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Lunchtime Links: Quants aren’t dead yet

23 December 2008

eFinancialCareers UK

Financial services firms may not be as hungry for mathematical geniuses as they were 24 months ago, but nor are they consigning them to a life of theoretical physics. According to Reuters quants are still required by hedge funds and banks who want to factor previously unidentified risks into their models. Emanuel Derman, course director of the financial engineering programme at Columbia University says they’ve had to tweak the curriculum to take into consideration the fact that human beings don’t always do what you expect. “You have to understand that you are dealing with people and markets,” he told Reuters. Psychologists may be the next hot thing for 2009.

Banker voodoo dolls on sale in Iceland (Bloomberg).

Corporate finance execs wanted soon in Malaysia (DealBook).

Axe hangs over banking jobs in Asia (Reuters).

Arpad Busson: “We are living in a privileged manner, but that could disappear.” (The Times).

Peter Kraus collects $25m bonus at Merrill, and then resigns (Wall Street Journal).

Hedge fund slashing partners (Wall Street Journal).

Barclays Wealth hires from Merrill to grow its emerging markets business (Financial News).

Boris Johnson: “Is it economically beneficial to give chutney for Christmas?” (Telegraph).

Comments (11)

Put a stake through the quants hearts please! Absolutely useless, my cat is a better stock picker. Go and make stuff in engineering etc. rather than bringing the financial system to it knees, again.

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Comments (11)

  • >"JWM Partners LLC, a hedge fund set up by John Meriwether in 1999 [after his previous fund LTCM collapsed due to highly leveraged trading strategies], told investors it will lose four partners and cut staff after the performance of its flagship fund plummeted this year."

    At least he's consistent.

    dd 23 Dec 2008

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  • Put a stake through the quants hearts please! Absolutely useless, my cat is a better stock picker. Go and make stuff in engineering etc. rather than bringing the financial system to it knees, again.

    Big Rob 23 Dec 2008

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  • jesus
    are you guys that stupid?  90% of banking would not exist without them.  We'd never do derivative business, to not even being able to model risk on big dumb loan books (so it is better to look at stuff WITHOUT even modeling???!!??)  The future is quantitative risk management.  All of you knuckle dragging old school bankers will be finished - there is no more room for back of the envelope calcs going forwards.  You come out with such comments above because you fear that you actually have no real skills yourself.  It is so much easier to blame things you cannot understand (nor ever will)

    BC 23 Dec 2008

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  • Thank you BC,
    Someone who really understands the past and can relate it to the future. Unfortunately, there are way too many people like Big Rob, who are clueless. They don't even realise how complex the subject of finance has become. In short its has become so complex that the likes of Big Rob, who might have had something to offer a decade ago, are of no use.
    There are reasons why the financial system has been brought to its knees. Indeed, some quants have contributed to its downfall, but at least they admit the financial instruments they were dealing with were too complex for their mathematical models. There were also people trading in these financial instruments without truely understanding their value. Even the Bank of England admitted that although they identified what was an unsustainable economic growth, they didn't understand the long term adverse impacts and how to supress them. And then there are the scores of ignorant bankers like Big Rob, who still don't understand why banks hire quants and what their role is, never mind understanding the complexity of the financial system.
    Big Rob is living the past when stakes where effective weapons. Quant Finance is the futur

    Anon 23 Dec 2008

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  • Oh Big Rob, you are a cretinous fool.  Our quant saved us USD 50 million this year.  That's right, 50 MILLION.  How much did you generate this year?

    Phil 24 Dec 2008

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  • BC, of course you need models to price derivatives, and we'll never escape models, but at the route of our problems was the believe that credit risk can be modelled; it cannot be.

    DCB 24 Dec 2008

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  • Phil,

    We have made many millions from exploiting the weakness in the quant models used by the rating agencies e.g. buying assets to securitise and now buying the loans back again.
    By the way you really did not need to be a genuis to work out the problems with the CMBS & asset backed CLO models.

    Of course at the time it was funny, but the overall social consequences are terrifying. 

    You can never model credit risk; the believe that you can got us into this mess.

    Our banks only really went into lending overdrive on the back of Basel II which allowed them to model their own credit risk and set aside reserves accordingly.

    DCB 24 Dec 2008

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  • what a hell. The cream of the society studies science and fine arts because there is no meaning in studying finance. its a useless subject. In the last 25 to 30 years, the world has become a complete capitalist based economy and because of that people working in banks got the total control of the world. There were literally deciding the future of the world.  the result is a disauster. This is the result of below average people of the society controlling the world. All of you need to look at the fundamentals.

    An average guy in UK has to work all his life to buy a house, which is nothing but a piece of wood. Is this sustainable? There was a similar demand for agriculture land in the previous century. who is buying agricultural land now?

    The economy needs a complete transformation and science has to come back to power. All of you need to remember that the whole westren world developped only because of science and technology and not because of complex financial instruments.

    NJ 24 Dec 2008

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  • NJ,

    Actually agri is almost certainly the best performing real estate sector in the last 12 months

    DCB 24 Dec 2008

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  • "The economy needs a complete transformation and science has to come back to power."
    This has been already happening for the last 60 years in a country called the United States of America. Sure the Wall Street financiers screwed the US economy now, but I can't think of any other country in the world where science plays such a important role in the economy.

    UBSguy 24 Dec 2008

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