making the move from physics to finance

Sabri Oncu soncu at pacbell.net
Tue Sep 16 12:22:42 MDT 2003


Les:

> your points are noted. to me though, the interesting 
> thing about this article is its surface features, that 
> is, its in effect extolling "rocket scientists" to boldly
> venture forth into finance analysis, stock market
>  thermodynamics, etc. in other words, the boldness, the
> arrogance, is still on display.

It is true. In these days there are many financial engineering programs
started by many academic institutions from my home university, Bogazici
University in Turkey, to many ivy-league business schools in the US. In
my view, what we are facing is an overproduction-underconsumption
crisis: more rocket scientists than the industry can "consume". What is
wasted in this however are humans. 

> and i disagree that finance thermodynamics is disappearing. 
> at least, it is not at the academic level. at the Sante fe
> institute level. etc. 

Like you, I don't think it will disappear at the academic level. Indeed,
I think they will continue to push in this direction, even harder. It is
not easy to realize the change when you are living it through and most
of the time you are tempted to deny the change. You usually accept, or
at least, realize the change only after it took place and became
undeniable.

My question is this: how seriously will these academics be taken by the
owners of money? It will depend on how well they will do their marketing
of course but I tell you, scientists in the money management business
are quite intimidating to the money managers. This is why they are
constantly being repressed by the more powerful non-scientists. Some
hedge funds may be different but the only one I knew reasonably well was
no different.

> what's your experience? are you in industry or academia?

Both! Eight years in industry though.

> just peeked at Didier Sornette's book, "Why Stock Markets
> Crash: Critical Events in Complex Financial Systems".

> am tempted to buy it and read thru. are you familar with 
> its arguments at all?

No! I am highly skeptical about this pseudo-science so I don't pay any
attention any more. But this is my subjective view, of course. 

> i started reading Debreu's book on equilibrium the other 
> day. what a hoot.

Well. Don't know this particular book but he is entertaining, isn't he?
They did not give him Nobel for nothing. He has been one of the most
influential mathematicians in economics.
  
Sabri



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