For All Of You Wouldbe Quants

<p>A good read:</p>

<p><a href="http://www.nytimes.com/2009/03/10/science/10quant.html?_r=1&em%5B/url%5D"&gt;http://www.nytimes.com/2009/03/10/science/10quant.html?_r=1&em&lt;/a&gt;&lt;/p>

<p>I just read that. Great article. And Nassim Taleb is a personal hero.</p>

<p>“All I can say is, beware of geeks bearing formulas.”</p>

<p>^^ leave it to warren buffet to give everyone the low-down</p>

<p>Good article. I also recommend:</p>

<p><a href="http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?ref=magazine%5B/url%5D"&gt;http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?ref=magazine&lt;/a&gt;&lt;/p>

<p>what does this mean for the future of quant-hopefuls on wall street?</p>

<p>As I said on another thread on here, it is up to the people who are going to use the formulas to understand them.</p>

<p>The Investment Banking firms blaming the quants for the financial meltdown is like a Las Vegas blackjack player blaming the guy who wrote the book on "Beating the House" for the fact that the player lost all his money in the casino. </p>

<p>People (and companies) have to take some responsibilty for their own actions.</p>

<p>^Of course. It was the MBAs that caused this crisis, not the PhDs </p>

<p>MBAs are stupid. Everybody has always known that b school is for b students. Sure, b schools gotten a lot tougher in the past 10 years, but most of the morons in charge got in when you just needed a pulse. Look at George W Bush. He has a Harvard MBA; think he understands the problem with VaR analysis for risk management? Of course not. I know so many 40+ yr old MBAs who said they barely graduated from college and hate math. </p>

<p>Again, Nassim Taleb predicted this crisis would be caused by brain dead MBA students and he was right. </p>

<p>I don't expect anything to change. Dumb and good looking plus good networking will always beat brilliant, ugly and socially awkward. </p>

<p>Hopefully I get into HBS.</p>

<p>As a MBA, I should take offense at your comment--but actually there is so much truth to it that I have to agree.</p>

<p>MBA schools in general have always taken the same approach--that the whole purpose of a company is to gain money for the shareholders. This "effort to excel"--and it's spin-off theory--that we should reward those who take the greatest risk--totally overlooks the downside theories (that risk needs to be monitored), and the theory that companies may actually have some responsibility to the community in which they do business, and to their employees. Plus, recently, there isn't even an effort to increase shareholder value--but rather just an effort to increase executive compensation. How else can one explain why executive compensation was still increasing in 2007 and 2008 even as the economy was tanking worldwide--and why executive compensation averaged 35 times an average employee's compensation back in 2007?</p>

<p>Business schools never had any courses on this--corporate social responsibility or business ethics--until after the Enron and Worldcom scandals back in 2001. As a result, companies have been driven entirely by the bottom-line (and what one can get away with, legal or not) for years. Even now, we see the end-result of this. Companies that are still trying to pay millions to those who lost billions even as the communities they are in are closing schools, small businesses are dying, and unemployment skyrockets.</p>

<p>I'm hopeful that the tide will now turn, but apparently that won't be happening until we start getting rid of some executives in the financial (Bank of America, Merrill Lynch, Citibank) and insurance (AIG) fields that are still living in the pre-Enron and pre-Worldcom environments.</p>

<p>I notice there is an argument on this going on in academia right now.</p>

<p>Here's the argument that MBA schools aren't doing enough:</p>

<p>Focus</a> on Individualism Creates MBA "Monsters"? | Back to B-School | BNET</p>

<p>and here's the argument that MBA schools aren't to blame:</p>

<p>Focus</a> on Individualism Creates MBA "Monsters"? | Back to B-School | BNET</p>

<p>P.S. There are a lot of individuals' comments at the second link giving feedback on what people are thinking about this subject.</p>

<p>Calcruzer (or anyone else), what are your thoughts on obtaining a PhD in lieu of an MBA?</p>

<p>I've always thought both PhD and MBA serve different purposes. So, I guess, what do you want to do?</p>

<p>Most people who get a PhD in business do so because they plan to either teach at a university or do research (or do both). Generally, the PhD is not a business degree you see in the corporate world very much.</p>

<p>P.S. I see I had a typo in my post #9 above. I wrote that "executive compensation averaged 35 times an average employee's compensation back in 2007". In reality, executive compensation averaged 275 times an average employee's compensation back in 2007--up from about 24 times an average exployee's pay in 1965. This is from a study done by Earl Wysong of Indiana University and two other research collegues and published in the UK journal, The Economist.</p>

<p>The New York Times now have their own view on this subject of whether business schools are partly to blame for the economic meltdown:</p>

<p><a href="http://finance.yahoo.com/college-education/article/106766/Is-It-Time-to-Retrain-B-Schools?%5B/url%5D"&gt;http://finance.yahoo.com/college-education/article/106766/Is-It-Time-to-Retrain-B-Schools?&lt;/a&gt;&lt;/p>

<p>It is ridiculous to blame b-schools for the breakdown in the financial system. The lead in to the NYT article was so pointless it must be restated agan just for fun.</p>

<p>"John Thain has one. So do Richard Fuld, Stanley O'Neal and Vikram Pandit. For that matter, so does John Paulson, the hedge fund kingpin.</p>

<p>Yes, all five have fat bank accounts, even now, and all have made their share of headlines. But these current and former giants of finance also are all card-carrying M.B.A.'s."</p>

<p>Most top management at all types of Fortune 500 companies have MBAs. It is not unique to the financial sector. </p>

<p>Most importantly, why were hedge funds and banks hiring so many MBAs. The CFA certification is much more applicable to their business models than an MBA. These guys are not running businesses, they are running money. Two very different things.</p>