Cheaper quants?
This article says that IBs are increasingly hiring cheaper quants and setting up their quant teams in regions like Eastern Europe and India. Well, from both an economic and a business perspective, it seems like the right thing to do. IT and quant talent are in high demand, and they're looking for people who can do the job...it doesn't necessarily mean you must be educated in top UK or US schools, where graduates have a high remuneration expectation. If you're hiring large numbers, especially fresh graduates, you can't really tell who's going to be the next Black or Derman, can you? Besides, by setting teams in these regions, they can be seen as expanding their investor base.
Quant is a sexy term, but it doesn't mean you create a model, implement it and the firm makes tons of money. Especially in an analyst role, you're involved in, typically, a small portion of model-building, perhaps working on a certain aspect of the model library. The stuff you learn in school are mostly textbook-based, and if you think you've managed to write VBA codes for all the pricing formulae in Hull, hopefully you are not too naive to think you'll be a successful quant.
For e.g., if you're pricing an exotic credit derivative, how do you model changing business cycles and credit levels? You make assumptions, a host of assumptions ranging from model-specific to macroeconomic ones. And with a short history to calibrate your model, your outputs and forecasts are, at best, wrong. I'm trying to say models are what they are, models. Being able to read the market is crucial, and how you make money is by coming up with the correct strategies, leveraging on your perception of future market movements.
I urge you to think about the finance intuition, the model assumptions and drawbacks, possible extensions and how your users, whether traders or external clients will use them, etc. Being a quant can very quickly become non-sexy, when you deal with the nitty-gritty stuff and spend weeks or months trying to decipher someone else's codes, when they have left for a higher position in another IB or a hedge fund.
Don't be afraid to voice out your ideas, but do plenty of research - while they will tell you that there are no stupid questions, opinions, etc...I'm sure you have on more than one occassion say to yourself...that's such a stupid question, what an idiot!
