Will Quant Finance Grow?

I subscriber asked if quantitative finance will grow. They are asking as they are in high school now and it will be 8-9 years before they have finished all the required schooling to become a quant.

The short answer: yes quant finance will keep growing and not be replaced.

What many people don't realize is that the quants at many firms and banks are actually building out the machine learning pieces used behind many AI applications and they are of course still utilizing math and stats to develop robust models. The truth is that ML is nothing more than a sub section of statistics and AI is nothing more than computer programming used to automate processes which include models. We will always need people to build new models whether it be statistics, math, ML, or AI as humans are constantly changing which requires new models. Finance and human behavior is not a hard science where it can be modeled once and done.

Also as the technology increases it will make some of the more complicated tools and model easier for smaller firms which will need models. Even with the rise of open source modeling software like R and Python, we are seeing more firms building models.

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[Professional-Hater]

Thanks alot!!, I am a highschool senior and I'll start my BS maths and stats this year, this was really helpful :)

[xkr]

Can definitely relate to this. Machine learning is just statistics and optimization used for making predictions by minimizing the error component or maximizing the distributions we are assuming for the data. Most if not all quant models use these principles. Personally I feel quants can or rather should differentiate themselves by having a strong foundation in fundamental math, optimization, probability theory, stochastic and time series related topics. Also, an ability to code and test models not necessarily at a massive scale (there are quant developers / software programmers who'd be better an optimizing the code as that is what they do :) ). And as you gain experience, the domain knowledge you build over time is also super useful. For instance, if youre woking in fixed income / structured products, understanding drivers of price / cash flows / prepays/ default /duration and spread analytics etc. also helps you grow. Personally, I've always felt that understanding the pricing /trading side has helped me grow and made things more interesting.

[nikaszilin]

Hey Dimitri, a fan from the UK here. Do you think you could make a video talking about the quant fields in other countries and maybe mention the key differences compared to the US field? I would really like to get some information from you about the UK quant field. I love your videos; keep it up!

[lebronjames]

this is one of the best vids on the channel, so informative. Literally laid out the industry so clearly. As always, God bless ya!

[tapasbarik]

Thanks for this detailed video, Dimitri. Been watching your videos lately. Really enjoyed understanding how quant finance is being used in various aspects of finance industry.

[ABSTRACTSHNITZEL]

This video did a really good job explaining the different areas of quant finance. Thank you!

[ColdWarVeteran-rj]

I have worked in lending for 25 years. 20 of those as an officer of the firm.

Analyzing buyer behavior to forecast default and bankuptcy used to be the secret sauce that made a profitable firm. Since CECL was imposed on FIs now accurate forecasting is a Federal Requirement. Loss reserves must be set aside at loan inception for each loan. We are in the days of not turning a profit a couple of years after the loan is funded.

[mikhailbabushkinum]

God knows I needed this video.
Thank you Dima

[misterthefreak]

It’s crazy how the comp sci people that are literal data analysis "experts" don't understand nor the models nor the math behind whatvthey do and just call it a black box. Universities should make Data Science an Applied Maths and Stats formation instead of forming people that just know how to implement the algorithms.

[danigonzalez]

Great video! Thanks for sharing your knowledge Dimitri :)

[danielwang]

Amazing video. I’m an undergraduate right now and this really opened my eyes to the vague idea of quant that people throw around. Do you have any recommendations for books or other resources to learn more about risk management?

[samarthparikshith]

Thank you so much for your videos, Dimitri! Do you know if Quant Programs will allow you to make up for linear algebra and multi-variable calculus at their college if you get accepted? I want to graduate soon and don't have enough time to get a math minor but I have taken Calculus I & II. I also have a lot of coursework in Stats and Comp Sci. which might waiver some foundational courses in a master's program.

[HedgehogCAD]

Hi Dimitri! Thank you for the video. Quick questions with some background. I completed one of the few undergraduate programs in Quantitative Finance in North America at the University of Toronto, but your channel and your opinions encouraged me to pursue a Master's in Quantitative Finance. I know that you've reviewed multiple Master's in Quantitative Finance programs in the US but I don't think you've talked about the two largest Canadian ones (MMF at the University of Toronto and MQF at the University of Waterloo). Also, what do you think of these statistics departments attempting to offer quantitative finance as a specialization for undergraduate statistics degrees? (The program is a double degree: HBSc in Statistics, specialist in quant finance and a BBA in Finance at the University of Toronto)

It's interesting because some of the undergraduate students in our program obtained internships as Quantitative Analysts in large Canadian banks, and I know you've mentioned how difficult it is to break into quant finance unless you have a master's degree. What do you think?

Thank you so much for your YouTube Channel, Dimitri!

[biglilrichard]

Do you think that as quant evolves, that the emphasis will shift from math, stats, and econometrics to computer science and engineering? We've already seen things like stochastic calculus not being quite as useful as it once was, and as datasets and computation power gets bigger do you think that CS people who understand stats will start being more attractive than someone with math, stats, econometrics skills? Or does it stay useful for the actual quants to be more heavily rooted in math and not needing to dive too deep into actual topics of study in CS as long as they are able to code?

[Steph_D_st]

Hey Dmitri, I'm 39 with a B.Eng degree in Electrical/Electronics Engineering. I also have expertise and a 3months experience as an ML/Backend Engineer. I have been trading the FX market for say 2yrs, and would love to be successful at it. I am thinking of an MSc in Financial Engineering.

Considering my age what would you advice pls.

Thanks for your anticipated response!

[alexandergrischuk]

Hi Dimitri. Thanks for the information. I am a Math Graduate. I have only used Excel Spreadsheet in my professional career. Can I apply Quant concepts using Excel and VBA? I am not having any programming background.

[amj]

Great vid. What are the books you said that are good on AI/ml quant finance?

[billyboy]

Me thinking im a fake quant working in Credit Risk Modelling, slowly studying and planning on transitioning to FO pricing quant field, (to be a real quant) dmitri: the fake quants are those damn pricing quants! Maybe the real quants are the friends we made along the way...edit: the titles dont matter, just have fun and learn.

[jonathanliang]

Because you talked a lot about education, what kind of resources would you recommend, especially as you were talking about books? What kind of background do people need?

[CM-xnoe]

So this is just engineering but with different steps ? The process looks very similar to fluid mechanics