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Comment: This *IS* important to the company (Score 1) 128

by financialguy (#28741461) Attached to: Red Hat Is Now Part of the S&P 500
"While this means little directly for the company..."

Not true. Inclusion in a widely-invested index almost certainly means an increase in the stock's price, all things being equal. This will be most visible up front as index fund managers buy in (because they have to). But there will also be a much larger base of investors that hold this permanently insofar as they hold S&P 500 index funds (or ETFs, CTFs, etc.). This could directly provide the company more "currency" to make purchases of other firms (by paying in stock), as well as give it an advantage in attracting and maintaining talent that are partially compensated in stock (assuming they award stock/options).

It could also result in more stock analyst coverage which would bring valuable publicity to itself and its shares, and likely also more "mind share" for Linux for the average investor that follows this sector/industry.

Comment: Future not as good, but still good (Score 1) 301

by financialguy (#27720405) Attached to: Future of Financial Mathematics?
I'd say the opportunity is more limited in investment banking, but there is still demand on the asset management side. Investment banks are the ones that created the now infamous CDOs and other complex mortgage-related structures.

Asset management using quants is done by mostly by hedge funds but also some traditional (a.k.a. "long only") investment managers (think mutual fund managers). Note that investment banks have traditionally traded their own money (known as proprietary trading), but that's happening less now because their a) many of their traders have done terribly and b) they don't have the same volume of money to trade.

To add one more wrinkle, most sizable investment banks also have asset management units where they take client money and invest/trade it for them, and/or create hedge fund structures/strategies to do the same.

I still see a lot of new job postings for PhD math people by asset managers, and occasionally investment banks. Try theladders.com or eFinancialCareers.com to get a flavor for what's out there. Another broad site that works very well for jobs if you can figure out the right search terms is indeed.com.

As another poster said, just because you specialize in one field doesn't mean you can't do something else with it. Lots of the math applies different places. If you really wanted to go whole hog you could do a math PhD in anything and then get an MBA with a finance concentration.

Note that Taleb is a smart guy, but he does have a product he's selling. He has many valid points, but there are firms still making millions or even billions of dollars using the statistical models he vilifies. Over the longer term there's too much skew/kurtosis/etc. from the human element (finance is a social science), but over shorter time periods there are lots of situations that work just fine with the kind of models you'd be able to build. Just always beware of leverage!

Comment: Not an Either/Or Situation (Score 1) 286

by financialguy (#26328953) Attached to: The Perils of Simplifying Risk To a Single Number

First, don't forget that Taleb is selling something. Very smart guy, but he wants to make a good living too.

VaR isn't something I'd want to be without, but you clearly can't depend on models alone when your assumptions are uncertain. That's what the whole mess with CDOs and such comes down to- bad assumptions.

With the mortgage-backed market (e.g. sub-prime), the assumption was that N number of borrowers would default in X period of time. If they had the models would've been fine, but in reality they didn't, and the basis for the assumptions was horribly incorrect. Why those assumptions were incorrect is another story.

To err is human -- to blame it on a computer is even more so.

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