<p>Sorry, newmassdad and nblazer. In many cases, the quants WERE management. They certainly were at LTCM. And if they weren’t top management, they were the people deciding what inputs to use and collecting their bonuses based on transaction fees.</p>
<p>
This really made me chuckle. You are talking about a major profit driver for Wall Street, especially Lehman Brothers, not to mention ratings agencies, over a period of at least two decades, with trillions of dollars of securities issued. It wasn’t the work of two or three 25-year olds who would have done better if they had listened harder in class. It was the work of really, really smart people some of whom had been working on risk and prediction issues since the emergence of junk bonds in the late 70s. (And they weren’t coming out of “quant programs” because quant programs generally didn’t exist when it all started. Quant programs came into existence in part to feed the beast this became.)</p>