Yeah, I can accept that. However, I do think there are essential parts of the business that don’t require much math beyond arithmetic and basic algebra. These might not be the parts of the business that CFA types are shooting for, but everyone will start to notice of those functions start disappearing.
“Two factors will make those with quantitative abilities takeover most realms of finance in the future” I agree with what you just posted, but that was not reflected in the above. People on these boards need to work on clarity:). I assumed that by “those with quant skills” you meant people who currently have them, not people who will learn them in the future. So, it’s a blend like everyone says because almost nothing is black and white.
Finance is pretty easy. But that is the thing, because there isn’t really much to finance, one finance guy is the same as the next, and people try to differentiate themselves, hence quants convincing people they are needed. We’ve got a Harvard quant in the basement, not sure why, but it sounds cool…we can say it in meetings and people will go “oooooooo”.
purealpha Wrote: ------------------------------------------------------- > Finance is pretty easy. But that is the thing, > because there isn’t really much to finance, one > finance guy is the same as the next, and people > try to differentiate themselves, hence quants > convincing people they are needed. > > We’ve got a Harvard quant in the basement, not > sure why, but it sounds cool…we can say it in > meetings and people will go “oooooooo”. Is he black ? 
… just kidding …
Probably not Black. Maybe it’s Dr. Scholes?
^ maybe it is Black since they keep him in the basement…coffin?
WhitecollarRedneck Wrote: ------------------------------------------------------- > “how can it not be true that money goes to the > people who hold more of the brainpower?” > > This is completely wrong. Haha, couldn’t agree more. I love it when people talk about how quants will rule the world. Yep, those quants are genius! So genius that they didn’t realize that there a million other quants running the same models, and that market turbulence causes the models to all tweak out at the same time. Gee, who woulda thunk it. No doubt there are some very smart quants, but this recent market dislocation has shown that they can be pretty stupid as well.
*pats himself on the back for his engineering degree
Exactly, you have a HF stacked with Harvard quants and it blows up the same as the rest, who woulda thunk it.
TheAliMan Wrote: ------------------------------------------------------- > *pats himself on the back for his engineering > degree I tried that a while ago and ended up with a dislocated shoulder.
Just out of curiousity…do any of you on this thread have a MFE? Are any of you quants?
So in the end, street smarts > book smarts. A drug cartel > harvard quant grad. I think thats how the world works and have worked since the days of cavemen.
As I see it, quants focus mostly on econometric time series analysis. They determine theoretical models which they use to program computers to perform trades (usually hedged), benefiting from mispricings identified through the models. Great! but that is only one type of investment strategy. What about fundamental investment on stocks (probably a CPA has a better background for this). Or what about vulture funds that buy distressed bonds and force management to pay, probably a finance savy lawyer would outperform any quant.
Exactly, you can’t have a quant leading the cave tribe, that would be absurd. But you could have a quant calcin’ the probability of your arrows hitting the enemy tribe, and that would be cool, but you could just go and kick the enemy tribe’s butt less all the calcs and that would be cool too.
3-on-1st Wrote: ------------------------------------------------------- > > Or what about vulture funds that buy distressed > bonds and force management to pay I like this strategy … they need to update the CFA books with this new Sopranos style strategy
3-on-1st Wrote: ------------------------------------------------------- > As I see it, quants focus mostly on econometric > time series analysis. They determine theoretical > models which they use to program computers to > perform trades (usually hedged), benefiting from > mispricings identified through the models. > > Great! but that is only one type of investment > strategy. What about fundamental investment on > stocks (probably a CPA has a better background for > this). > > Or what about vulture funds that buy distressed > bonds and force management to pay, probably a > finance savy lawyer would outperform any quant. Your opinion of a quant is sadly mistaken. This is why I asked the question above. So many people have had their way bashing some unknown representative quant, but have little idea as to what they actually do.
There seems to be some substantial misconceptions of quants on this forum. We had one lurking around our office so I took a snapshot; now people can recognize a quant vs. quannabes http://2.bp.blogspot.com/_dvC7YFSCPus/SXEcUZtZqaI/AAAAAAAAADg/ynU92ErQAa4/s320/WISHMASTER.jpg
Is that from Star Trek or something? Quant-Nerd.
JOE2010 Wrote: ------------------------------------------------------- > 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. There is no space between “non” and “sense.” Maybe in JOE(y)-land where the kangaroos frolick, but not in other places. : )
Pretty interesting thread, shows clearly how people perceive (or misperceive) quants. People blame quants for creating the recent crisis because their models have failed to capture certain tail risks. Anyone bought hurricane insurance on himself yet? Probably no one has done so because they perceive the risk of themselves being blown away by a hurricane as being so small. That’s probably about the same as the pre-post probability of observing those extreme tail events in the financial market, that no one foresaw. Bankers are the ones who want to enter into credit derivatives to get the loans off the books, and make money from origination without servicing the loans/mortgages. Someone needs to value those CDOs/CMOs, and should you rely on the bankers to do it themselves if not the quants? The imperfect models only mean that financial engineering is still an evolving science. In an investment management process, the quants tend to focus more on the strategic asset allocations, and not as much on the individual security selection (where you do more fundamental analysis). Quants are pretty involved in structuring and trading, of derivative type instruments and enterprise risk management. I don’t think that quants are taking over the world nor that you need to understand financial engineering in order to be competive in finance. For most people working in investments, I think having quantitative knowledge sophisticated enough to understand the financial economics in John Hull’s is more than enough.