This is a good answer. Quants are hardcore math guys from hardcore math disciplines... Who often become world class traders. But running a business requires a completely different set of skills... And managing a hedge fund is all about running a business. As a rule... Quants love to crunch numbers... But HATE dealing with the daily people and administration hassles of running a business. That's why 90% of hedge funds... Are started and run by business/sales/broker types... The sort of SLEAZE that would pressure sell your grandma worthless gold stocks. Such funds are no more than elaborate "skimming operations"... That produce random results... But generate big profits for the principals.
I agree most quants are not good traders. Trading belongs to the performing arts largely. Monroe Trout was a basketball player. Simons offers quants $150k, a fraction of what good traders are paid. Its all in the execution.
First... $150k+ with performance bonus. Second, "by far" most retail are not good traders. Third, there's "good" traders with quant. and computer science background than others, in terms of ratio. You have 100k retail traders and 1000 hedge fund quants... You're obviously going to get more good retail traders. "%%%%%%%%%%%%%%%%%%%%%%%%%%%%"
Why would quants need to be good traders? What do traders bring to the table that an autotrading program don't? I mean, most quants' models require non-discretionary trading. So having the computer carry out the executions would be better.
I think schooling has a lot to do with it. Most quants are heavily school educated and are trained to think a certain way. But academia looks down on trading - unless it's institutional - and pushes quants away from trading. Most of the quants I graduated with all went into risk management or modeling. Only a small fraction got into trading.
I don't agree with most of what is being said here. The reason to me is really simple, at least based on the quants that I have talked to (I know several that work at Citadel): They work for firms that will reward them on the performance of their models. So if they come up with a trading system, almost by definition it must be quantifiable, which means it can be programmed, and they don't have to sit in front of a screen buying and selling. If that system goes live, their bonus is based on the performance of that model. So they get something like $150K - $300k a year guaranteed in salary, and then they may make 7 figures in bonus (in some cases capped no matter how well the model does) if they have a model that is being traded for the firm. For people that would be particle physicists working for $60k a year and be completely content, that is heaven from a financial point of view. Look at Doyne Farmer and company. Read the book "The Predictors." There are plenty that have an entreprenurial spirit of forming their own trading companies like Farmer. Then there are others that choose the route of being an entrepreneur under the umbrella of another corporation. Even Farmer eventually realized that having access to large sums of money and extremely low trading costs, with a solid backing to continue research, was/is extremely beneficial. nitro
this is a fairly accurate description of quants. btw, for some reason i can never figure one what hersley tries to say, all his posts tends to go on & on & on, i always thought hersley sounds like a bar of chocolate