------- 1) the ability to respond to what a > client or other person genuinely wants in a way > that builds trust, confidence, and a stronger > relationship, and This is comprehension skills, not people skills. This is being a good listener. A smart person helps the client ask the right question and then answers it.
> > People with other talents AND people skills are > rare and extremely valuable. Still I’d rather be able to dunk a basket ball than any of that stuff.
I think everyone is judging this argument from their own personal experiences. I’m guilty of this as well because when I first joined this board a lot of what I read seemed to be silly to me (and to some extent is). But I am not going to get into a ideological debate over the merits of one over the other. Each approach has its drawbacks and benefits - and neither group is going to eradicate the other. Investing is more about understanding and controlling one’s emotions as it is placing a value on a potential investment. The most successful individuals take a measured, patient, unemotional view of the markets. WhiteCollarRedneck made an excellent post, as well as some other posters. High IQ means nothing in investing. The whole MBA not MBA approach isn’t as simple either. I just got accepted to a pretty decent program - my primary intention being to get the name of an average college off my resume to level the playing field - secondary - improving my soft skills (because I am better conceptualizing things in my head versus verbalizing them). Do I believe in half of the crap I learned in the CFA program or what I will learn in academia - hell no. If academics ruled the world we’d be screwed. Its a shame people take what they hear for face value. Not sure where this is really going but…yeaaaah
needhelp Wrote: ------------------------------------------------------- > bchadwick Wrote: > -------------------------------------------------- > ----- > 1) the ability to respond to what a > > client or other person genuinely wants in a way > > that builds trust, confidence, and a stronger > > relationship, and > > This is comprehension skills, not people skills. > This is being a good listener. A smart person > helps the client ask the right question and then > answers it. Are you arguing that being a good listener is not a key people skill? Being able to read between the lines? Being able to tell that an evasive answer or a pause in speech indicates that the client is constrained in some way about saying what he/she really wants? Being able to rephrase the question in a way that maybe the client can feel more comfortable answering it? Remember that building trust and confidence and a stronger relationship is also a key part. That’s not just about passing information along accurately, that’s about understanding the financial, emotional, and political context that the client operates in. To me, that’s a big people skill that a surprising number of people lack.
This is a new article regarding the lack of union between quant skills and traditional finance… http://www.newsweek.com/id/200015/page/1 The majority of us need to meet in the middle…I am referring to a blend, not the tails of the distribution. Quants, stop being so high and mighty and pick up those social skills; stop looking down on traditional finance and learn it! Just because there aren’t mutiple greeks in the equation doesn’t mean it’s not useful. Business folks -> stop complaining and being lazy; learn your maths, otherwise you will be kicked to the curb. In response to Eureka; higher computing power and more normalized data doesn’t mean you need to use quantitative methods, but it certainly makes those quantitative methods better and more enlightening (as long as quanty folks don’t get too lost in the beauty of the equation). It will increase competition so much that those individuals without both quant and fundamental understanding will have little value.
Keys Wrote: ------------------------------------------------------- > This is a new article regarding the lack of union > between quant skills and traditional finance… > > http://www.newsweek.com/id/200015/page/1 > > The majority of us need to meet in the middle…I > am referring to a blend, not the tails of the > distribution. > > Quants, stop being so high and mighty and pick up > those social skills; stop looking down on > traditional finance and learn it! Just because > there aren’t mutiple greeks in the equation > doesn’t mean it’s not useful. > > Business folks -> stop complaining and being lazy; > learn your maths, otherwise you will be kicked to > the curb. > > In response to Eureka; higher computing power and > more normalized data doesn’t mean you need to use > quantitative methods, but it certainly makes those > quantitative methods better and more enlightening > (as long as quanty folks don’t get too lost in the > beauty of the equation). It will increase > competition so much that those individuals without > both quant and fundamental understanding will have > little value. Excellent.