Personal investments of a quant

[Andy Nguyen]

Paul Wilmott has his money in a saving account and bond. And he wrote books about quantitative finance. That should tell you something, right
http://www.nytimes.com/2008/09/18/opinion/18wilmott.html

 

[IlyaKEightSix]

Well, what it tells me is that someone can't put their money where their mouth is. Now, I may be young and naive and inexperienced, but if quants don't use their own strategies for their own personal incomes, isn't that a bit hypocritical?

You're telling clients to do with their money what you wouldn't do with your own.

Now for small investors, there may be other constraints that are virtually negligible for large sums of money, but from my perspective, something smells very fishy.

Can anyone more experienced provide some more feedback?

 

[Sanket Patel]

Now for small investors, there may be other constraints that are virtually negligible for large sums of money....

I think that sums it up quite nicely.

 

[Andy Nguyen]

Can anyone more experienced provide some more feedback?

You want to read some feedback? How about this

 

[bigbadwolf]

Well, what it tells me is that someone can't put their money where their mouth is. Now, I may be young and naive and inexperienced, but if quants don't use their own strategies for their own personal incomes, isn't that a bit hypocritical?

You're telling clients to do with their money what you wouldn't do with your own.

Now for small investors, there may be other constraints that are virtually negligible for large sums of money, but from my perspective, something smells very fishy.

Yeah. So? A snake oil salesman doesn't have to believe in the rubbish he peddles. As Wilmott explains it:

As long as people are compensated hugely for taking risks with other people's money, and do not suffer equally on the downside, then those risks will inevitably become outrageous. Whether markets are efficient or not I don't know for sure, but I do know that if there's a way for someone to make money at another's expense, he will.

Thus the current system of compensation at financial companies does not lead to anything good at all. If you give $10 million to random people on the street and tell them that they'll get 20 percent of any profit they make, without any consequences if they lose it, then many of them will go into the nearest casino and bet it all on red.

And this applies not just to salesmen and brokers, but to major firms and their CEOs: as we're seeing from the current bailout, profits remain private, while costs get socialised (the hapless taxpayer is lumbered with them).

Wall Street has been a racket that would make Al Capone and Vito Genovese drool with envy.

 

[myqee]

Wall Street has been a racket that would make Al Capone and Vito Genovese drool with envy.

You know the mob has already been active participants in the stock market (from what I hear there are floor traders on the NYSE that are connected and tied to pump / dump or other schemes). Perhaps it's a matter of time before they start manipulating derivatives. (Actually I wouldn't be surprised if they are already playing with options).