The Same Old Same Old

Events of the last year seem to have passed a lot of researchers by. I find it both amusing and disturbing that the same people are still giving the same lectures about the same models at the same conferences without any sign of embarrassment whatsoever. It’s like a parallel universe!

You can fool some of the people all of the time.

Sadly the easy ones to fool are people doing Finance PhDs and MFEs. On the forum there’s always plenty of discussion about which qualifications people should go for, and how many. I find that the people who pick up new ideas fastest are those with a mathematics or science background, those actually with little hard-core quant education. They still have an open mind, something which is surely needed now more than ever before. The more time spent in academia learning the ‘received wisdom’ of quant finance the more one’s brain atrophies it seems. As has been said on the forum many times, a finance PhD is for someone who wants to be a finance professor. You are better off getting a job, any job, in a bank or fund asap, start earning asap, move up the food chain as quickly as possible and leave your degree-collecting friends behind. This business will not be this lucrative forever.

I worry that people just can’t distinguish between good and bad quant finance. There’s plenty of evidence for this in journals, at conferences and in textbooks. People will certainly spot a mathematical error in a paper, but can they make the more subjective distinction between a good paper that advances the subject and a bad paper that sets it back?

There is nothing new in this, journals have almost always preferred to publish the ‘reliable,’ the “brilliant new research by Professor X” that is really “the same old stuff by a has-been plodder.” At this point a plug for our magazine is in order. Portfolio magazine was very flattering in its recent article about our magazine, saying “Paul Wilmott, publisher and editor in chief of Wilmott, is looking pretty smart these days. Wilmott and his magazine, which is aimed at the quantitative-finance community—the math geeks at banks and hedge funds—foresaw many of the problems that dominate the headlines today. He and the contributors to the magazine, whose influence far outstrips its small circulation, were railing about the limits of math and financial models far in advance of the meltdown.”

It’s not hard to find good research, our magazine seems to be particularly talented at this. The difficult part is knowing the difference between the good and the bad. This skill can be learned, but an open mind is needed. And they are increasingly hard to find.