I don't think there's a gene for playing esoteric minigames on the options market while you literally suck at everything else
Why? I have met many “smart with computers” people. Many of them have terrible people skills, don’t show up to things on time, are unable to keep their workspace clean, don’t know how to explain anything, and cry about how they can absolutely never ever be interrupted because their workspace is so hard. There are also people who are “good at it all”, of course, but I have the impression that the math/computer people tend to be fairly unwilling to deal with even mild inconveniences.
People who can barely deal with the tyranny of daily standups probably would struggle a lot in a world where you need to write grant proposals continuously to justify your existence.
I’m being glib for effect, but there’s so much involved in getting work done beyond “being smart”!
Besides… it’s not like the reason we don’t do more cancer research is because smart people didn’t go into that. “Cancer research” is limited by funding for positions into that domain!
So “this quant should have been a cancer researcher” is saying “this person who decided to become a quant will be a better cancer researcher than a cancer researcher who went into that domain directly”. I don’t know the prestige vectors there but it’s a stretch in my book!
I'm continuously writing grant proposals to justify my existence, and have been quite successful (lucky) in it. But I do bitch about the pointless grant game and about the pointless meetings.
Perhaps the problem is that to survive in academia you have to be able and willing to waste your time on all the bullshit that is not research. And it selects for people who are good and willing at the grantwriting and politics game, which is not the same as being good at research.
Maybe there's some point in bitching about the tyranny. Having tech people to do sales and marketing on the side like researchers have to do probably isn't an ideal division of labor.
The market has two functions:
1. Incentivizing convergence of the price towards fundamental value, to support proper asset allocation decisions.
2. Supporting buying and selling (ie "liquidity") to shift consumption in time (and enable productive investments with the delayed consumption).
Suppose a retirement fund holds their investments over a 20 year period on average, growing at a modest 4%. A 1% wider spread would reduce the return from 119% to 118%. I'm not sure avoiding that is worth the financial sector constituting 30% of GDP.
What would happen if equity markets were only open a very short period a day? Say you have one auction a day, or maybe two, and no continuous trading?
Everyone whose advantage is speed would lose out (HFT, some prop traders). Their current gain would instead accrue to those on the other side of the trades.
According to this source: https://www.statista.com/statistics/248004/percentage-added-...
> finance, insurance, real estate, rental, and leasing ... is 20.7% of US GDP.
Since the original article is about Jane Street's financial market making business, let's focus on investment banks. What percent of US GDP do you think that investment banks and trading hedge funds represent? It is tiny. I would be shocked if it is more than 5%.
> What would happen if equity markets were only open a very short period a day? Say you have one auction a day, or maybe two, and no continuous trading?
Finally, professional financial market makers have an important role to play in reducing the size of bid-ask spread. I recently bought some 1Y US Treasury bills using Interactive Brokers. I was stunned by how tight are the spreads, and I am a "Retail Normie/Nobody". Absolutely, this was not available to people like me 30 years ago. Who do you think is providing this liquidity that keeps bid-ask spreads so tight?
I think about it like this:
How stable are prices of low liquidity instruments compared to the most liquid instruments?
What happens in the first 10-15 mins after the markets open? EXTREME volatility.
Longer trading sessions, higher volume and more liquidity lowers volatility on average.
A hypothetical X percent worse spread on my mortgage bonds, means I have to borrow X% more to buy the house. That’s meaningful money for most people.
Market makers will still earn the spread. More trading just means it gets lowered because of competition and volume.
Allocation of capital, market liquidity etc are useful, but the size of the financial sector and the rewards it gives out for this shuffling of money are insane.
He probably overstates that case, especially talking to early career interns that haven’t yet narrowed their specialization and could pivot to other highly quantitative roles that use other high level math.
He’s also probably flattering his audience, to whom “math research” is more likely to be status-bearing.
Doubt he’s saying they’d suck at anything else.