Saturday, December 14, 2013

chat with Yi Hai on quant finance education

i see more and more young people with this kinda degree getting good salaries (50% to 66% of our salaries within 3 years of graduation) as researchers or analysts. This skill has higher value than programming skill. More importantly, this skill suffers no "technology churn".

My training so far is on derivative pricing (+ modeling) theories and portfolio theory. These are all classic topics with well-established theories. very academic, idealized theories, but surprisingly generations of students get trained on these and go into the field and make good money.

i have working knowledge in option pricing, bond math and a bit of personal experience as an equity investor. I find the theories too academic, too idealist, far removed from real trading. I feel like learning traditional Chinese landscape painting -- seriously distorted and out of perspective.

These theories are actually the content of all the major quant finance programs. Therefore, many young quants every year are trained on these theories.

In fact, the professors can't teach anything but academic theories. These are what they are best at. Professors aren't traders or fund managers, so their strength is not in application of theories to practical challenges in order to achieve investment success.

The theories are impressive efforts to simplify the complicated realities in finance. (Best examples would be tail risk, volatility skew) But they are still rather imperfect. However, the trainees often went on to get good jobs and make good money.

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About Me

New York (Time Square), NY, United States
http://www.linkedin.com/in/tanbin