Some comic relief from reader Matthew G:
How many quants does it take to screw in a lightbulb?
Using ten racks of co-located blade servers, one quant can detect a janitorial inefficiency, step in between janitor and light fixture, and screw in 49,500 bulbs in less than a millisecond, keeping five hundred lightbulbs of profit.
Two quants competing with each other can screw in 99,998 bulbs in a millisecond, with each quant retaining a profit of one lightbulb.
When ten quant firms try to screw in a light bulb, the bulb explodes, the light fixture gets ripped from the ceiling, the building falls down, the entire electrical grid of the city of Greenwich shuts down, innocent civilians all over the world have their retirement accounts electrocuted, and the Federal Reserve has to give the counterparties of each quant firm five hundred million light bulbs to maintain the stability of the system.
Afterward, each of the ten quant firms subjects its strategies to a probing and relentless critique, hires fifteen additional Ph.D.’s from MIT, Cal Tech, Harvard, and the Indian Institutes of Technology, buys four new supercomputers, and searches for new arbitrage techniques and algorithms. Independently of each other, each of the ten firms develops the same brilliant and innovative strategy of “Knock knock, who’s there?” arbitrage.
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Hardy har har!!!
Q: How many MBA’s does it take to screw in a light bulb?
A: Just one. He grasps it firmly and the universe revolves around him.
Q: How many economists does it take to change a lightbulb? A: Eight. One to screw it in and seven to hold everything else constant.
Q: How many lawyers does it take to screw in a light bulb? A: None, lawyers screw the lot of us.
IMO you need none, since they’re their heads are up their behinds. Not one of the above types I have interacted with as quant, had any grasp on what financial market complexity comprises. For the record I am not in a quant fund, I only know there should be more of us and not less. IT’s the so called real financial types that screwed up, not the quant phd’s
One hears all this crap and then the very next breath one hears about the lack of enrollment in math and science classes in our schools and colleges.
Bravo. For the nth time, many quants warned about this shit, at best they were ignored, at worst they lost their jobs.
re: para beginning w/ “When ten quant firms…”
Hilarious & dead on.
Quants. YUK!
How many quants does it take to provide plausible deniability to intentionally corrupt parasitic financial institutions in scamerica?
Or, said another way …
How much toilet paper does it take to wipe pretty the asshole of financial corruption in scamerica?
Deception is the strongest political force on the planet.
It is a funny read but folks who understand math & physics are not the biggest contributors to the crisis.
A guy like Alan Greenspan (who never understands that when debt levels always grow at a multiple of profit & GDP growth, you are doomed) are a much bigger pain in the xxx.
So this article is just as funny as it is nonsense.
Quants don’t screw in a lightbulb. They screw on a much larger scale. You can’t fit the entire world economy in a lightbulb.
You have cut to the center of the problem–these mathematically sophisticated people have constructed models and risk management protocols based on absurd assumptions. If quants end up complaining of a “six sigma event” several times in a decade, it ain’t a six sigma event–it is a faulty model. I have a much simpler risk management rule: no enterprise in the history of the world has ever used 50x leverage and not eventually come to grief.
David X. Li was the genius default quant. Didn’t his original equation, Gaussian copula function, measure risk based on a 20-year history of CDSs on housing, during which time housing prices never went down? If the basic premise of the model is wrong, even if it’s elegantly beautiful, it will collapse. Just like the theory that market players are rational is INSANE. Or that everyone has perfectly symmetrical information at the same time.
Knock, knock!
Who’s there?
Greed and corruption instead of sharing and equal rule-of-law.
Pity that.