Quantitative Analysts
Introduction
A quantitative analyst is someone who uses their advanced skills in fields like math, statistics, and computers to analyze financial data and build models that help predict a market's behavior as well as help companies manage risks in their investment decisions. They work in banks, hedge funds, and investment firms, in which they use their quantitative skills in addition to their understanding of financial markets to make decisions backed by data that can benefit these companies. A quant usually works closely with traders and portfolio managers by adding financial ideas into models that can be calculated and improved as market conditions change.
History
Quants go all the way back to Louis Bachelier and a model he discovered called Brownian motion model which was used to interpret stocks which set the groundwork for other quants later on to make improved models. Around the mid 1900s, many financial masterminds like Harry Markowitz and Edward Thorp created and adapted models in the finance world that helped with analyzing, interpreting, and predicting stocks which is when quants really began booming. However, as time went on and around the late 20th century, the use of new technology like computers allowed for larger amounts of data to be interpreted, calculated, etc. which exponentially improved the accuracy and skills of these quants and made more firms want to hire them. Now in recent times, large companies are shifting towards adapting groundbreaking technology like Artificial Intelligence within quants and hope to improve them even more.
Day in the life
A day in the life of a quantitative analyst focuses on solving complex problems using data and math in high-pressure environments. Day’s work often begins by reviewing what happened in the markets lately and evaluating how their models are performing in these markets. Most of their time is spent coding and refining algorithms even by the slightest amount after reviewing large sets of data and running simulations to see how models or strategies perform under different market conditions. Quants work closely and monitor live models in real time, troubleshoot - or fix - unexpected behaviors in their models, and adjust strategies as markets shift and end up often working long hours where being precise is a necessity.
What is Expected
Top firms in search of quantitative analysts are in search of people that not only have exceptional math skills, computer programing skills, and a solid understanding of the current market but as well as people who have the ability to provide results in pressure. Firms like Citadel Securities and Jane Street Capital are often in high stake situations in order to beat out their competition and thus need a quant that they can count on in these situations that they know will give them results. Now, for people who are just starting off their finance career and have to consider college first, it is important to note that the top colleges for quants are ones like MIT, Stanford, Harvard, UChicago etc. These colleges allow these quants to build their analytical skills and prepare them for the real world with the top firms.
Popular Quants
Jim Simons (Renaissance Technologies): Known as the "Quant King," he founded Renaissance Technologies and its highly successful Medallion Fund, usingg complex algorithms to get massive returns.
Ken Griffin (Citadel): Founder of Citadel, a dominant global financial institution heavily reliant on quantitative strategies.
David Shaw (D.E. Shaw): Founded D.E. Shaw & Co., developed the use of computer-based, quantitative trading in the financial markets.
Peter Muller (PDT Partners): A legendary trader who formerly led a successful quantitative trading unit at Morgan Stanley.
