Book Review: How I Became a Quant, Insights from 25 of Wall Street's Elite by Richard R. Lindsey and Barry Schachter

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Two weeks ago, I wrote a post about careers in the STEM fields: science, technology, engineering and mathematics. I had read a report that attempted to prove that the U.S. did not have a shortage of STEM professionals, but rather that they had left STEM fields for business careers in marketing, finance and production, as well as general management. One counter-argument I read was that senior corporate executives complain that they cannot get enough American-born engineering doctorates to work for their firms. This book I just finished, How I Became a Quant, gave some example why.

How I Became a Quant discusses the careers of 25 Wall Street analysts, traders, and investment managers, all of whom held doctoral degrees before accepting positions with financial institutions. Seven of these men and women hold a doctorate in a STEM field, another has only a bachelor's degree in mathematics. The rest had advanced degrees in business and finance.

The quants who began their careers in a STEM field listed several reasons why they made their career move, for example:

+ I did not like working on applications for the military.
+ In academia, you switch from your interests to the proposals that you know can be funded, even if they are not your interests.
+ Academics live from short-term proposal to short-term proposal.
+ I did not like how professors and research worked--or did not work--together.
+ I did not like pure mathematics.
+ The only women (in this technology company) at the time were secretaries.
+ There was little room for creativity in the corporate environment.
+ Corporations had too many policies and too many layers of management to censor ideas.

Today, the academic community has actually become more accommodating to the quants who prefer not to study in a STEM field. There are numerous undergraduate and graduate programs in quantitative finance and financial engineering. No doubt the quants who came before them have spun several generations of bright financiers who might have become STEM professionals in another era.

Sounding Off on Guarantee Football Games

Fourteen months ago, I wrote a syndicated post about Georgia State University's entry into college football. I took the position that the school should be considered for membership in the Big East Conference by 2017.

I reasoned that after seven years of play the university might want to take their game up a notch, and that the Big East would benefit greatly by entering in the Atlanta media market. Two other conferences, the Atlantic Coast Conference and the Southeastern Conference, do extremely well in this market.

Then last night I picked up a copy of ESPN The Magazine. I wanted to read their basketball stories. As I got closer to the end of the magazine, I caught a story: Georgia State will play Alabama in the last road game of their very first season. That's right. The University of Alabama, undefeated and ready to compete for conference and national titles this season. The home of legendary coach Paul "Bear" Bryant--their stadium is partly named for him--winner of six national championships.

What on earth were they thinking?

Georgia State, according to this story, is guaranteed $450,000 to show up at Bryant-Denny Stadium. Bill Curry, the Georgia State coach, and the former head coach at Alabame, says, and I quote the story:

"It's a once-in-a-lifetime opportunity, We won't deprive our young players of seeing how it feels,"

I know how I'd feel. Sick.

I come at this from a slightly different perspective as a Rutgers football season ticket holder. Our team was on the losing end of an 80-7 debacle during Greg Schiano's first season as head coach--and we played West Virginia, an in-conference opponent.

I doubt that Coach Schiano had anything to feel good about after that game, or that any of his players saw positives from this disaster. Best case, they learned how hard they had to work before they could become competitive. But a football team does not need to be sent through that type of humiliation in a non-conference game.

Other things I hate about guarantee games:

+ Fans do not see a competitive contest. There is nothing exciting about being on either side of a blow-out game. Especially if you paid the other team to take the beating.

+ Fans pass on these games. If you want to give up your tickets you can't sell them for face value. Rutgers added to this problem by selling tickets to the guarantee games as a two-for-one special. Pay $40 and you got another seat free. I renewed my season tickets in January, eight months before the season opener, and I get penalized for being loyal to my team?

+ The money spent to guarantee the win could be spent elsewhere. Athletic programs across the country are facing decisions to cut budgets by eliminating non-revenue sports. Even a football power such as Alabama is not immune from the pressure to make cuts. If I attended Alabama I would prefer that the $450,000 be directed to keep some sports that would otherwise be cut. Those athletes deserve their chance to compete.

+ If a sports program is running a deficit--Alabama is probably one of the profitable programs--then spending in the hundreds of thousands for a guarantee game is immoral. If my alma mater went into the academic budget to subsidize a program that paid for guarantee games, I would reconsider my contributions to that school.

If the so-called bowl subdivision schools cannot agree on a play-off to determine a national champion, then I suggest a refinement to the ranking system. Drop a team three places in the ranking for every guarantee game--we'll call this a non-bowl-subdivision team for now--on their schedule. So, if Florida inks a game with Charleston Southern, for example, they start off ranked fourth instead of first.

On second thought, that might be difficult to enforce, because so many top football schools play guarantee games. So, here's another thought: lose the game and, regardless of your end-of-season record, you drop out of the top 25 and do not go to a bowl. That will give the opponent more motivation to play better and spoil your season. If you're anxious to reap the spoils of victory, then be prepared to handle the humiliation of defeat.

Book Review: Don't Follow Me, I'm Lost, A Memoir of Hampshire College in the Twilight of the '80's by Richard Rushfield

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Located in Amherst,Massachusetts, and founded in 1970, Hampshire College was an experiment in higher education that has lived on to this day. What made Hampshire unique, then and now, was the freedom to self-design your college degree program. While Hampshire offers a longer list of majors than most small liberal arts schools, it is known for placing few restrictions on a choice of major. The 100 (Exploratory) and 200 (Foundational) courses are open to all students. Hampshire is also part of a much larger Five College community; students can also take classes at two women's colleges: Smith and Mount Holyoke, at Amherst, one of the leading traditional liberal arts schools in the country, and at the flagship campus of the University of Massachusetts.

But that's the quick tour, circa 2009. Richard Rushfield's Hampshire experience was much different. Rushfield, who grew up in a very insulated environment in Southern California, came to Hampshire for two reasons: he wanted to have his own room in college and he had met this girl in a black skirt and red leggings named Malaria who asked him to imagine that everyone in the party around him was dead.

The Hampshire College Rushfield writes about is dysfunctional. The school offers a January term, but cuts back on service so much to discourage students from attending. Resident assistants have the authority to remove, and accept, students into student housing; the most common units are called Mods, labeled by number. Campus buildings are named for what they resemble: the Airport, for instance is the name of a student lounge, because the furniture looks like an airport terminal. The dining hall is named for the former food services company that managed it.

Rushfield describes himself as a social misfit before college, then he goes on to describe Hampshire as a college of social misfits. The misfits do not necessarily conform to any group the college has institutionalized, rather they form their own subcultures. Rushfield, who is thrown out of his first dorm assignment for defacing posters with a Magic Marker, later becomes a member of the more notorious cliques, the Supreme Dicks. The misfits do not exactly succeed at forming a cohesive college community in this memoir, which was someone interesting.

Yet this school, at that time, also had hangers-on. Rather than throw out students for poor academic progress, Hampshire had students who lived on campus for more than four years. One Supreme Dick, who was forced to graduate, was entering his second decade as an undergraduate. And he found faculty willing to go along with his continued stay in school.

This story made Hampshire look like a college where the "drop-in" and "tune-out," remnants of the 60's meets up with the music of the 80's--Rushfield admits knowing little about the Greatful Dead before coming to school there--where a faculty that had, in the past, tried to be "hip," but was now losing touch with its students.

Whether you like this book or not will depend on your college experience. If you lived to party, you might find a few stories that stretch beyond your imagination. If you stayed away from the parties, you'll wonder how the author ever graduated.

I took a look at student reviews of the Hampshire of today. I read only a small sample of comments, though many were also in Rushfield's memoir. For instance, a positive was the freedom to explore interests, but the negatives included intellectual snobbery, professors with excessively liberal political views, too many slackers and stoners in the student body, and the unattractive non-traditional Seventies architecture.

But to be fair to the school, I'm posting a link to their Web site. Hampshire was an experiment that has now lasted forty years. If you believe a liberal, with a capital as well as a small L, education is in the cards for you or your son/daughter then you should look at all sides of the story before you plunk down the money. Hampshire, like so many private colleges, has approached the $50,000 price tag.

Remember the 442nd on Veteran's Day

Today is Veteran's Day and I am reading a Washington Post story about Muslims in the U.S. military. According to the story, 3,557 members of the 1.4 million-member U.S. armed forces describe themselves as Muslim.

While there have been few complaints of religious discrimination actually filed; the writer learns that Muslims in the military face taunts and ethnic slurs; some relate to the enemies these men and women have sworn to fight.

Since today is a holiday to celebrate our military--Veteran's Day was originally Armistice Day, signifying the end of World War I--I was curious to find out how other soldiers of the past might have fared at war when they had to fight people of similar ancestry, or volunteered for service after the American government had imprisoned people of their own ancestry. That took me to stories of the Japanese Americans who fought for our country as members of the 442nd Regimental Combat Team during World War II.

The 442nd Regimental Combat Team was the most decorated unit for its size and length of service, in the entire history of the U.S. Military. The 4,000 men who initially came in April 1943 had to be replaced nearly 3.5 times. In total, about 14,000 men served, ultimately earning 9,486 Purple Hearts , 21 Medals of Honor and an unprecedented eight Presidential Unit Citations.

While the 442nd was a successful unit, there were prejudices that had to be overcome before these Japanese-Americans were allowed to fight.

The 442nd was comprised of Hawaiian-born Japanese-Americans nicknamed "Buddhaheads" and mainland Japanese-Americans. The Buddhaheads had represented the largest ethnic group in the Hawaiian islands; many were serving in the Hawaii National Guard or in the University of Hawaii ROTC program before the bombing of Pearl Harbor. While these men, Nisei soldiers, aided American wounded and gave blood after the bombing, and Nisei cadets in the University of Hawaii’s ROTC guarded vulnerable areas against enemy attacks, they were not asked to fight. In fact, the ROTC cadets were discharged and labeled "enemy aliens."

On the mainland, Japanese-American families were sent to internment camps. More than 110,000 Japanese-Americans, sixty percent of them being American citizens, were forcibly relocated from their homes, businesses and farms in the western states.

And yet, men from Hawaii and the mainland chose to fight. Over 10,000 from Hawaii alone volunteered, though only 1,500 were asked for at the start.

When I consider how our president and military treated the Japanese-Americans at the onset of World War II--the men of the 442nd were not deployed until May, 1944, only sixteen months before the war ended--I have to wonder how we treat the Muslims who choose to serve. Those 3,557 men and women are making the same difficult choices that Japanese-American Nisei had to make nearly 70 years ago. They might not be as decorated in battle, but they still deserve our respect for their service.

For more information about the 442nd, including oral histories told by Japanese-American veterans, visit the Go For Broke National Education Center.

The U.K. Moves on Sex Ed Policy Where the U.S. Fears to Tread

Today I read a story on LifeSiteNews that religious schools in the United Kingdom will be required to teach about homosexuality and contraception in the classroom.

The Labour government announced that parents will have no right to remove their children over the age of 15 from explicit sex education programs in schools. In addition, all children need to receive at least one year of sex education as teenagers before the age of consent at 16 - meaning that parents lose the right to opt-out for children over 15.

From reading the story, Ed Balls, U.K. Secretary of State for Children, Schools and Families, is trying to balance religious issues with the need for better sex education and the need to stress tolerance. In addition, the Family Planning Association (FPA), the U.K. affiliate of Planned Parenthood, asked for, and received, a mandate to repeal a parent's right to opt-out of sex education classes for their children.

According to the story, opt-out had been a part of national education policy for the past 13 years. The writer added that the Labour government granted the FPA's demand despite the fact that their own public consultation found that nearly 80 per cent of respondents believed parents should retain the right to withdraw their children at any age.

Government works differently in the U.K. than in the U.S., though public opinions, at least in this story, appear to be quite similar; comprehensive sex education in public schools, parental rights to "opt-out," and the inclusion/exclusion of homosexuality as a curricular subject are common issues in both countries.

But no U.S. politician would dare propose to regulate a sex education curriculum in parochial schools. While I am not a lawyer, I could surmise that separation of church and state has something to do with that. But there is a more fundamental issue: parents send their children to parochial school because they want their children to have a religious education. I would also presume that no parochial school teach or administrator would want to go against the leadership of their church. A U.K. ministry has taken some very dangerous steps against these life and work decisions.

I'll be curious to see how long these new sex ed policies hold up in the U.K. My guess is that they'll last until a Tory, the opposing party, government returns to power. As is the case in the U.S., it is not unusual for a conservative government to overturn liberal policies and programs, first through executive order, then by legislation if necessary.

At the same time, in an odd way, I felt proud to be an American as I read this story. While I lean towards support of comprehensive sex education, and that tolerance should be ingrained as part of everyday life, I also believe in a parent's right to choose a religious school for their children. That choice is part of the meaning of religious freedom. I also believe that if parents have serious objections to material in a sex education class for religious reasons, they should have the option to withdraw their child from reading that material. That too, is a reinforcement of religious freedom.

Should All High School Students Go to College?

Yesterday, I read this debate in the Chronicle of Higher Education between several education policy experts over the value of a college degree. This debate is a worthwhile read for all parents, whether you are committed to a college education for your children, or on the fence. The piece is accompanied by the results of a parent's survey.

One conclusion that I can make from reading the story and the survey results is that affordability, as well as perceived return on investment, are the major reservations about a college education. After reading the story and the survey results, looking into your financial situation and your son/daughter's academic prowess and intellectual curiosity, you might want to ask, and answer, these six questions as a family.

+ What interests does your son/daughter have that might be considered academic or intellectual exercises? (For example, auto mechanics, band, chorus, computers, drama, speech and debate)outside of the classroom?
+ Which of these interests has your son/daughter delved into on a weekly basis--something they cannot be without?
+ Could these interests be pursued without going to college (a traditional four-year school)?
+ Could those interests help your son/daughter qualify for a scholarship or an employment opportunity while he/she is in college?
+ What would it take, if the college cannot award grant or scholarship money, for your family to pay for each of those schools?
+ Can you step in to pay student loans after graduation if your son/daughter cannot?

What are the points behind these questions?

+ People are happiest doing the things they like to do.
+ There are hundreds of colleges for every level of academic performance, but few for every intellectual interest.
+ Parents need to help their son/daughter find their interests before college in order to get a good return on their investment in a college education.
+ There are many lucrative professions that do not require a four-year college degree, but offer alternative paths to an education.
+ If you're going to struggle to pay for college, it becomes less of a struggle when your son/daughter knows what they want to do with their degree.

U of Wisconsin-Madison Ties Democracy to a Student Surcharge

This summer, I spent a week at the University of Wisconsin-Madison, one of the nation's finest state universities, and one of the nicest college communities anywhere. This was a special trip for me. Not only was I going for education--I was enrolled in a week-long writing program--but I also had a chance to visit a school that I had considered more than thirty years before. But if I had come to Madison during the late 1970's to tour the school, I probably would have gone there.

Why am I reminiscing about a university I never got to visit until my late 40's? Well, today I read about the Madison Initiative for Undergraduates, a unique approach to tuition increases at Wisconsin's flagship university. Basically, the students were asked to support a tuition increase in exchange for an opportunity to work with faculty and administrators to solve well-known campus problems.

In May, 2009, students supported tuition surcharge of $1,000 for in-state residents and $3,000 for out-of-state students, payable in increments over the next four years, in exchange for having a say over how the money was spent. Students who come from households with incomes below $80,000 are exempt from the surcharge.

For Wisconsin residents, for the 2009-10 academic year, the supplemental tuition charge will be $250; for 2010-11, it will be $500; for 2011-12, it will be $750, and for 2012-13, it will be $1,000.

For non-residents, for the 2009-10 academic year, the supplemental tuition charge will be $750; for 2010-11, it will be $1,500; for 2011-12, it will be $2,250, and for 2012-13, it will be $3,000.

The surcharge is expected to collect $10 million in new revenues annually for financial aid, additional faculty, international programs and student services. To date, $3.8 million has been collected and allocated. Half of the monies collected will be allocated to new programs and new faculty, and half to financial aid.

A total of 29 proposals, essentially applications for funds, were submitted. They were reviewed first by a student committee, then a joint committee of students, faculty and administrators. The highest rated proposals were approved for finding, along with additional faculty lines for the liberal arts and business schools.

Proposals approved for funding included:
+ A campuswide information system for academic advisers
+ An online tutorial for international students
+ Expanded international internship opportunities
+ More internationalized curricula
+ Short-term study abroad programs

The Madison Initiative is a rare idea for a public university: to trust the students to become involved in decisions on how their money is spent for a greater good. It is also a chance to support programs that provide an immediate, rather than a future benefit. It is also an opportunity for students, parents and the public at large to learn what it takes to sustain a quality education at a very large school.

I suspect that college administrators and student governments at other large universities will be watching UW-Madison's progress. The Madison Initiative has made a large, and supposedly democratic institution, even more democratic than before. And this time students will learn that with greater powers comes greater responsibility.