Buffeted "quants" are still in demand

[Dave Haan]

Buffeted "quants" are still in demand
by Phil Wahba (Reuters Dec22 9:54am EST)

NEW YORK (Reuters) - Last week, New York University and Carnegie Mellon sent a new class of math whizzes out into a profession that is both blamed for the financial collapse and charged with preventing it happening again. Many of these so-called quantitative analysts, or "quants," graduating from elite financial engineering courses will end up writing computer programs that handle an ever greater share of market trading. Because some of their mathematical models failed to take into account factors that later turned out to be crucial, quants have been blamed for compounding risk and exacerbating the crash in financial markets. But far from going into decline, those with financial engineering degrees are still in demand as hedge funds and banks seek ways to measure previously unforeseen risks and factor them into their models.

... Quant farms started appearing at leading engineering schools in the United States in the mid 1990s, with Carnegie Mellon first out of the gate with its master's in computational finance in 1994. Now there are more than 20 programs from Cornell University in Ithaca, New York, to University of California at Berkeley. Abroad, they have sprouted at schools such as HEC Montreal, City University in London and Bocconi University in Milan. "Quants need to question their own assumptions," said Gregg Berman, co-head of RiskMetrics Group's risk management business and a former quant. "Unfortunately in quantitative finance, there are many who come from a schooling that's very theoretical." One suggestion he has is to teach students more about how interconnected the various players in finance are. "We have to understand how contagion can spread between strategies. Risk management should not be divorced from investment management." New York University, for example, is planning to introduce more classes aimed at reducing mispricings, which have wreaked havoc with models. It will also beef up its teaching of "crash risk," said Petter Kolm, the quant program's deputy director.

"This is the toughest market I've ever seen," said Rick Bryant, executive director of the quant program at Carnegie Mellon. "Right now we're 69 percent placed." Columbia and NYU are seeing the same thing. "The job situation is going to be worse for a while, that's for sure," said Columbia's Derman. "Historically, quants have worked at investment banks, and in the past few months there has been a mass evaporation of investment banks." Kolm said about 55 percent of half of New York University's class of 2008 has been placed. Normally that rate would be between 80 and 90 percent at this point. But that's not to say there are no high-paying jobs waiting for them.

[IlyaKEightSix]

And this is why I don't feel like applying to grad schools. I'd rather work for a year or two, see the market clear up, then go to grad school.

[Sanket Patel]

* had to delete the post - just realized someone had already posted the same article *