Do you have to be good at math to go into hedge funds?
Your question is confusing. Yes, you will need some math skills, but you loose me after that. If you mean will you have to take math courses in college, probably yes. Statistics, finance, possibly basic accounting & economics. See what the college requires for a degree. Got no idea of what going into hedge funds means other then investing in them. If you mean to work in the field, they usually requires degrees in finance, banking, accounting, economic & things in related fields.
What's the math needed in hedge funds?
It absolutely depends on what you're trading and how you're trading it.At the top end of the scale you aren't going to get a sniff without a phd.At the bottom end of the scale you're going to need to be able to add up and maybe even multiply though knowing how to get a calculator to do those things for you might be enough. I have met at least one person in finance who did literally* every calculation I ever saw him do on a calculator. He was very fast on a calculator.Unfortunately that's not a very helpful answer. Unfortunately this is a pretty vague question.To try to offer something a little more useful - in general I was considered a reasonably quantitative type of trader, for a non-mathematician. I have studied statistics (a long time ago) as part of an Economics undergrad and then again (at a very basic level) as part of an MBA. I have an 'A' level (the school exams you take at the age of 18 in the UK) in Maths. I'm very comfortable with numbers.You don't need to be particularly good at maths to work at a hedge fund. (In fact if I had the choice I'd rather be good at programming than maths). Of course there's no real disadvantage to being good at maths either, and strong numeracy is helpful.* Like literally literally
Is pure math a good degree for working in a hedge fund?
Hedge funds are businesses, some big, some small. The big ones hire all sorts of people, programmers, accountants, janitors, lawyers and so on. A math degree is as useful for not for those jobs as it would be for any other employer. The small ones typically favor generalists who can pitch in and do a lot of stuff. A math degree does not promise that, but a mathematician with the right attitude and skills could have a good chance.Some hedge funds and other financial firms use a lot of math in their research and analysis. It is mostly applied math, but having a pure math background is a good qualification. In most cases, however, these organizations value problem-solving ability more than pure math brainpower. A Math Olympiad winner, for example, would get more respect than a math PhD from Princeton; and someone who could demonstrate using advanced mathematics in a useful project would trump both.Even for non-quant shops where the research is not explicitly mathematical, a math background demonstrates intelligence and analytic ability. It’s harder to fake than ability in, say, economics or history. The firm might prefer someone with deep insight into economics or history, but hire the gal with the math degree because at least they know they’re getting something.But none of this is specific to hedge funds. Math people are in demand at any place that values focused research. That includes some, but not all, hedge funds and some, but not all, not-hedge-funds.
Can someone explain "hedge funds" (for Dummies) please.?
My learning style is visual (artist) or if you could use metaphors it might make sense to me. Also, is this an effective way to invest these days? Thanks for making the effort.
What kind of mathematics/statistics are used in quantitative funds?
First, most Quantitative funds are using APT/CAPM type factor models.I have been told by at least two fund manager that they prefers to use models they can explain to the investors to models which produce higher rates of returns at lower variances.However most successful Quantitative and Algo funds (Like Renaissance Technology and a bunch of funds that do not have names or websites and that no one has heard about) use proprietary algorithms.Some Quant funds have a surprisingly low level of mathematical or algorithm sophistication.My favorite article on explaining what a Quantitative fund does is E. Thorp's"A Perspective on Quantitative Finance: Models for Beating the Market"http://media.wiley.com/product_d...Quantitative finance is merely the use of mathematical models to model market dynamics. Currently the main methods used by quant funds are finite difference methods and monte carlo methods.Everything in physics and mathematics is finding applications in quantitative finance. Here is one example. There was a diffusion process described by a stochastic differential equation; Brownian motion. This was studied beginning in the early 1900s. A mathematician studied the solution of this stochastic partial differential equation. The solution to a partial differential equation is a function, so he was studying the properties of this function. It turns out that the function was everywhere continuously and nowhere differentiable. The function is insane; it could not possibly exist in nature or have any applications.The Ito calculus was developed to study these functions and the solutions of similar stochastic partial differential equations. Then Black-Scholes were studying the relationship between a stock and the price of its call/put option. They presumed the stock was undergoing continuous time Brownian motion and using Ito's lemma derived the Black-Scholes equation for options pricing.When you tell a mathematician that the Ito Lemma has applications in finance; they do not believe you.
Petroleum Engineer or Hedge Fund Manager?
1) I've met dozens upon dozens of hedge fund managers and have been one and don't know any who came there from I-banking. Sam's post is idiocy. 2) The richest hedge fund managers I know can't do high school math. Sam's post is idiocy. 3) Hedge funds usually invest in things other than stocks except in ways that are different than you invest in stocks. 4) " At least you will be earning clean honest money with your dirty hands" is obnoxious. I always made clean money for people in ways that they couldn't by themselves. My trading was a benefit to the world as well as my clients.
How good are the top investment bankers and hedge fund managers in mathematics?
For hedge fund managers it depends on the strategies. There are funds employing massive quant strategy to depending on algorithmic trading or those depending on macro bets. Not all of them require much proficiency in mathematics. In some cases, the lowest common denominator is just some high school arithmetic. In particular I don't think Soros and Ackman are really top class as mathematicians. Their money making skill are more a combination of some psychology, some instinct, some macro betting ideas, leadership etc. But if you are talking about mathematicians in the hedge fund industry, you missed the perhaps most important name of all. That is, Dr. David Elliot Shaw, probably one of the smartest living souls, yet somewhat obscure. Investment banking is a different ballgame altogether. Although they recruit quants in market facing roles, their main business, by definition, is not related to quants. It is more about M & A, company valuations, IPOs, deal making etc. While you need some good applied mathematics for that, it is much more about soft skill, negotiation, leadership, connection, understanding pitfalls, business acumen etc. Blankfein, for that matter, is a lawyer by training. Jamie Dimon (CEO of J. P. Morgan) is a Harvard management graduate. Now, many MBA students focus heavily on mathematics, but most do not. I am not sure about Dimon though.