Known as the “the Rocket Scientists of Wall Street” (as initially labeled by Investopedia) Quant traders or analysts - "Quants" - maybe understandingly intimidating to many. However, as their returns increase, more are becoming aware of their power. Quants are a specialized set that cannot be ignored…
Quants apply mathematical and statistical methods in order to create algorithms to solve financial and risk management problems. Their tech solutions are replacing humans in the investment set. As David Siegel, Founder of Two Sigma Investments put it (2014):
“No human investment manager will be able to beat the computer”
Despite his cynicism, recent years have proved Siegel’s thesis correct. In May 2017 Two Sigma’s assets under management reached $45 billion, up from $32 billion at the start of 2016. This brought it up to the number two spot (behind Renaissance Technologies, also a quant fund) as the nation’s second-biggest hedge fund firm.
With these returns, those outside the Quant- niche are taking notice. In 2017, CNBC headlined “‘Quant:’ the buzzword hedge fund workers can no longer afford to ignore.” Forbes, also, published “Quants Are Eating Away at Wall Street’s Edge” this past March. In June Bloomberg published “ Robots Are Eating Money Managers’ Lunch” focused on a similar theme.
While no media outlet wants to blatantly tell their audience that tech’s stronghold on the finance industry means that their subscription readers’ jobs are dead, headlines continue to draw attention. Depicting a monarchy, this May Wall Street Journal published “The Quants Run Wall Street Now.” The Journal named Quants as the “New Kings of Wall Street” the same month.
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