If 90% fail, then why do these banks and hedge funds require a damn 4.0 just to be considered? Everyone knows, EVEN mark douglas, author of Trading in the Zone says that education doesn't mean sh-t when it comes to trading. Even engineers, doctors, and other highly educated people fail at trading all the time. So 9 in 10 Harvard, Ivy league grads are going to fail this year. Everyone makes the damn analogy to baseball and how athletes do so well in this business, why not just go out and hire a bunch of football and basketball players to be traders, instead of the smuck who got an "A" on his pointless english essay? Anyone with the disipline, money management, edge, and emotional control can be a successful trader. A stay at home mom could have just as good a chance if not better than the Harvard types.
I have *my* answer to this question... I firmly believe that when someone is between the age of 13-21, their true "profession", their job, is to excel at school. If they can't bear down and do their job well, there's no reason for me to think that they'll suddenly become superstars after school. That's not to say people who struggled in school can't possibly do well... of course they can. But that's not my problem. I don't need to be the one that gives them a chance. I want the employee that's most likely to succeed in this new professional career, and that's going to be the person who also succeed in their academic career.
If everyone at the company performed well in school then they want others who performed well because they assume that others like them will benefit the company. Its a "safe" bet. Also, if you performed well in school it means you enjoyed many of the properties and challenges associated with it. School and corporate environments have a lot in common. I hated school and i am happy hedgefunds and banks have those requirements because I know exactly where I don't want to be.
Interesting post. I share your sentiment. I don't know the answer to your question, but here are a couple of thoughts. (Lest anyone accuse me of sour grapes, I confess up front to having an excessive number of letters after my name.) At this moment in time, highly educated people run the world. If people don't need a degree to do difficult things, then what are the fancy degrees of the world-runners really worth? Nobody likes to think their efforts could have been more easily achieved, or that maybe they are not so smart, and any plumber have done what they are doing (just an example--no offense to any plumbers-- there are plenty of smart ones, and we need them badly!) People who have earned an advanced degree, or a 4.0, have jumped through a lot of hoops--other people's hoops. They are tenacious, and will keep at an assigned task through thick and thin. If you want to hire someone who will jump through your hoops, and keep jumping through them, without protesting, you pick someone whom you already know is able to do this. As much as we profess support for diversity, many of us like to be surrounded by people who are like us. I'm generalizing a bit here, so again, I don't mean any specific offense to anyone. But just observe people and their friends. They wear the same clothes, have the same politics, go to the same schools, clubs and churches, have the same haircut, same weight, same level of education, and make about the same amount of money. So it follows that people with 4.0's and impressive degrees might like to hang out with other people like themselves. I'm always amazed at people who are so unquestioning of these values about education. Some of them begin saving for their child's college education and choosing Ivy league schools while he is still in utero. They don't even know this kid. What if the kid wants to start a business, study the primates in Africa, become a rock star or artist or take some other unconventional route? What if he has learning disabilities or is mentally impaired? Formal education opens many wonderful worlds, but it also encourages conformity. I wonder where the world would be now if John Adams, Marie Curie, Winston Churchill or Ludwig van Beethoven had been conformists.
I seriously doubt that these highly educated types actually trade in hedge funds. My guess is these people are hired mainly for research and the sell side of the business. The problem with school education is that it teaches you that if you study hard you get great marks, which does not translate well to markets and trading. No matter how much you focus or work hard there will always be a certain percentage of your trades that will be losses (depending on you risk to reward setup). For people who are used to getting great marks their whole life it can be incredibly hard to get used to being wrong on a regular basis in the markets. My guess is that someone who did not do great at school is better prepared to face the markets than someone who did great.
I for one don't accept the theory that there are *any* downsides to excellence in formal education. I don't agree that formal education implies conformity. I have a 3.95 GPA in comp sci from the top public university in the nation, and also a graduate degree from the top engineering university in the nation. I know many peers who've also done well in school. The best students were rarely the ones with thick glasses, zero imagination, and no social life. The best students were interesting, informed, and thinkers in every sense... I'd attribute their success to intelligence, but just as importantly the ability to focus with laser-like intensity, and prioritize their life as needed to getting tasks done. Again, I'm certain there are people who will thrive professionally even if they had a 2.0 in school... just as I'm certain there are people who did well in school who will be utter failures professionally. But in this field, we're all about statistics and probability, right? The probabilities of an excellent student becoming an excellent professional are higher.
At first I didn't agree but the more I think about it the more correct that statement seems. Thanks for that alternative perspective.
Unfortunatelly, it's true. The school system imposes rules that everyone has to follow and excellence within that system requires conformity. That's also the reason why a lot of business leaders and historical figures never excelled in their formal education. Some examples: Winston Churchill Independent and rebellious by nature, Churchill generally did poorly in school, for which he was punished. http://en.wikipedia.org/wiki/Winston_Churchill Albert Einstein In his early teens, Einstein attended the Luitpold Gymnasium. His father intended for him to pursue electrical engineering, but Einstein clashed with authorities and resented the school regimen. He later wrote that the spirit of learning and creative thought were lost in strict rote learning. http://en.wikipedia.org/wiki/Albert_Einstein Nicola Tesla Some sources say he received Baccalaureate degrees from the university at Graz.[16][17][18] However, the university claims that he did not receive a degree and did not continue beyond the first semester of his third year, during which he stopped attending lectures. http://en.wikipedia.org/wiki/Nikola_Tesla George S. Paton The Academy compelled him to repeat his first "plebe" year after doing poorly in mathematics. He repeated his plebe year with honors, and was appointed Cadet Adjutant (the second highest position for a cadet) eventually graduating in 1909 instead of 1908 and receiving his commission as a cavalry officer. http://en.wikipedia.org/wiki/George_Patton Some of the more recent ones: George Soros http://en.wikipedia.org/wiki/George_Soros George W Bush Although he attended Harvard Business School, he characterized himself as an average student. http://en.wikipedia.org/wiki/George_W._Bush Dick Cheney He attended Yale University, but, as he stated, "[he] flunked out." http://en.wikipedia.org/wiki/Dick_Cheney
Would you like to see a list of excellent scientists and businessmen who excelled in their formal education? It's a long list. Failing in school is not a death sentence, and excellence is not a golden ticket for life. Your list is just a reminder of that. But it is absolutely a meaningful sample point for a person's likelihood of future success... even more so for a recent graduate.