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What is a quant? Who is a quant?
Quants are just like other people, except maybe they're a little bit better at math.
Quants look at the world in a very logical way.
A quant is an investor that uses mathematics to find things that consistently deliver opportunity as opposed to things that just deliver noise in the data.
I'm a research analyst. I'm a scientist. If you see something in the data, we want to understand why it exists. Is it something fleeting? Is it a one-time event?
Well, there's certain patterns that you can pick up.
Human beings tend to make a lot of mistakes when they're investing. We may overreact to some good news. We may overreact to bad news.
So we're after patterns that persist, due to either economic reasons or behavior reasons.
Well, Mark Twain said that history doesn't repeat, but it rhymes. So we're trying to find some of those rhymes in the patterns of investment returns.
And if you can capture what rhymes, what's a systematic relationship that's repeatable, then actually, you know, you can benefit from that.
In investing and in sports, it's not just one game. It's how you do over the long term.
It's similar to having a baseball team. You need different types of players on your team.
So you may have some of the players on your team who are great fielders in baseball, some that hit for power, some that hit for average, some that draw a lot of walks, some that get hit by pitches. And the same thing in your portfolio, you want to have maybe some assets that have a lot of upside. At the same time, you want to have some assets that have lower risks and steadier returns. It's trying to be successful on average over time by getting the best combination you can.
I think that every investor is a quantitative investor to some degree. There's so much information out there that investors need to analyze to make good decisions about companies they invest in.
Quantitative investing is just like regular investing. We look at the fundamental facts of a company, but we try to do that in a disciplined objective way.
The way we do quantitative investing at QMA is to combine data analysis with economic theory.
You have a very research-driven culture.
It's not a bunch of data being crunched and then just spit out for investing.
We use the numbers and computers as tools, but we have human portfolio managers, like myself, who look at the results of those models, those computer analyses and actually have the final say over the what assets go into the portfolio.
It's people who are building models with their investment knowledge that they can use consistently to avoid the human biases that investors typically have.
What we're trying to do is to have something that's going to be successful on average over long periods of time and deliver the kind of results that our clients rightfully expect of us.
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