Let me explain. Many quant books contain vast volumes of unrealistic mathematics. Some people get carried away with the beauty of this mathematics with no corresponding understanding of finance and, more importantly, of human nature. These people are dangerous, as you cannot talk to them about the real world. If you tell them their models do not work, they’ll talk of all sorts of abstract notions, proving themselves right in their heads. Unfortunately, all this is without any reference to the real world. And in finance—which is as much about people as mathematics—if you can’t grasp that, then that is dangerous.

I have always advocated the mathematics “sweet spot,” that fine balance between a sufficiently advanced knowledge of mathematics to do the job in the real world, while not being so abstract as to lose your head in the clouds. You must not dumb down quantitative math, else you cannot understand more complicated derivative products. But, equally, you do not want to stray into the even more dangerous area of really high-level math, where people get carried away by the subject’s beauty. There are some 5,000–10,000 Masters in Financial Engineering graduates churned out each year, and I would not employ a single one of them myself, as they are so hopelessly out of touch.