<p>@LoremIpsum - It’s the same principle as London’s inability to prosecute more than a handful of bit players in the riots last year. When the entire herd acts wild, it becomes impossible to enforce. That said, I do think it’s ridiculous. Part of the problem I think is the lack of concrete legal governance regarding most of the actions within the IBs.</p>
<p>@poetgrl - Not sure where you’re getting that information on Salomon and LTCM, but I’m curious to read it. Do you have a link somewhere?</p>
<p>How Meriwether treated the rest of the LPs is largely irrelevant, it’s not unethical in the least to prefer certain investors over others in a hedge fund. And again iirc, LTCM ended up losing the principals all of their assets anyway (not sure where you’re getting the fact that they made people lots of money), so the pushed out ones were lucky :P</p>
<p>Edit: I don’t remember the Fed being actively involved outside of helping to manage negotiations in LTCM’s bailout either, but I could be wrong on that.</p>
<p>Long Term Capital Mgt was doomed by the very algorithms that it used to “vacuum up nickles” by arbitrating demonstrated historical inefficiency’s in futures markets. They had a great ride until the futures market eventually adjusted to LTCM activates and then their nickle vacuum became a dollar hose. </p>
<p>LTCM didn’t anticipate that their activities would change the way the market reacts. All made worse with leverage of course. All large financial disasters are enabled by leverage.</p>
<p>Interesting, I can’t seem to find my copy of Lowenstein, but I guess it must have been in there. In any event, it’s tangential to the main point (which is by now a complete derail from the OP). Which is that we effectively went spelunking, the tunnel behind us collapsed, and we can choose between jumping down a 50 foot shaft or trying to shimmy out a few miles in a tunnel barely wide enough to squeeze into.</p>
<p>Jim Manzis article agrees with you. I personally thought it a much better evaluation system but posters on CC strongly disagree with me. </p>
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<p>Here is a quote from the article:</p>
<p>*Hsu, a physicist at the University of Oregon, then offered a further distinction between hard and soft firms, which are looking for subtly different skills. His distinction turns almost entirely on quantitative abilities. Hard firms, like hedge and venture firms and tech startups, demand sheer mathematical brainpower and will take it where they can find it. Soft firms such as investment banks, law and consulting firms that sell services, like advice, that is more “nebulous” and harder to measure, and where “prestige” matters more, embrace the elite-school brand more readily. *</p>
<p>I think the above comment by Hsu is accurate, based on what my kids have experienced in recruiting as econ majors. These firms are mostly only looking at top school students, and use interviews to check for fit and likeability. If math skills are really important to the position, then they’re going to give you an IQ test, and /or math problems and brain teasers. S saw the spreadsheet his bank created to evaluate the entry level candidates they were interviewing, and it even had a column for math SAT score. That was a shocker. Despite the candidate having completed 4-6 years of college, the bank cared about high SAT scores because they believed it indicated natural quantitative ability.</p>
<p>But let’s not for one minute assume that the soft firms still don’t thoroughly screen elite school candidates for themselves. The educational pedigree is just the starting point. D is on round 4 so far of interviews at a small investment firm–just to get a summer internship. It’s amazing.</p>
<p>Here is what the Manzi article has to say about this:</p>
<p>Prior summer internships at an MBB firm, Goldman, etc., are a strong positive. The reason is not that this means somebody is clubbable. The recruiting process for internships has similar resume screening/interviewing steps, and there are even fewer internship slots available at each than there are slots for full-time jobs.</p>
<p>His description of the screening process also sounds a lot like what your D is going through. 750 on the Math and typically 1550 on Math + Verbal, a minimum GPA of 3.5 in a hard course, 3 sets of interviews and finally, holistically assesses the survivors for highest potential performers.</p>
<p>On Hsus comments about hard and soft elite firms:</p>
<p>This distinction is a useful starting point, but what has been happening over the past 20 years or so is the increasing migration of value from soft to hard; basically, to math, technology and analytics-intensive work. This is happening within firms and industries the emphasis on math ability was growing within consulting in the period I worked in it, as it was within banking and across sectors as technology start-ups and math-intensive finance became the most obvious ways to make real money in America. This isnt random, but is happening because these are huge opportunities to create value.</p>
<p>Can anyone on CC tell the following Brown/Cornell v. Harvard/Princeton apart:</p>
<p>Select 15 seniors at random from each of the four schools, ask them to write a short essay about Earth the year 2112. Number them 1-60. Read and sort to four piles, B, C, H, P. </p>