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I give you $1000, how do you invest the money? Why?

Posted: November 7th, 2008, 11:07 pm
by CrashedMint
I must admit: The models/the math interests me, not the actual underlyers. But I have an interview next week and almost certainly they will ask this question. Is there some site on the web that has a quick daily report on the indices and interesting stocks? Something I could read in like 15minutes to get a general understanding of the current situation.And: If I asked YOU today "I give you $1000, how do you invest the money? Why?" what would be your answer?CM

I give you $1000, how do you invest the money? Why?

Posted: November 7th, 2008, 11:16 pm
by aiQUANT
My answer? Go bet on the hounds. Go to betfred and look for dogs that run with a kink i.e. the angle between the direction of running and the direction the dog is facing while running is somewhere between 5 and 10 degrees. These dogs almost always win. PM me if you want names of specific dogs. Good day.

I give you $1000, how do you invest the money? Why?

Posted: November 7th, 2008, 11:20 pm
by Jeriot
I would buy as many second hand computers as i can find.A quant is nothing without his machine, and it is more cost efficient to get many second hand computers and do parallel processing than one good computer for number crunching ($1000 doesn't get you much these days). Once I come up with a profitable quantitative trading strategy, it would be easy to raise capital and start reaping the rewards.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 12:43 am
by trackstar
Pink Sheets

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 1:03 am
by Traden4Alpha
First, I'd want to know the target risk characteristics and time horizon for possible redemption. If the $1000 is strictly an overnight loan, it's not going to go the same place as if it's meant to support the future retirement of someone who's 30 years old. Here, you can talk about your understanding of risk and how the current VIX level suggests that you could easily lose half that $1000 in the next 12 months.Second, "$1000" is far too small to efficiently invest in anything more interesting than a CD. Round-trip transaction costs (and your labor in investing/monitoring it) will eat a huge chunk of such a small amount of money.Third, I like Jeriot's line of thinking -- buying capital equipment that makes you more productive should have a vastly higher ROI than anything you could possible find (and depend on) in the markets. Although $1000 is a little light, it could be a down payment on a 30" monitor, MATLAB, Mathematica, or something like that. Here, you get to highlight what you can do for the company.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 12:04 pm
by veeruthakur
QuoteOriginally posted by: CrashedMintI must admit: The models/the math interests me, not the actual underlyers. But I have an interview next week and almost certainly they will ask this question. Is there some site on the web that has a quick daily report on the indices and interesting stocks? Something I could read in like 15minutes to get a general understanding of the current situation.And: If I asked YOU today "I give you $1000, how do you invest the money? Why?" what would be your answer?CMI would run away with it and laugh at you for not buying credit protection!

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 2:18 pm
by farmer
Go fuck yourself.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 2:52 pm
by DominicConnor
The suck-ass answer is of course "invest it in your bank".It's possibly the worst as well.Aside from the obvious "issues" in buying into financials at this time, it has tragically poor risk characteristics.By investing in the firm you work for you gain no extra return, but your risk is more concentrated, and there's the obvious issue that the time they are most likely to drop you is the time when their shares are doing very badly.That may sound a bit "academic finance", but ask Bear Stears, Lehman, or Enron staff how "academic" that might be.Traden4alpha outlines what is probably part of one "right" answer.Although the banks have screwed up, they haven't yet quite resorted to asking random people what to do next. Though nothing surprises me much now.They care about the quality of your thinking.Another valid form of answer is to "put it in 3 different banks that are back by government guarantee and wait for this shit to pass".This of course will lead them to ask "how will you know when we've hit the bottom" ? This is good because what you want is for them to ask questions that you think you have an answer.There exist many plausible ways of spotting the market, and with some luck you can then go into how to make money if you have a good way of spotting the market bottom.The trick here is to predict the follow-up questions, or even to try and induce them to ask ones you believe you can do well at.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 3:42 pm
by quantmeh
buy a lottery ticket. then be ready to explain why it's a thoughtful choice based on modern investment theory

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 3:50 pm
by CrashedMint
QuoteOriginally posted by: jawabeanbuy a lottery ticket. then be ready to explain why it's a thoughtful choice based on modern investment theoryMy guess: Since it's impossible to beat the market, I bet on a black swan event?

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 4:21 pm
by quantmeh
QuoteOriginally posted by: CrashedMintQuoteOriginally posted by: jawabeanbuy a lottery ticket. then be ready to explain why it's a thoughtful choice based on modern investment theoryMy guess: Since it's impossible to beat the market, I bet on a black swan event?nope. think in terms of well diversified portfolio

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 6:04 pm
by trackstar
Approaches:Dogs - No, unless you can tell me what to look for besides that tilt; even with greater knowledge, unlikely that I would bet on dogsHorses - Yes, but I will take out today's Daily Racing Form from my desk and you will have to walk me through some races with real precision and insight.Black Jack - Yes, but I will call people into my office and we will play a few hands; you better be good!Dice - Maybe - can you recite the probabilities for me? Unloaded, one loaded, both loaded?Computers - If you can tell me how you would build a cluster that would hit or exceed Linpack benchmarks, yes. But you will wind up in IT, not the front office. You can assume that I will give you a desk, a computer, some pencils and paper if you start here. I might even throw in some post-its and a stapler.T4A makes good points on defining the client and the time horizon. But you still have to answer my question. I can see you are stalling...Lottery tickets - my assistant can do that for me; with you brand new uni degree, you are overqualified.(Actually having seen jawabean's later post, I agree that the ticket could take you to a comfort zone, if you are conversant and clever with behavioral finance.)My bank's stock - You'd better be joking. I hate that kind of career-services coached response. We need thinkers with a bias for action, not syncophants around here.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 6:34 pm
by ppauper
buy blow and sell it to your coworkers

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 7:20 pm
by Cuchulainn
I just want to say one word to you - just one word. 'Plastics.' There's a great future in plastics. Think about it. Will you think about it? Shh! Enough said. That's a deal.

I give you $1000, how do you invest the money? Why?

Posted: November 8th, 2008, 7:28 pm
by CrashedMint
QuoteOriginally posted by: jawabeanQuoteOriginally posted by: CrashedMintQuoteOriginally posted by: jawabeanbuy a lottery ticket. then be ready to explain why it's a thoughtful choice based on modern investment theoryMy guess: Since it's impossible to beat the market, I bet on a black swan event?nope. think in terms of well diversified portfolio please elaborate :-)