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farmer
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Will the profession of "Quant" die?

September 18th, 2008, 11:27 am

QuoteOriginally posted by: KackToodleseven if they can't code up a spreadsheet to do a mortgage simulation.When has there ever been any person who could code up a spreadsheet to do a mortgage simulation? Can I meet this man? You could import a bus schedule into Excel, use that as your mortgage model, and get an equally good result compared to the state-of-the-art practices of experts in the field.
 
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mizhael
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Will the profession of "Quant" die?

September 18th, 2008, 2:20 pm

QuoteOriginally posted by: DominicConnorIn the long term, I think the term will fall into disuse.But not for the reason you might think.I observe the infiltration of quant techniques into all aspects of the business. It's not that long ago trading was almost quant free, now it's tough to get into that career track without basic quant skills.Risk management was largely run by accountants, and sales people were not exepcted to do much beyond schmoozing. Again we see sales people with quants skills.I even see compliance roles coming up.That's both good and bad.It pushes up aggregate demand for quant skills, but means that there will be more roles where other skills are necessary.However I appreciate that quants enjoy knowing stuff others simply can't understand, and that their pay reflects this.We are now seeing quant skills in senior management, which means a more realistic appreciation of what is easy/hard/silly.What type of Quant skills?You still only see SDE stuff in exotics which now deemed as toxics?And of course we could think everything will come back again -- however as we going from leverage to de-leverage and from de-regulation to over-regulation, this cycle for exotics can be as long as 10-15 years or decades...
 
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mizhael
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Will the profession of "Quant" die?

September 18th, 2008, 2:25 pm

QuoteOriginally posted by: QFsurvivalQuoteOriginally posted by: mizhaelThe profession of quant thrived on exotic products. But with the government and people loathe the infamous exotic products to the extent of loathing toxic, will the profession of Quant die?Will there be a massive cut of quant jobs and exotic stuff?People always say it's up and down and it will all come back again - but will it happen that people hate exotics so much that they write their loathe into regulation or law?Yes you are partly right but not all. Some of the complex derivitavies will die, such as CDO square, synthetic CDOs why?They are too complex to understand for ordinary investors and heavily relied on mathematical model. Model is just a tool to help you to do the analysis but cannot be the only source to make profit. Look around in the industry, most of quant guys owned one or two phd degree in science, they are extremely quantitative, they can even make a bloody greatly complex model to send the spaceship to the moon. But what we missed out? Yes, a basic sense of the financial market and macro economy. Model can not transformed to liquidity. But can market lives without derivative? No, derivative is one of the most important part to form a efficient market. I think you should learn it in your lectures. It is just something have to be in the market just like why you see fast-food on the street, 'coz you have to eat food. So, derivatives are just like other things, bad one rule out, good one stay one, and new one rule in year to year. But will never die. As long as derivative is alive, quant is alive.But those derivatives will be under strict over-regulation and they will be very standardized and exchange traded, quants are not needed for these products. I mean hardcore quants, or quants with skills for exotics...
 
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twofish
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Will the profession of "Quant" die?

September 18th, 2008, 2:39 pm

QuoteOriginally posted by: DominicConnorI observe the infiltration of quant techniques into all aspects of the business. It's not that long ago trading was almost quant free, now it's tough to get into that career track without basic quant skills.Also I think that the profession of "quant" will die for the same reason that people don't have much call for "webmasters" nowadays. As the fields develop, you start needing lots of different people with lots of different skills. Even before the crash, there was less and less demand for the type of job that Derman talks about in his book, and more and more jobs with somewhat different skills.QuoteIt pushes up aggregate demand for quant skills, but means that there will be more roles where other skills are necessary.However I appreciate that quants enjoy knowing stuff others simply can't understand, and that their pay reflects this.This attitude is self-defeating as the market chances. We are moving from "we've got rocket scientists in the back room doing stuff no one else understands (GOOD!!!)" to "we've got rocket scientists in the back room doing stuff no one else understands (BAD!!!)". What I think this means is a chance from models that have esoteric mathematical techniques to those in which you can explain what you are doing to a manager or client.
 
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twofish
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Will the profession of "Quant" die?

September 18th, 2008, 2:41 pm

QuoteOriginally posted by: mizhaelBut those derivatives will be under strict over-regulation and they will be very standardized and exchange traded, quants are not needed for these products. I mean hardcore quants, or quants with skills for exotics...Even standardized exchange traded exotic derivatives can be very difficult to model. Your standard US 30-year fixed rate mortgage can be very difficult to model and risk manage. Also once you have the model, you have to implement it on a computer system.
 
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TraderJoe
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Will the profession of "Quant" die?

September 18th, 2008, 4:46 pm

Well, I'm looking forward to the re-emergence of the quant field in a few years in the form of quant 2.0 .
 
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Cuchulainn
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Will the profession of "Quant" die?

September 18th, 2008, 6:16 pm

QuoteOriginally posted by: twofishQuoteOriginally posted by: mizhaelBut those derivatives will be under strict over-regulation and they will be very standardized and exchange traded, quants are not needed for these products. I mean hardcore quants, or quants with skills for exotics...Even standardized exchange traded exotic derivatives can be very difficult to model. Your standard US 30-year fixed rate mortgage can be very difficult to model and risk manage. Also once you have the model, you have to implement it on a computer system.If and when derivatves products are standardised as you describe above, the next step is to develop the software systems. These can also be standardised as seen elsewhere. Maybe we will see another approach to software development from the one I suspect that twofish (from what he has said here) is involved in at the moment.Will everyone be writing their own Cholesky decomposition or Calibrator method in their favourite language? Less reinvention of the wheel. I think that role names will be related to what we mean by product. What is it? Just 2 Euro cents.
Last edited by Cuchulainn on September 17th, 2008, 10:00 pm, edited 1 time in total.
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Maelo
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Will the profession of "Quant" die?

September 18th, 2008, 9:24 pm

QuoteOriginally posted by: jomniQuoteOriginally posted by: twofishQuoteOriginally posted by: mizhaelIf the law-makers frames up a law to express their anger against one product, they might as well restrict the similar productsBut at the same time I think that risk management is going to turn into a really hot field.Maybe non-quant-oriented risk management.I think the legal services will be very much in demand these days as well.yeah?? Let me in..let me in!
 
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tu160
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Will the profession of "Quant" die?

September 18th, 2008, 10:43 pm

QuoteOriginally posted by: TraderJoeWell, I'm looking forward to the re-emergence of the quant field in a few years in the form of quant 2.0 .what could it be? Dynamic replication with prohibited shorts?
 
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QFsurvival
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Will the profession of "Quant" die?

September 19th, 2008, 12:43 am

QuoteOriginally posted by: mizhaelQuoteOriginally posted by: QFsurvivalQuoteOriginally posted by: mizhaelThe profession of quant thrived on exotic products. But with the government and people loathe the infamous exotic products to the extent of loathing toxic, will the profession of Quant die?Will there be a massive cut of quant jobs and exotic stuff?People always say it's up and down and it will all come back again - but will it happen that people hate exotics so much that they write their loathe into regulation or law?Yes you are partly right but not all. Some of the complex derivitavies will die, such as CDO square, synthetic CDOs why?They are too complex to understand for ordinary investors and heavily relied on mathematical model. Model is just a tool to help you to do the analysis but cannot be the only source to make profit. Look around in the industry, most of quant guys owned one or two phd degree in science, they are extremely quantitative, they can even make a bloody greatly complex model to send the spaceship to the moon. But what we missed out? Yes, a basic sense of the financial market and macro economy. Model can not transformed to liquidity. But can market lives without derivative? No, derivative is one of the most important part to form a efficient market. I think you should learn it in your lectures. It is just something have to be in the market just like why you see fast-food on the street, 'coz you have to eat food. So, derivatives are just like other things, bad one rule out, good one stay one, and new one rule in year to year. But will never die. As long as derivative is alive, quant is alive.But those derivatives will be under strict over-regulation and they will be very standardized and exchange traded, quants are not needed for these products. I mean hardcore quants, or quants with skills for exotics...By mean of the "quant", I think you are talking about pure quant, people who only know mathematical model and coding in more than 10 different languages. Yes, unfortunately they are going to die out. There will be re-definition of the quant role. As I have said bad one will rule out. Dont you think in past years, derivatives have been developing way "exotic".
 
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KackToodles
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Will the profession of "Quant" die?

September 19th, 2008, 4:16 am

QuoteOriginally posted by: KackToodlesThe problem is that the MFE-type quants' expertise is amazingly narrow and specialized, so when the economy falls into crisis mode (about once every 5 years), quants lack sufficient economics ability to think thru the bigger issues about how to fix. In the long run, a good HF and bank really need people who are more broadly trained and experienced in business and econmics (e.g., macro and political) to direct the firm in the right direction. It is high time that people recognize that 1 year of "MFE" training is really insufficient to call yourself a "professional." The quant profession needs to PhD-ize itself with a truly thorough program covering macroeconomics, microeconomics, business, management, math, and political science. The days that someone can claim to be qualified to manage billions of dollars after he took a 1 quarter class in monte carlo coding are over.
Last edited by KackToodles on September 18th, 2008, 10:00 pm, edited 1 time in total.
 
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twofish
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Will the profession of "Quant" die?

September 20th, 2008, 2:52 pm

QuoteOriginally posted by: KackToodles I The quant profession needs to PhD-ize itself with a truly thorough program covering macroeconomics, microeconomics, business, management, math, and political science.Actually no.....People have this silly idea that school is the only place that you can learn stuff. It isn't. You learn what you need to learn on the street, and if you try to package that into a curriculum, you just end up with endless political fights and a program that is totally out of touch with economic reality.
 
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twofish
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Will the profession of "Quant" die?

September 20th, 2008, 2:56 pm

QuoteOriginally posted by: QFsurvivalBy mean of the "quant", I think you are talking about pure quant, people who only know mathematical model and coding in more than 10 different languages. Yes, unfortunately they are going to die out. One day I'd like to meet a "pure quant." I keep hearing about them, but I don't think I've met any.Also you can imagine a corporate stock or a bank balance sheet as being a hypercomplex exotic derivatives, so I don't think that the need to model those is going to disappear. There is going to be a huge emphasis on regulatory capital and economic models of institutions under stress.
 
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KackToodles
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Will the profession of "Quant" die?

September 20th, 2008, 11:47 pm

QuoteOriginally posted by: twofishPeople have this silly idea that school is the only place that you can learn stuff. It isn't. You learn what you need to learn on the street, and if you try to package that into a curriculum, you just end up with endless political fights and a program that is totally out of touch with economic reality. Then why go to school at all, pray tell? To only learn a narrow bundle of technical stuff?
 
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twofish
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Will the profession of "Quant" die?

September 21st, 2008, 2:16 am

QuoteOriginally posted by: KackToodles Then why go to school at all, pray tell? To only learn a narrow bundle of technical stuff? To get enough exposure to the liberal arts and basic skills so that you can continue your education on the street.
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