Burkle building on CGU campus which houses the Drucker school.

Very weak. Number of students applying is on the decline.
Reviewed 12/16/2011
Rating 1/10

What is unique about this program?
There isn’t much to be said. It’s a weak program.

What are the worst things about the program?
So expensive for the quality eduction you get. Profsesors are leaving and going to other colleges.

Career services
None

Student body
Poor

What is unique about this program?
The MSFE program is a joint program of the School of Mathematical Sciences and the Peter F. Drucker and Masatoshi Ito Graduate School of Management where students have a unique opportunity to take management courses, MBA courses, along with advanced mathematical courses where your seat buddy might be a PhD student in Financial Engineering or Economics.

What are the worst things about the program?
The main shortcoming of the MSFE program is computer program, especially in C++. There are some courses that require programming in VBA, R and Matlab and most years a group of students come together and form a C++ study group. Having said that, if a student does have a background in programming, then the CGU MSFE program is absolutely excellent.

Career services
The career services has gone through some transformation in the last year or year and a half to the better. I personally received my job offer from an opportunity through the career services. The career fairs have become more relevant to the MSFE students and it seems as if the service is constantly getting better.

Student body
The students are close knit and are very supportive of each other. They come from all over the world and some of them are incredibly smart. The student body creates a great sense of community, probably in part due to its small size.

Can you tell us a bit about your background?
PhD student in Economics, SUNY-Albany 09/2005-05/2007
M.A. in Economics, Wuhan University, China 09/2002-05/2005
Equity Analyst, CITICS in Wuhan, China 08/2001-08/2002

Did you get admitted to other programs?
No.

Why did you choose this program (over others, if applicable)?
. It has a flexible course arrangement and a better balance between Mathematics and Management.
. A 40% tuition cut is affordable
. Southern Calif. is a better place to live.

Tell us about the application process at this program
1) Deadline is Feb 1.
2) Applied
3) Receive ad and fellowship 6 weeks later.
4) about 400 deposit.

On a scale of 1-10, how would you grade the accessibility of the faculty and staff?
8

Programs like Baruch MFE, UCB MFE have refresher courses for incoming students. Does this program offer such courses? How useful was it?
Yes if the probability and statistics is. I think it’s useful for those person who stayed out of campus for several years.

On a scale of 0-10, how would you grade the usefulness of these refresher courses?
9

Tell us about the courses selection in this program. Any special courses you like?
Management Part:
Financial Accounting
Corporate Finance
Asset Management Practium (An excellent project with a real money Fund)
Financial derivatives (a professor with experience in practical market)

Math Part:
Stochastic Process
Math Finance
Numerical Method for Finance
Credit risk
Financial Time Series
Asymptotic Method
Simulation
Math Clinic (A applied math project with industry)

On a scale of 1-10, how would you grade the flexibility of the curriculum?
9

Tell us about the quality of teaching
Several Lab classes were arranged in each course, including math course. And homework is plentiful but acceptable.

On a scale of 1-10, how would you grade the quality of teaching?
8

Materials used in the program
. Hull
. Derivative Markets by Mcdonald
. Stochastic Calculus (I&II) by Steven E. Shreve
. Portfolio Construction, Management, &Protection by Strong
. An introduction to credit risk modeling by Christian Bluhm

On a scale of 1-10, how would you grade the practicality of the curriculum?
8

Programming component of the program
VBA/R/Matlab/C++

Projects
Group projects were there in every course. And there is a special project in Asset Management that a real &300,000 fund was conducted by the this course students. You can test your strategies in the real market. Awesome.

Career service
Career center really work hard to help you, but seems it doesn’t work well in the bad market. Before 2008, many students had chance to do Intern or full time job in TCW and Countrywide. But it was difficult now.

On a scale of 1-10, how would you grade the career service for internship and full-time job?
3

Can you comment on the social interaction between students of different ethnics, nationalities in the program?
Most India students got their jobs with the help of their social network.

What do you like about the program?
flexible courses and high quality professors.

On a scale of 1-10, how would you grade the value of the program for the price tag?
5

What DON’T you like about the program?
. no special course or seminar for programming. And there was just a discussion group by students.
. placement is not good.

Suggestions for the program to make it better
. more programming seminar because most students were not come from computer science major.
. construct a better alumni network.

On a scale of 1-10, how would you grade your experience in the program?
6

What are your current job status? What are you looking for?
I graduated on Aug. 2009 and am looking for a job in New York City now.
I really hope that I can work in the quantitative field. Not easy. I am trying.

On a scale of 1-10, would you recommend this program to others?
8

Click here to submit a review of your program

This review was submitted on 1/22/2010 at 20:43:00 by a student who studied full-time in the program from 9/2008-5/2010*

Can you tell us a bit about your background?
BS Physics & Mathematics, Loyola University Chicago
BA Economics, Loyola University Chicago

Did you get admitted to other programs?
Yes

Why did you choose this program (over others, if applicable)?
Flexibility. I am graduating in two years with both an MBA and MSFE because CGU has been very flexible in scheduling and allowed me to “overload” a couple semesters in addition to completing intensive courses.

Additionally I liked CGU’s access to studying abroad. FE or MBA students can spend a semester in Switzerland. Additionally there are travel courses at Oxford and the Chinese University of Hong Kong. I attended the Hong Kong course and it was a blast.

Finally, CGU offered me a fellowship including 50% off of tuition for the first 16 units each semester.

Tell us about the application process at this program
Very timely. Pretty typical stuff, essay, recs, transcript, phone interview.

On a scale of 1-10, how would you grade the accessibility of the faculty and staff?
9

Programs like Baruch MFE, UCB MFE have refresher courses for incoming students. Does this program offer such courses? How useful was it?
This course does not. The pre-reqs for CGU’s MSFE program are not as high as other programs. For example you need not have taken probability before. CGU starts with very basic courses so there is no need for an additional refresher.

On a scale of 0-10, how would you grade the usefulness of these refresher courses?
5

Tell us about the courses selection in this program. Any special courses you like?
I will only discuss the FE courses, not the courses I took additionally for my MBA.

MATH CORE (16 units)
Probability (4)
Statistics (4)
Stochastics (4)
Math Finance (4)

FINANCE CORE (16 units)
Corporate Finance (4)
Financial Accounting (4)
Financial Derivatives (4)
Asset Management Practicum (4)

Additionally students take 16 units of electives
I took Credit Risk (2), Quantitative Risk Management (2), Doing Business in Asia (this is the Hong Kong course) (4), Real Options Analysis (4), Energy Derivatives (2), Business Law (2)

On a scale of 1-10, how would you grade the flexibility of the curriculum?
10

Tell us about the quality of teaching
A couple of the professors have a few years experience in the “real world,” but for the most part courses are not taught by practitioners. The exceptions to this are Real Options Analysis and the Asset Management Practicum which have practitioners as guest lecturers. Asset Management especially makes use of this as about 1/3 to 1/2 of the lectures are by practitioners. I saw professors and TAs multiple times for help with homework and studying. They are extremely accessible. I am now a TA myself and feel a great deal of responsibility to my fellow students. The comradery of the program is pretty strong.

On a scale of 1-10, how would you grade the quality of teaching?
8

Materials used in the program
Obviously Hull and Shreve.

Lando’s Credit Risk Modeling
Mun’s Real Options Analysis
Copeland & Antikarov’s Real Options
McDonald’s Derivatives Markets

On a scale of 1-10, how would you grade the practicality of the curriculum?
8

Programming component of the program
There are quite a few options for programming courses but the core classes for the most part do not have any programming. Every year a student-led group does an into to C++. In the math courses there is generally one or two programming assignments in either VBA, R, or Matlab. This semester there is VBA lab to accompany the financial derivatives course. Aside from these courses, Harvey Mudd (a top math and science school) offers a number of programming/programming-based math courses that CGU students, as members of the Claremont Consortium, are more than welcome to take. I’ve had many friends take these courses and love them. The Mudd campus is next door to CGU so it’s rather easy.

Projects
The asset management practicum involves students running a portion of the university’s endowment. It requires everything from researching and backtesting strategies to a small group making a presentation to the board of trustees. Real Options required a small individual project applying real options analysis.

Career service
Very little currently. I would not go by past reviews for career services as this is a big priority among the current administration and should be changing. Call the program and ask them. They’re very honest about current offerings.

On a scale of 1-10, how would you grade the career service for internship and full-time job?
4

Can you comment on the social interaction between students of different ethnics, nationalities in the program?
To some degree student’s self-segregate, but when Thursday and Friday come around it doesn’t matter what your background is, everyone’s drinking and having fun together.

What do you like about the program?
The flexibility. If you don’t want to be a standard cookie cutter quant then come to CGU.

On a scale of 1-10, how would you grade the value of the program for the price tag?
9

What DON’T you like about the program?
The other side of the flexibility is that you are really responsible for your own future at this program. You can’t sit back and do interviews on campus. You have to hustle and get things working.

Suggestions for the program to make it better
More programing in the courses and more career resources.

On a scale of 1-10, how would you grade your experience in the program?
10

What are your current job status? What are you looking for?
I have a job offer for structuring and analytics in electricity markets with a large investment bank.

On a scale of 1-10, would you recommend this program to others?
5

Other comments
I put a five on the recommendation because it is difficult to say without knowing someone. If you are a real “mover” and get things done, then I really suggest CGU. You’ll have a lot of personal opportunities. But if you don’t feel like being creative and hustling the I don’t recommend this program for you.

Click here to submit a review of your program

This review was submitted on 1/24/2010 at 18:02:31 by a student who studied full-time in the program from 9/2009-5/2010*

Can you tell us a bit about your background?
I graduated in Physics from Harvey Mudd College and went to work for a year in a small business software company as a consultant.

Did you get admitted to other programs?
No

Why did you choose this program (over others, if applicable)?
N/A

Tell us about the application process at this program
I secured admission before leaving my undergraduate program. It was very easy to apply because Harvey Mudd and Claremont Graduate University are just across the street from each other. Thus, most of the admission process was carried out in person. During the rest of the admission process e-mail and phone communication was prompt and helpful. There were no problems with the admission process as the online application was straightforward and well thought out. I did enroll as part of a 4+1 year masters program available to undergraduates of the Claremont Colleges.

On a scale of 1-10, how would you grade the accessibility of the faculty and staff?
6

Programs like Baruch MFE, UCB MFE have refresher courses for incoming students. Does this program offer such courses? How useful was it?
While the program itself does not have refresher courses, taking courses at the undergraduate institutions of the Claremont Colleges is both possible and encouraged.

On a scale of 0-10, how would you grade the usefulness of these refresher courses?
0

Tell us about the courses selection in this program. Any special courses you like?
There is a set curriculum of core courses taught in a specific order. Of the 12 required courses, 8 are mandated parts of the curriculum and 4 of the courses are electives. Selection of elective courses is highly teacher specific. If a good teacher is teaching a class it will be gold. The courses I especially like were Financial Accounting (a required part of the curriculum) and Fixed Income (an elective) and I liked those courses because the teachers in the courses were excellent.

On a scale of 1-10, how would you grade the flexibility of the curriculum?
9

Tell us about the quality of teaching
The teaching quality is quite variable. One of my favorite teachers has won 14 teaching awards during his time at several of the Claremont Colleges. The other favorite teacher is a retired accountant and has put in the effort to write his own book that we use in the classroom. Due to both natural ability and conscious effort, he is an excellent teacher. Other teachers I have encountered have been ‘good,’ although one teacher was terrible. These solidly good teachers give instructive classes but would could to put more effort into coordinating their classes, better tailoring their homework problems, and sharing more ‘pearls of wisdom’ from outside the textbook.

My teacher rating of 8 indicates that there are at least two excellent teachers, and the majority are good teachers.

On a scale of 1-10, how would you grade the quality of teaching?
8

Materials used in the program
Shreve: Stochastic Calculus for Finance I and II
Hull: Options, Futures and Other Derivatives
Ferris and Wallace: Financial Accounting for Executives
Ross, Westerfield and Jordan: Fundamentals of Corporate Finance
McDonald: Derivative Markets

On a scale of 1-10, how would you grade the practicality of the curriculum?
3

Programming component of the program
This is the biggest weakness of the CGU MFE program. Little to no programming is done in the core curriculum and the possible programming electives are not well taught nor tailored to finance. The good news is that this weakness has been recognized and is starting to change this year. An independent weekly workshop in C++ is being tested this semester and the Financial Derivatives class from this semester onwards will include a weekly VBA lab.

Languages: C++, VBA, MATLAB

Projects
Two projects are offered. In the asset management class, the endowment for the Peter Drucker School and Masatoshi Ito school is partially managed by teams of MFE’s mixed with MBA’s. There is also a research project in Financial Derivatives.

Career service
The career services coordinator is incredible. He and his staff work very hard and he has significant connections with companies ranging from Disney and Barclays. The Claremont Colleges all share the same career services jobs and internships network, thus graduate students can also pursue opportunities from Claremont McKenna College and Pomona.

There is a small but growing web of alumni contacts, and Professors do pass along job prospects from time to time.

It is easy to find an internship or full-time position if you take charge. There is not as much active assistance as in other programs I have heard about but the resources are here if you put in the effort to make use of them.

On a scale of 1-10, how would you grade the career service for internship and full-time job?
6

Can you comment on the social interaction between students of different ethnics, nationalities in the program?
The CGU MFE program is predominantly foreign of which the majority are Chinese. The program itself is nearly majority Chinese. There are several MFE program-wide events during which interaction occurs between all groups. On a day-to-day basis none of the groups all sit together in cliques.

What do you like about the program?
CGU’s best attribute: There are at least two excellent teachers, the majority are solidly good, and a terrible teacher can be easily avoided because they are only teaching elective classes. The teachers are accessible.

Second best: The high proportion of Chinese students allows for an intimate exposure to China. I sure will use my contacts in China in the future and I have been able to ask colleagues for their opinions on all news I get from China.

Others: The integration of the CGU job posting network with those of the excellent undergraduate universities nearby allow for a much broader range of opportunities. There is a lot of freedom to take advantage of the resources offered by the school, but the onus is on you.

On a scale of 1-10, how would you grade the value of the program for the price tag?
5

What DON’T you like about the program?
The fact that programming is not well integrated into the courses and homework is a severe shortcoming. Also, the program is quite theoretical and should be more applied. It many respects the program is a series of classes connected only if the courses are taught by the same teacher. Better integration of the classes into a coherent program would be desirable. There was an attempt to have the Mathematical Finance class integrate with the Numerical Methods for Finance class, but due to a lack of communication between the different professors the classes complemented each other very little.

Suggestions for the program to make it better
The suggestion that more programming be introduced into the curriculum has already been somewhat addressed with an independent C++ workshop and weekly VBA lab period. The integration of classes into a coherent program with a single well designed syllabus is a must.

On a scale of 1-10, how would you grade your experience in the program?
7

What are your current job status? What are you looking for?
The connections the CGU MFE program has in East Asia have been invaluable. I have an internship lined up in Tokyo with Barclays Capital for the Summer of ’10. The internship is in Fixed Income IT support.

Since I trained as a physicist and worked in business software for a year, I am not sure where I want to head. I will be better informed after my internship.

On a scale of 1-10, would you recommend this program to others?
9

Other comments
This program is very close to making it big. The alumni network is growing under the expert management of the current career services office, and programming classes are being incorporated into the curriculum. I expect my degree to be worth much more than I paid for it in 3 to 4 years as those graduates in my class and the year before begin reaching high-level positions. I plan to be actively involved with the school in the years ahead and am working to improve the program myself.

Click here to submit a review of your program.

In the last ten years, the number of graduate programs in quant finance has exploded, as has the number of MFE grads with an eye on top jobs at big-name firms. A decade ago there were seven graduate level quant programs in the United States; today there are close to a hundred – each cranking out anywhere from twenty to a hundred graduates a year. Just as their students see a MFE degree as a surefire ticket to wealth, universities are trying to cash in on the bonanza of eager (if somewhat naïeve) future quants by offering multiple programs in the field. It’s a great moneymaker for the schools, but are the expectations fueled by these degree factories realistic? Can the finance industry absorb the coming glut of MFEs?

Financial trading has transformed over the past 30 years. In the early ‘80s, the people drawn to trading had a passion for markets, but few had the academic pedigree that’s a prerequisite today. Many had only a high school education, but the markets were straightforward enough that a basic understanding of option theory and CAPM sufficed. When derivatives markets exploded in size, both in terms of equity trading and footloose liquid capital, complexity increased by an order of magnitude. Traders with a technical background who had been there from the start were able to capture “monopoly profits” since a failure to understand the technical nuances of the business was a barrier to entry for many prospective quants. Academics and engineers were in short supply, and therefore were hot commodities.

Today, however, the situation looks much different. Where advanced training in quantitative finance was once the exception, there is a growing army with advanced credentials. Black-Scholes and Ito’s Lemma used to be hallmarks of an expert in quant finance; now they’re part of the MBA curriculum and even some undergraduate math programs. Interest rate derivatives and the Gaussian copula for credit and mortgage derivatives were similarly standardized.

As their numbers and sophistication grow, so does the gap between MFE students’ expectations and reality. While the majority of MFE students dream of becoming traders or big-time portfolio managers, the dismal truth is that there simply aren’t enough of those jobs to go around. Right or wrong, most people get those positions by working their way up through the ranks, starting out in jobs that are much less attractive to someone with an advanced degree intent on being the next big trading success story.

Not only are there are more than enough people with first-rate credentials, number of positions in trading, quant finance, and portfolio management is likely to shrink. Firms questioning the worth of their strategic trading platforms have increasingly chosen to spin off entire businesses. These trading jobs likely won’t go away, but will require less infrastructure and support staff – especially once regulators implement new rules tightening firms’ belts on compensation.

This means many MFEs will end up in fields like Audit, Risk, Finance, or Operations. While they may be less trendy, the jobs are important, engaging, and less likely to get hit in a recession. Firms will need more supporting staff to meet the requirements of new regulations, and the skills for these jobs are applicable outside of Wall Street, in areas like accounting, database management, and process management. They aren’t badly paid, but neither are they a route to fast, easy wealth and an early retirement. Success comes the old-fashioned way: hard work over the course of years, perhaps decades.

It’s all the more important, then, that prospective quants make sure they have the right motives. While there’s nothing wrong with wanting to make money, it’s not the way to choose a career, especially not when the chances of easy success are slim. Few things are worse than doing a job one hates – even fewer when one has to resign oneself to doing that job for many years. Those considering finance should stop to assess their real motives. Are they reading the financial press regularly? When they go online, are they frequenting trading and market blogs? Are they keeping up with the academic press, not because they have to, but because of a genuine passion for finance? If they aren’t among the lucky few to make it big, would they be happy dedicating their lives to finance? If not, that choice doesn’t bode well.

Our picture of the future of the financial industry is growing clearer, and it’s obvious that major changes are already in progress. A growing army of MFE’s will face limited and likely shrinking opportunities in trading and quant development, which will produce ever-larger numbers of MFEs chasing formerly snubbed spots in Audit, Risk, Finance and Operations. Schools need to be more candid about the prospects for students once they graduate, but students need to take a more critical view of whether they truly belong in finance, and if so whether they are in a program that will give them the skills to stand out in a growing crowd. While there will always be demand for highly talented MFEs, the run-of-the-mill candidate will likely find himself outcompeted and out of work, or doing jobs that used to require no more than a BS or BA degree. Nonetheless, graduate programs will continue to crank out MFEs. The question is, where are they going to go?

By STEVE SHREVE

In his article “The flawed math of financial models”, Financial Times, November 29, Pablo Triana seeks to fix a large portion of blame for the world-wide financial crisis on “quants” in the finance industry and the programs that educate them. Mr. Pablo recommends radical reform in such programs. Others, carrying these ideas farther, call for a diminished role for quants in finance.

Any discussion of quants in finance must begin with the recognition that the global integration of economies and the associated complexity of our financial system has made the use of mathematical models an indispensable tool. Rules-of-thumb and intuition will not suffice when multi-national firms face exchange rate risk, funding risk and commodity price risk, when insurance companies and pension funds face longevity risk, when financial institutions are called upon to mediate these risks, and when regulators are charged to oversee these institutions. This was recognized in the recent U.S. financial reform legislation, which authorized a government Office of Financial Research whose task in 2008 would have been to alert policy makers to the ridiculously large naked position in credit default swaps held by AIG and to predict the effect of the failure of Lehman Brothers. Such an office must necessarily be populated by quants, people who can build models into which information about financial institutions is fed.

What then is the appropriate training for quants? I believe we should focus on three aspects.

Most importantly, a quant must be competent in the technical disciplines of mathematics, statistics and computer programming, and she must be knowledgeable about financial markets. Achieving competence across this broad spectrum is a tall order. But it must be done because a well-intentioned incompetent quant is as dangerous to the financial system as a well-intentioned incompetent doctor is to personal health. The primary focus of the educational programs at Carnegie Mellon will remain the creation of competent graduates. This is what we do best.

But a good quant also needs good judgment. A wise quant takes to heart Albert Einstein’s words, “As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.” All models are wrong. Judgment is needed to know when an admittedly wrong model can be helpful and when it is dangerous. This kind of judgment is acquired primarily through experience, but we can begin teaching it in the classroom. Since the financial crisis, we have invited participants in the crisis to speak in detail to our students about deals that went bad, describing how the deal was analyzed, why it was approved, and what was overlooked.

Finally, we need people with integrity managing our financial systems. Teaching ethics is difficult, and guaranteeing that listeners will implement those teachings is impossible. It is not easy for a quant to sound the alarm that his models are being stretched beyond their limits, knowing that if he is taken seriously it will result in the loss of business to competing firms and may result in the loss of his job. We cannot instill in sixteen short months behavior that properly requires years of nurturing and mentoring. We do what we can, leading by example, penalizing students for academic dishonesty, setting and enforcing rules for ethical conduct when interacting with potential employers, posing ethical dilemmas for classroom discussion, and encouraging our graduates to consult with fellow graduates when facing tough ethical decisions.

A lesson that can be learned from the present crisis is that if everyone implements the same good idea, their collective action can invalidate the assumptions that made the idea good. If everyone assumes that U.S. housing prices cannot decline and makes large bets based on that assumption, their collective action will ultimately bring about a decline in housing prices. This is not a new lesson; it is the lesson of every bubble. A feature of the most recent bubble is that quantitative analysis contributed to a false sense of security that encouraged firms to scale up risks. In some cases senior managers and even quants themselves did not appreciate the limitations in the models on which they based their risk analysis. Our students do not begin their careers at the level where the disastrous decisions were taken, and only a handful of them will ever reach those positions of power. Nonetheless, in the short time they are in our care, we seek to the extent possible to make them competent quants who exercise sound ethical judgment.

About the Author

Steve Shreve’s books The Binomial Asset Pricing Model and Continuous-Time Models are the required textbooks for many MFE programs’ Stochastic Calculus courses. He is a professor at Carnegie Mellon University and one of the co-founders of the M.S. in Computational Finance at Carnegie Mellon.

The following is a response by Mr. Triana sent to Quantnet on Jan 10, 2010.

By PABLO TRIANA

Let me first say that I deeply admire Professor Shreve. Though my mathematical background does not empower me to fully appreciate his scientific prowess (not that his unparalleled global reputation would ever necessitate my feedback as further support), I am aware that in replying to his analysis of my recent FT article on quant education I am addressing most possibly the world´s leading light when it comes to stochastic calculus and mathematical finance. And far from an aloof researcher, Professor Shreve is also a very successful and ingenius academic entrepreneur, having taken a leading role in the development and management of one of the most exciting and path-breaking university graduate programs ever devised. To top it all, I can personally attest to his human generosity and kindness, getting misty-eyed as I recall the time when Professor Shreve, now about a decade ago, kindly accepted my invitation (as President of NYU Stern´s Financial Engineering Association) to regale us with a wonderful lecture and an even more pleasant follow-up dinner at a fancy Soho restaurant. I vividly recall him being impressed by my thorough knowledge of and interest in his legendary Computational Finance program at Carnegie Mellon, to the point of asking me why I had chosen NYU instead (I didn´t even try to apply to terrifyingly intimidating Carnegie Mellon, acutely aware of my negligible chances at getting in; I ain´t no rocket scientist, folks!).

In sum, it is not only my responsibility but also my pleasure to try to address Professor Shreve´s rebuttal as respectfully as possible, given the caliber of the counterparty. I hope I manage to succeed at this, if not so much at triumphing in the debate.
Some initial clarifications are in order. I don´t really blame quants and quant programs for the crisis. I blame the use of certain models for the crisis. I don´t really care if those using, peddling, and imposing the deleterious models were quants, traders, salesmen, or fast food caterers. My goal is not to target specific groups of people, my goal is to target specific analytical concoctions. Having said that, it is true that a lot of quants vouch for those models both inside and outside the financial industry and, much more critically, vouch fanatically for the quantification of finance in general. As long as such belief is held and enthusiastically pushed, we can get in trouble because the potential for bad models to infiltrate the markets would be made that much larger. We need to create much more restrictive filters when it comes to welcoming mathematical finance wizardry into the realm of practice. Quants and quant programs could and should have been much less permissive and much more critical. Roadblocks to dangerous models should have been forcefully built by those who best understand the mechanics. So, yes, quants and quant programs could in the end be subjected to one type of accusation: neglect.

Everything stated in Professor Shreve´s response makes a ton of sense, and one can´t help but wholeheartedly agree. But, like other famed quants too graced with the ability to muse gracefully and the valour to challenge flawed quanty practices, Professor Shreve does not go far enough. Just like Emanuel Derman, Paul Wilmot, or Ricardo Rebonato, Professor Shreve needs to get closer to Nassim Taleb (and, maybe, my very humble self) and take things a step or two further and engage in a healthy dose of loud name-calling and unabashed denunciation. It is not enough to state that quantitative analysis played a role in the crisis by encouraging misplaced confidence or that many misunderstood the maths. It is imperative to endlessly fingerpoint the main culprits, essentially VaR and Gaussian Copula (to Professor Shreve´s credit, he went after the latter in a recent piece), and to make sure that such utterly failed tools are never again given the keys to the risk kingdom. Demonstrably flawed and lethal models should be banned from the land, and the real reasons for their original embracement intrusively inquired. VaR can no longer be part of banking regulations. These things can´t continue being taught, unless they are presented as the bad that can emerge from the quant lab. More pressing still, those failures must serve as catalyst to force everyone to revisit whether finance can and should indeed by mathematized. Are VaR, Gaussian Copula, Black-Scholes, Portfolio Theory, or Financial Econometrics isolated cases of failure, or rather inescapable proof that financial theory is bound to be at best useless and at worst crisis-igniting? We urgently need a Mathematical Finance Council of Nicaea, so that these pressing questions are answered once and for all. I wrote my Lecturing Birds On Flying in a naively idealistic attempt to help kick-start such process. Will the best that the discipline has to offer, like Professor Shreve, pick up the gauntlet?

This is no time for mincing words, it´s time to act. Back in 1994, Carnegie Mellon showed untold innovativeness and courage by correctly embracing the forcefully emerging field of financial engineering. It became the indisputable world beater. Now, with the discipline in tatters and accused of horrible crimes, the same institution should once more display one-of-a-kindness and lead the second quant finance revolution, the one that ought to make sure that models and financial stability can coexist side by side and the one not afraid to terminally castigate those naughty analytical concoctions that wreak havoc.

About the Author

Pablo Triana is the author of Lecturing Birds On Flying: Can Mathematical Theories Destroy The Financial Markets? (Wiley)

By YAN LIU BALCZEWSKI

My parents and teachers recognized my aptitude for mathematics as a youngster and so steered me towards an engineering program at one of China’s leading universities. I did my graduate studies in engineering at Louisiana State University, earning my Ph.D. in 1997. I was subsequently employed by Seagate Technologies in the Twin Cities, working in the areas of research, product design, and quality assurance. Looking for new vistas I enrolled as an evening student at the Carlson School of Management’s MBA program, and I continued with the program even after I switched employment to Boston Scientific.

Juggling a full-time job with studying for an MBA, coupled with taking care of a young family, kept me hectically busy for four or five years.  But for the support and encouragement of my family, I might have given up on my studies, so exhausting was the workload. During the last semester of my MBA I started to reflect on how I could best utilize my expertise in engineering and my education in finance simultaneously. I was inspired by Derman’s book, “My Life as a Quant,” and thought perhaps I could do something similar.

Completing my MBA in 2007, I started to look for openings as a quantitative analyst or financial engineer. My first two interviews were not, I confess, resounding successes; I suspect the reason was my interviewers suspected I was bringing too much of an engineering orientation. These failures prompted me to portray myself in my modified resume as having to offer a valuable synthesis of engineering acumen and financial education. This served me well and I received an offer from GE Capital at the end of 2007 to work as a capital allocation analyst.

This was the same time that one of the greatest financial crises in several decades burst upon us. I took this crisis in stride, trying to do my level best in my new job. Using the “zero tolerance” quality standards I had used hitherto as an engineer, I pushed myself to make sure there were no errors in the information and analysis I passed on to senior management. These exacting standards with regard to accuracy did of course demand long hours and unstinting checking and rechecking of source material. The quality of my work was, however, recognized and consequently the financial storm left me unscathed, even though as a newcomer I would ordinarily have been more vulnerable to layoffs. Indeed, one of my professors at Carlson was astonished I kept my job.

Presently my routine involves regular communication with management and an offshore analytical team. But the majority of my time is involved in designing and writing code to ferret out patterns of information submerged in the millions of records of massive databases. Presenting this information is one of the great pleasures of my work and often serves as the basis for new quantitative models.

I typically reach my office at around 7:30 am, dropping off my daughter at a Chinese immersion school en route. If I’m unlucky enough to be caught in a snowstorm, or delayed because of inclement weather, I start scanning and responding to email messages via my Blackberry whilst in my car. In my office two computers run throughout the day – a desktop to perform dataset manipulation using SAS and other programs, and a laptop to exchange email messages with management and the offshore analytical team. I squeeze in lunch whenever an opportunity presents itself and twice a week I make time for a 90-minute Ashtanga yoga session. I try to refrain from working at home over the weekends, preferring instead to spend time with my daughter, helping her with her homework or accompanying her to swimming practice. And it helps me to recharge my batteries for another grueling week.

About the Author

Yan Liu Balczewski got her PhD in engineering from Louisiana State University. While working as a senior engineer, she took part time MBA program at Carlson School of Management. After completing MBA program in 2007, she joined GE Capital and have been working as a quantitative risk modeler since then.

As we reported earlier this year, the number of applications to Financial Engineering, Quant Finance programs fell significantly in 2009 as the conditions in financial markets continued to deteriorate. In follow-up conversations, program directors ascribed a large chunk of this drop to decreased applications for part-time programs and courses, the students of which typically make up about a third of an incoming class. The primary culprit appears to be stricter tuition reimbursement policies for employees of banks (particularly sell-side banks). Other causes seem to be the increased reluctance of employees to avail themselves of what benefits are still on offer (for fear of jeopardizing their jobs in a climate of continuing layoffs) and the increased volume of work (resulting from the layoffs of the last few years).

Organizations such as, for instance, Morgan Stanley, Bank of America Merrill Lynch, Citigroup, and Goldman Sachs have explicit policies on how much tuition reimbursement may be claimed, on what basis (e.g., certain grades achieved), and for what kind of courses.

Morgan Stanley will reimburse up to $5,250 and $10,000 per calendar year for part-time and full-time employees, respectively, according to internal tuition reimbursement policy obtained by Quantnet. To receive this reimbursement, “employees must be full-time or part-time regularly scheduled to work 20 hours or more per week and have completed 6 months of employment with the Firm in the above classifications prior to commencement of the course. Employees must also have a satisfactory performance record. At Bank of America Merrill Lynch, both full-time and part-time employees can receive at most $5,250 per year for both undergraduate and graduate courses and degree programs provided they are “job-related”. At Citigroup, employees receive a mere $3,000 per year for tuition. Goldman Sachs, known for its generous employee benefit, does not provide an absolute number but sources have told us the amount of reimbursement is based on the grade. For grades of A+ to C- an employee receives 100% of the course fee while grades of D and F merit no recompense.

Our various sources claim that these policies, both officially and unofficially, have become more stringent over the last few years. Many of our members mentioned that their employer reimbursed 100% of the tuition as recently as 2008.

While it’s easy to see why banks have to cut cost amid the economic downturn, it’s interesting to note that once-approved seminars, workshops are now being questioned. One source contends that his employer now questions whether a requested course cannot be done in-house (using, say, computer-based training or in-house courses), whether the material is not available gratis on the Net, or whether indeed the course requested is relevant to an employee’s current or possible future job in the organization. Another source of ours indicates that his organization will reimburse the cost of courses only if both the employee’s supervisor and Human Resources approve – previously Human Resources would give an automatic assent (provided the eligibility criteria were met).

A quantitative analyst at Citi informed us his employer questioned his need for a two-day $2,899 seminar –“Steven Shreve on Stochastic Calculus” – arguing that the analyst should already know the material. Some banks have stated explicitly the kind of courses and degree they will or will not reimburse. Morgan Stanley states that certificate programs or courses leading to professional designations are not covered. Courses, seminars or exams that are completed in one month or less are generally not covered. BAML states that “to be reimbursed, your course or degree program must support your job, help advance your career or develop your current and future job skills at the bank”. Among the courses and degree legible for reimbursement, it lists Business Administration, Computer Science, Finance or Accounting.

Early reports from Financial Engineering programs in the NYC area indicate that the number of applications this year is at par with, or slightly better than, last year’s figures.

Part-time students usually take two classes per semester. CMU MSCF tuition for Fall 2011 is $3,228 per class (a typical class is 6-unit at $538/unit). NYU Math Finance program bill its students $3,987 per 3-point class using the 2011 estimate of $1,329/point. At Baruch College, the only public university offering an MFE degree in NYC, a typical 3-credit class costs $975 at $325/credit.

By CHARLES TAPIERO

The recent financial crisis combined with a confused press regarding who is at fault has, in recent meetings of Financial Engineering/Mathematics programs across the US, raised the urgency to better define how we are educating our students for the Masters degree in Financial Engineering. The need to brand financial engineering is being discussed by the IAFE (International Association of Financial Engineers). This has presented an opportunity to effectively collaborate when challenged externally by a public duped in believing that financial engineers were a major contributor that led to the crisis. In these discussions, a challenge on defining the nature of the financial engineering profession has been revealed. In particular, are financial engineers Quants or is Quant only a means (albeit important) but increasingly of lesser importance.

This is a dilemma, “are we engineers or Quants?” This question has plagued “Science” and “Technology” as well. Science makes discoveries by seeking an internally consistent theoretical framework. Technology is challenged by the need to reconcile what we know and the manifestations of a complex reality that inserts doubts into everything we encounter. Quants however, seek to maximize an implied rationality, while financial engineers recognize that these rationalities are bounded and they seek an understanding that satisfices (a word attributed to Herbert Simon) our needs.

The danger to our programs is that Quant Finance may “hijack” the brand of “financial engineering”, and thereby isolate financial engineering into an academic ivory tower, increasingly disconnected from the real and business needs of financial professions. Practice points to the fact that “markets are incomplete”, that they are “unpredictable, that financial information is inadequate as well as non-transparent, that financial services are thriving on arbitrage rather than investing, and that financial ethics are violated often by the few at the expense of the many etc. These elements tend to render Quants ineffective. Financial engineers, far more sensitive to real practice and more aware of theoretical quant model failings, are more apt to confront them. Practice has pointed to the fact that Quant Finance can at times mislead far more than lead. Nassim Taleb seminal Black Swans, were based on an extensive theoretical and practical experience as a trader, that recognized that “predicted future state preferences” so dear to Quant Finance for the theories it is based on, can in fact be unpredictable. Numerous studies point to the effects of skewness (thereby-non normality of data) and fat tails (kurtosis) that are far more evident than Quant finance would let us believe. While state preference theory, “Martingale Finance” or “Risk Neutral Pricing” are most appealing and represent a master stroke of rational thinking, it is only a model—and therefore by its definition it is only a partial image of a limited reality.

The branding of financial engineering as “engineering rather than a Quant profession” is thus essential if it is to survive and prosper. In our program at NYU-Polytechnic Institute, financial engineering is at the kernel of an interdisciplinary profession. It seeks to bridge theory and practice; integrate in a coherent educational framework the theories and the environment of finance and economics; points out that finance is fueled and fed by information (and therefore, any beginning financial engineer must first be confronted with data and how to reduce its complexity into statistical and meaningful pronouncements); that financial engineering technology is an essential part of its entrepreneurial business and of course Quant.  Quant in this framework is a means to reduce the complexity of financial constructs and understand their complexity. It is not however its dominant factor. For a Quant, finance will be “virtual” embedded in rational expectations, for financial engineers, virtuality is a means to manipulate “reality”. A Quant will seek comfort in numbers and constructs that have removed financial risks ex-ante; for a financial engineer, however risk may be mitigated but not removed.

In a global financial world, financial engineering is “about the world”, its politics, its upheavals, its opportunities and the many challenges it confronts, as everything that happens impacts finance, while everything that requires “financial actions” requires financial engineering.

About the Author

Charles S. Tapiero is the Topfer Chair Distinguished Professor of Financial Engineering and Technology Management and Head of Department of Finance and Risk Engineering Dept, NYU-Poly. Charles S. Tapiero has just published “Risk Finance and Asset Pricing: Value, Measurements, and Markets“.

Table of content

1. Starting at Baruch MFE
2. The Birth of an App Idea
3. App-lying Myself
4. Time to Submit the App
5. Marketing the App Free-style
6. Conclusions

One day in July 2005 I called Dan Stefanica, director of the financial engineering program at Baruch College. I had been to one of the open house sessions and heard that they had a somewhat new and pretty good program there. My econometrics professor had suggested I check it out.

To my surprise, Dan picked up. I was expecting a machine; or at best a receptionist. So I wasn’t exactly prepared for a conversation. I said, “I went to the open house the other day and have an application in progress.”

“So you want to meet with me or sit in on a class?”
“Okay. Both.”
“When can you meet.”
“Anytime.”
“How about at five o’clock?” (It was around two.)

When I hung up, I started getting a little nervous, which is not like me. I was totally unprepared and not confident at all about my skills. I was a graduate student in economics at City College and had recently finished two courses in econometrics. Before that, it had been many years since my calculus and statistics courses as an economics undergrad at UCLA. And I’d gone nowhere near something like stochastic calculus.

At five I arrived at Dan’s office and he skimmed through my application and asked me a few questions. Then he said (and I paraphrase) “I don’t think you will make it in this program.” Nice. In my mind I totally agreed, but I’ve never been one to believe people when they tell me I can’t do something. I prefer to find out myself.

The blackboard used by Baruch MFE students in their Quant Lab

In the end though, Dan told me to take the calculus “refresher” course (3 semesters of calculus crammed into two weeks) and then see if I still wanted to apply. I got the calculus book and did the first 12 chapters before the class started. I did good enough that Dan allowed me to be in the program “provisionally” by taking Introduction to Pricing Financial Instruments, a class taught by Dan. If I did well, then I could stay. I did well (enough) and so I stayed.

I graduated in December of 2008 with my Masters Degree in Financial Engineering, having attended courses part-time while working full-time at an energy trading software firm. There probably wasn’t a worse time to graduate with such a degree. My original plan was to look for work, then change jobs to one of the big banks. That plan changed to “keep your job until further notice.” Further notice came in August 2009 when I was laid off.

The Jeep that I traveled cross country in.

One week after my last day at the office, I took off on a cross-country road trip. I visited numerous national parks along the way, took a lot of pictures, visited some friends in California, and generally chilled. The rest of the year went by fast. I went out a lot, visited family a lot, and had a trip to Mexico. Luckily I had save up enough money over the previous five years (and did well in some key stocks) so I didn’t need to rush out to find work. But work would find me soon enough.

One day Ernesto and I were sitting in Shade, a small Greenwich Village bar with great crepes, drinking our third or fourth Weihenstephaner Hefeweissbier, talking about how we should be developing iPhone apps. Ernesto Santos is an experienced, self-employed Web programmer. However, he is most identifiable as the president of La Boule New York, a petanque club (labouleny.com). Shade is where he and his petanque friends usually hang out after playing. It’s as good a place as any to think of an app idea.

iPhone startup idea brew over a few beers

There are basically two ways to go about doing it as indie developers. You can try to bang out a new simple app every few weeks and flood the app store with a bunch of (mostly clone) small apps. Each is low risk and most will generate no revenue, but if one is a hit it pays for the failures. Or we could try to think of one cool idea and spend some months developing it and hope it’s a home run. We decided to try to think of a home run. If we couldn’t, then we’d just start banging out apps and see what happens.

It’s easy to have an initial idea for an app, but not so easy to think of an app that is original, doable, and could make money. We had lots of ideas, but each had a pitfall, like needing a large content partner, no way to make revenue, or just too hard to make.

Then I thought about it in a different way. Instead of trying to think of a cool app that runs on the iPhone, think of the particular capabilities of the iPhone and make an app that exploits them. So what are the capabilities of the iPhone? Text, photos, sound, video, push notification, location services. What can we do to take advantage of these features?

At this time, Ernesto was talking about Monkeyfish, an old idea he had back in the ‘90s that would “mash up” stuff from different people. I wasn’t really sure what that meant, but the idea of combining stuff from different people to make a new kind of rang with me. Also in my mind from news earlier that day was Chat Roulette, the random chat service that seems to be mostly for exhibitionist guys. I’ve never used Chat Roulette but the randomness of it intrigued me.

I was stuck on the push notification functionality of the iPhone and I jotted down a few quick notes on a piece of paper. Telephone. Push notification. Random. Time limit.

Then I asked Ernesto, “How about a game like telephone, where you record yourself saying something, then it goes to a random other person with push notification and they have to repeat it? And you can only hear it once and have only 30 seconds to repeat it. And the chain goes on until the end and you can see how the message changed.” Ernesto thought it sounded good. So we did some brainstorming.

There could be a problem with sending voice messages to random people, since you don’t have control over what they say and you can’t guarantee it won’t offend the next randomly chosen user. So the telephone game seemed questionable. But we could do something like it, where you create a topic and random people reply to the topic within a short time frame. At the end, we can censor any offensive content. This seemed more realistic and more likely to get approval from Apple. It could work for text, photos, sound and videos; it uses push notification and location services.

At the end of that beer, we had the basic idea complete. We decided to do a first version with just text and photos. What we loved about the idea is its simplicity and users can make of it what they will, like Twitter. It’s a simple, random micro-blog. The development name for the product would be Hot Potato.

Ernesto is a server-side expert, so he would focus on the back end and I’d do the app. The problem was that I didn’t know Objective C, the programming language of the iPhone. But it seemed easy enough to learn (might have been the beer thinking). The next day Ernesto lent me two iPhone programming books and I got started learning Objective C and iPhone programming.

Developing an iPhone app is both easier and harder than you think, especially if it’s your first app. Objective C is a pretty easy language to learn, but may seem odd if you already know C, C++, Java, or other languages not based on Smalltalk. And the iOS development environment, Xcode, takes some getting used to also.

WARNING: Be prepared to spend 25 hrs a day, 8 days a week on this. If you are an MFE student, then it’s a lot like that, except you need to maintain the motivation yourself, without classes, homework, tests, assignments, and deadlines.

Programming aside, developing and releasing an iPhone app is not like making a Web site. You have to get development certificates for developers, provisioning licenses for all phones being used for development, get different provisioning licenses for your testers, describe your product for the iTunes store, design the product within Apple’s interface guidelines, and so many other little things.

So next time somebody tells you “I have a great idea for an app, it’s so easy we can do it in a week,” be skeptical.

The two books I started with are Beginning iPhone 3 Development and Sams Teach Yourself iPhone Application Development in 24 Hours. I also bought one other book later, which was very useful: The iPhone Developer’s Cookbook. But the best resources are online. You can Google just about any iPhone programming question and you will find dozens of forums and blogs where other people experienced the same problems. After I got the hang of developing using the books, the Internet became the best learning tool.

Everybody learns programming in his or her own way. Some people like to read books cover to cover and understand each step of tutorials. Some people like to bang through examples waiting for something to “click.”

I strongly believe that the best way to learn is by having an app to develop. It doesn’t even have to be an original app that you want to release. You could copy an existing app. You just need to have an app in mind and work toward implementing the various functionalities it needs. The problem with just going through tutorials is that your motivation peters out. If you are actually creating something, you’ll stay interested, solving all the problems you need to solve. Programmers love having problems to solve. It’s what keeps us up until 3 a.m. without feeling tired.

This is what I had. As I went through the books, banging out tutorial apps, I always kept “Hot Potato” in mind, planning how I would code it. As I finished tutorials, I thought about how I could incorporate the new knowledge into my app, and every few tutorials I would take time out to do actual programming for my app. I really just like jumping in and playing around to learn, then reading more later to refine.

In the meantime, Ernesto was building the server application. It was only a few weeks before we had a working prototype sending messages to the server. I had even implemented the audio and video recording. But the code really sucked.

Original App Logic Design

Although we had the major functionality working by mid April, the app was definitely not release ready and we had a lot of cleaning up to do. The app code was very bad and the interface was clunky. I had just been “piling code on top of code” since the beginning. I learned a lot more about good code design, so it was time to start from scratch.
I highly recommend throwing out the first bit of code written for an app and starting over, at least if you follow my method of learning (banging out code and refining it as you learn). It is a tremendous learning experience. Chances are, all the code you wrote before is garbage and you now know a lot more about good coding practices.

Regarding graphic design, it was pretty obvious that my skills were lacking. Aside from the fact that I am color blind, I only know what looks good after I see it. Good designers can envision how something should look and implement it. My “trial and error” method is just a big time waster.

Masako Masuda is an experienced graphic and user interface designer who agreed to join our company in late May. It didn’t take long before the app started looking good. Even her first day’s design put mine to shame. But she would continue to improve it and together we created a user interface flow and design that often gets the first compliments.

At the same time, we brought on Richie Narvaez (of asininepoetry.com) for writing and editing. He would be responsible for all the text in the app, the description in the app store, the press releases, and other writing that came up. It helps to have friends with such skills. We had everything we needed, except a marketing expert.

Now we needed to name the app. Hot Potato was too generic and the URL was taken. We thought the potato metaphor was cool, so I asked Masako, who is Japanese, “What’s the Japanese word for potato?” It turns out there are a few, but the one that sounded good was “Jagaimo.” I took the “a” out to make it a short “i” sound and we named the product Jagimo. Jagimo.com was available. So now we had a name. All we had to do was finish the app.

The app submission process is notorious, but not as ridiculous as its reputation. Apple is strict about what they accept for the app store: can’t crash, must adhere to Apple’s design guides, can’t have nudity or defamatory content, can’t do something one of Apple’s apps already does, etc. But it’s not as bad as people think. There are 8-10,000 apps submitted each week (including updates) and nearly all are approved.

This being my first app, I was fairly certain that it would be rejected for some technical reason. But I worried more that it would be rejected for some conceptual reason. Specifically, we are sending user-generated content from one user to randomly chosen others. If Apple believed that a 12-year-old could be receiving inappropriate content from some other user, they might reject it. If that was the case, our whole business model is out the window. Time to find a job.

There is a lot to do to get your app ready for submission. You need to submit the description, screen shots, app icons (large and small), and enter other information like keywords, age rating, and categories. Then you need to build your application in a specific way that makes it work for distribution. The documentation on this is not easy to dig through, especially if you’re working late trying to finish by your self-imposed deadline. But once you finish, you upload your app’s binary and wait.

We waited about one week before the status of our app changed from “Waiting for Review” to “In Review.” That was pretty exciting. But it sat in that status for two more days. Then it changed to “Rejected.” Why? Because when I copy/pasted the password for the Apple reviewer to use, MS Word decided I wanted to have it capitalized. So the first letter of the password was capitalized and the reviewer could not log in. Once I sent them the proper password, the app went back to “In Review” a couple days later. This time the status changed only an hour later to “Ready for Sale.”

I was shocked. I was certain that there would be some technical problem with the app that caused it to be rejected. This was my first app after all, and it wasn’t a farting noisemaker, a flashlight, or some other totally easy app. This app had to do a lot of network communication with a server, push notifications and location services. Either this means that I’m an awesome programmer or that the review process isn’t as scary as people believe.

Here was the description of Jagimo in the app store:

Jagimo is the app store’s first and only social brainstorming game. Users toss ideas. Random people catch and add to them. Together they create cool and creative mashups.

It’s easy to use. The jagimo starter enters a topic, creates the first message with words or photos, and tosses it. The server sends it to randomly chosen people. Those who catch the jagimo have a limited time to respond. After a certain number of tosses, they can check out the resulting mobile mashup and comment on it.

Let the Downloading Begin! Right?

The first day after our app was approved was the biggest day for us. People started registering and tossing jagimos around. Ernesto and I were having a “business meeting” at Shade that night. Our phones kept buzzing with new jagimos as we frantically responded to each and tracked new user registrations in the database with our iPads.

But the frantic pace of new user registrations and tossing lasted exactly one day. New apps show at the top of the list in the app store when first released, because they are listed by release date. Since there are so many apps released each day, your app is pushed to page 2+ very quickly, and the new downloads slow to a trickle. Then you have to figure out a way to get people to notice your app.

This is the hard part. All the other stuff about thinking of an idea, programming, designing, and submitting to the app store is the easy part. How in the world are people supposed to see your app when there are thousands flooding the app store and review sites every day?

This brings up what I consider to be our first mistake. We were very afraid that someone would steal our idea, so we didn’t do any pre-release publicity. We thought that if someone saw the description of our app in a press release, then they could do the same idea. We were also afraid that Apple would reject the app on conceptual grounds, ending our development. So our first release was probably a month too soon. We didn’t want to work another month if Apple was going to reject the concept and we didn’t want to wait a month because we thought someone else might do the same app.

Looking back, this was not smart. First off, no one had thought of and implemented the idea for the past few years. It was unlikely someone would suddenly do it. Second, the first day in the app store is an app’s big chance to get eyeballs, so you really need to publicize it ahead of time. Then people will be waiting for it and will recognize it when it’s released. The fear about Apple rejecting it on conceptual grounds was legitimate, but since Chat Roulette is in the app store, it seems unlikely that Jagimo would be rejected.

When we released subsequent app updates with enhancements, we saw nowhere near the amount of downloads as we did on day one. Always promote your app for at least a month before you release it.

This appears to be very common for just about every app submitted to the app store. There is an initial spike of downloads from people who see it on the first day, followed by a long tail of very few daily downloads. The biggest challenge at that point is to get your app noticed. The more people that see it, the more will download it. This is harder than it sounds.

Being a startup company with no money for things like marketing, we needed to try every free marketing tactic we could. The Internet is full of tips on how to promote your app and there is at least one book, The Business of iPhone App Development: Making and Marketing Apps that Succeed, which provides lots of good information. We had already made the first mistake, not promoting the app before release, so it was important for us to do everything we could to make up for it.

The first thing I did was to join a lot of forums that discussed iPhone apps. I posted an introduction about Jagimo and started participating in discussions. It is important to follow the forum’s rules before posting. You don’t want to look like you only came to promote your app, or to look like spam.

Next we submitted the app for review on about 75 Web sites. Since these sites receive hundreds of review requests each day, it is not easy to get them to look at our app. But we had to do this. We also submitted a press release to many of the same sites as well as tech news sites. The press release started showing up in Google searches, but it’s unclear how many people are seeing or reading it.

I also joined Meetup groups that specialize in technology, mobile apps, iOS, and entrepreneurs. These are hit and miss. Although I’ve met great contacts in some, others are just a waste of time. One that I went to was just the organizer and me having dinner. It was like a blind date.

I visited the Baruch Small Business Development Center, where I talked with a counselor who actually gave some pretty good advice. I subsequently met with the marketing specialist there. Based on these discussions, we’ll be trying some grassroots marketing tactics and hiring an (unpaid) intern from the marketing department.

How do these free marketing methods work out? Not great, to be honest. Sure, we have seen a bigger trickle of downloads, but it’s not enough to “get over the hump.” Other app developers say that the number one thing that increased downloads was being featured by Apple in the app store. How do you get featured? Well, Apple has to like the app. There is nothing we can do to get it featured besides make a good app that Apple likes. What kind of app does Apple like? Only Apple knows.

One might be asking, “How did the financial engineering degree help, if at all?” Well, the honest answer is that it did not help in any specific way. Jagimo does not use math or finance and has nothing to do with financial engineering. But there are some less obvious ways in which my MFE helps, even for an app developer.

First, the Baruch MFE program is very demanding. I was working full time and taking courses at night, 2-4 nights a week. So my work+school day started before 9 a.m. and finished after midnight (on good days). Weekends were dedicated to homework. These happen to be the same hours required of a small business owner, especially a startup tech company. People like to say that owning your own business must be great because you can set your own hours. To which I reply, “Yes, I can work whichever 20 hours of the day I want.”

Second, the Baruch MFE program teaches C++. Although the iPhone development language is Objective C, understanding object-oriented programming is key. Objective C is like a blend of C and Smalltalk. The Smalltalk part gives it its objects, and it is very object-oriented. The other nice thing is that you can mix C and C++ into an Objective C program and the compiler takes care of it. A lot of programmers will use C when they want to get some extra processing speed or if they only know how to do something in C.

Last, having an MFE degree from Baruch makes me confident that I can find work when I need it. At this point, it’s like an insurance policy. If my company does not succeed, I believe I can find a job at a financial institution more easily than without the degree. That’s a big help to an entrepreneur because starting a business is very stressful. And if I cannot raise or earn money from the business, I will have to find a job at some point.

What’s next for Woern? Well, we are seeking investment to take Jagimo to the next level. We need to have a major marketing push and would like to develop the Android version. So for now, development is on the back burner and the front burner has a big boiling pot of business plan. On the other front burner is marketing.

Developing an app isn’t just about having a cool idea and programming it. If you intend for it to be a source of income, you need to deal with all of the other business aspects that go with it— legal, business, project management, personnel management, marketing, etc. It is true that there are many hats to wear, and if you are the type of person who can juggle hats, you just might succeed.

About the Author

Erich Wood is president and co-founder of Woern LLC, a company he started with Ernesto Santos in order to develop an iPhone app called Jagimo. The app launched in late June of this year (free in the app store) and the company is now seeking investment. Erich (known as Woody to most) graduated from Baruch College’s Masters in Financial Engineering (MFE) program in December of 2008. Starting a mobile apps development company was not what he had in mind while earning his degree; a job at a big bank seemed more realistic. But sometimes you just have to go with the flow and answer the door when opportunity knocks. You can reach him at woody@jagimo.com. See more about Jagimo at http://jagimo.com.

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DEShaw
Deutsche Bank
DFG Investment Advisers
DRW Trading Group
Fidelty International
FINCAD
First Quadrant
GBAR
Glenwood Capital Investment
Goldman Sachs
Houlihan Lokey Howard & Zukin
Infinum Capital Management
ING
Investec
J.P.Morgan
Janes Street
Jump Trading
Knight Capital Group
M&G Investments
Mitsubishi UFJ Securities International
Moody’s
Morgan Stanley
Nomura
Numeric Investors
Numerix
Nuveen Investment
Optiver
QVT Financial
Royal Bank of Canada
Royal Bank of Scotland
SIG Susquehanna
Spot Trading
Societe Generale
Standard & Poor’s
Standard Chartered Bank
State Street
TD Securities
Tower Research Capital
Two Sigma Investments
UBS
Walleye Trading

These investment banks, hedge funds, quant shops cover all asset classes and for these quant internships and graduate hires, the firm will sometimes offer the opportunity for rotational programs in sevaral of these areas to give you a feel for what each area does.

Know a firm that should be on this list? Broken links? Leave us a comment!

“If we did all the things we are capable of doing , we would literally astound ourselves.” - Thomas A. Edison

‘To study as high as possible, you will have more chances to achieve better quality of life.’ This axiom has been widely accepted in my country or even in majority of Asia. So it is no strange that I will take this to heart and want to pursue my master degree. Next question is which field will be both challenging and rewarding financially. The answer would be very subtle and depend on individuals. For me, a person with engineering background, Math and Computer programming are my preferences. And these skills will have more additional values if they are applied to Finance area. I discovered this when I learned of ‘Financial Engineering’ a few years back.

If I went out to the street (of course not Wall Street) and told people that I wanted to study Financial engineering in my country few years ago, they would be puzzled with the strange term. With little knowledge about FE in Thailand where I live, I garnered more information from several reliable sources and Quantnet.com is one of them. More perception about FE, more intimidation and inspiration arose in the same time. It seems to be very difficult and intriguing at the same time. By the way, I thought this career path would fulfill my expectation and a good fit to my preference. Eventually, I made a decision to overcome those fear and pursue my dream as a ‘Financial Engineer’.

The journey to gain something very crucial and meaningful to you is always not easy and smooth, mine either. To earn a FE degree, US programs seem to be a better choice. However the tuition is pretty high if you have no scholarships. Therefore I start to set aside huge amount of money by working abroad, thanks to my company (ASM Technology Singapore) who gave me a reasonable emolument and irreplaceable experiences. Apart from the tuition, I need to take couples of standard exams. For my country where English is not an official language, it is not easy to obtain a good GRE score. I really appreciated my GRE instructor whose wonderful techniques and strategies helped boost my score by 200 points within 10 days.

The next process is to find the schools which fit my preferences and provide good teaching quality Since I have no experience in US school admission process before, I missed some deadline by the good programs. I tried my best to get into the remaining available schools. Each school has its own selection process and requirements. Some need video presentation; some may require three kinds of statements of purpose and so on. I spent a lot of my time day and night in preparation and put a lot of efforts into it. Eventually my endeavor paid off; I was accepted into the MFE program at University of Illinois Urbana Champaign. Though it is an inaugural class and a lot of people still do not know about its quality and hesitate to join, I heartfelt believe in UIUC. And I will put all of my effort to make the program to be one of a good ‘Financial Engineering’ program which people yearn for. I promise.

Thanks to my family for their continued support and toleration to my persistence.

Robert C. Merton, winner of the 1997 Nobel Prize in economics, will rejoin the faculty of the Massachusetts of Institute of Technology’s Sloan School of Management to focus on training students in quantitative finance.

Merton has been at the Harvard Business School for 22 years where he was the John and Natty McArthur University Professor until his retirement at the end of this month. He will retain his association with Harvard, as an emeritus professor.

Merton, 65, will teach in Sloan’s Master of Finance program, which was launched last year, MIT said in a press release.

Only in its second year, the MIT Master in Finance program saw a five-fold increase in number of applications this year. The program received 950 applications for the 2010 incoming class, up from 175 the year before. The one-year program costs $72,000 in tuition. According to its website, the program seeks to address the broader area of finance, instead of financial engineering, a narrow area which suggests “quants and traders only”. With a brand new building recently added, the university is studying the viability of expanding the MFin program’s class size from 60 in the near future.

Reached by phone in Boston, Andrew Lo – Director, MIT Laboratory for Financial Engineering told Quant Network that Merton will teach a newly designed course which is currently under development. His return secured only days earlier, Merton will help MIT establish a financial research center where government agencies and private companies can tap into the university’s vast technical resource and finance expertise, said Lo.

In addition to teaching and research, Merton will be involved in leading conferences and executive education seminars aimed at providing sophisticated financial training for senior managers and regulators. He will take up his new role on July 1.

In 1997, Merton was awarded the Nobel Memorial Prize in Economic Sciences with Myron Scholes (of the famed Black-Scholes formula) for their work on stock options. Together with Myron Scholes, Merton was among the board of directors of Long-Term Capital Management (LTCM), a hedge fund that failed spectacularly in 1998 after losing $4.6 billion in less than four months.

“We need people in the private sector, but also in finance ministries, and central banks who understand how the system works, and how to improve it,” said Merton. “We need people with strong quantitative skills who understand complex instruments and how risk is transferred; we need people who know how to build models, but who also have the breadth of finance knowledge and judgment to make sound abstractions and know well the models’ limitations, the art of the science. MIT, because of its history, its culture, and its approach, is the ideal place to take up this task of educating the next generation, and to do it on a large enough scale to have a macro effect.”

Merton said he will also continue his work on the development of a next-generation pension system. His Nobel Prize-winning work, which he began at MIT, where he earned his Ph.D. and was on the faculty for 18 years before moving to Harvard, focused on a method for determining the value of derivatives.