Kurt Johnson

An emerging markets bond trader offered this wisdom during a recruiting event:

VaR is the bastard stepchild of econometrics. Econometrics is an ugly offshoot of economics. Economists are people without enough sex appeal to become actuaries.”

“There’s nothing like watching two guys with fat glasses and bad skin fight over what VaR means.”

Which reminded me of this, from an Emanuel Derman piece in HBR:

I went to work at Goldman Sachs in the field of quantitative finance, the branch of economics concerned with calculating the fair value of securities. At first I was charmed by the resemblance between the papers I now studied and the physics papers I used to read and write. Then, as I read further, I discovered that economists love formal mathematics much more than physicists do. Many economic journals encourage-or even demand-a faux-rigorous style with multitudes of axioms and lemmas in numbers that tend to be inversely proportional to their efficacy in the real world.

Why are economists trained so formally? It makes sense to axiomatize a discipline when the axioms are true (or almost so) and have strong predictive power. That’s the case for Euclidean geometry, for example, as well as Maxwell’s electromagnetic theory, where many valid, useful, and accurate predictions follow from applying the laws of deduction to a few initial assumptions.

But economists seem to have embraced formality and physics envy without the corresponding benefits of accuracy or predictability. In physics. Maxwell’s theory and quantum mechanics allow you to predict the way an electron spins about its own axis inside a hydrogen atom to an accuracy of 12 decimal places. Something that accurate isn’t just a model - it’s a law. In economics, by contrast, there are no laws at all, only models, and you’re immensely lucky if you can predict up from down.

Derman is a physicist who crossed over to help build GS’s quant competency. He published a memoir a few years ago that looks interesting…

Via future classmate Britchick comes this recap from a GMAC meeting where MBA admissions officers discuss their hits and misses in evaluating applicants. Nothing earth shattering, but kind of a nice checklist all in one place….since the things that make good MBA students also make good employees it’s a good list to think about when interviewing regardless of which side of the table you’re on.

One excerpt:

One red flag that is often ignored but should be taken seriously, said some symposium participants, is excessive contact with the admissions office. Termed “Hassler Syndrome” by one participant, extreme dependency on the admissions office may signal a lack of self-confidence that manifests itself as neediness. This trait may show up later in the learning environment, when the student is unable to contribute meaningfully to classes and work groups and becomes known as a “net taker.” The same person may be a drain on career services, unable to take initiative in a job search.

I’ll take the “Hassler” notion one step farther - I question some of the folks that spend hours a day on message boards. At the very positive end of the continuum are board users who are net contributors, sharing valuable experiences. Then there is a sizable body of needy affirmation seekers - on b-school message boards these are the “what are my chances at X school” posts but similar characters exist on Brand X car boards or wherever. These posts add signifcant mass but minimal value to the community. Finally there are the pure trolls and bullies who tear people down without adding intelligent commentary; these folks drive off the good people with short fuses for BS.

246 days on the road last year for work (including some weekend days spent at the client location).

And no, I didn’t calculate this just for grins - I have to know it for my standard meal allowance (it’s tax time!).

Discovering the Anonymous Lawyer blog made my whole week. This man is a genius. I’m not a lawyer but I’ve seen enough of the same mentality from friends and coworkers in big-time consulting/law firms/investment banks to see the truth in the satire.

If you don’t get it, or you think it’s mean instead of funny….you’ve probably never worked in one of these places….which probably isn’t a bad thing. It reminds me that many new investment bankers seem to love watching/reciting the movie Wall Street and/or Boiler Room. Even though these movies nominally vilify investment banking the analysts worship the movies as celebrations of their culture and lifestyle (and maybe even values). I have a feeling the Anonymous Lawyer is worshipped the same way by the hardcore law students trying to land a spot in a big 100-hour a week $180k firm.