Become a Quant

The FINANCIAL — A quant (derived from the word “quantitative”) is someone who can make sense of large sets of numbers. As the world is becoming more complex, we are seeing increased demand for people who can use complex quantitative methods to make sense of that complexity.

The place where quants are probably the most prominent is Wall Street: according to the investment bank Morgan Stanley, 84% of stock trading in the United States is not done by humans, but by computers trying to battle each other with algorithms designed by rocket scientists. However, quants can be found in most large organizations around the world: Barack Obama’s presidential campaign for example, employed an army of statisticians and data scientists, to figure out what worked with voters and what didn’t, in order to adjust his political strategy based on these findings.

In this new world of complexity, gut feelings are not enough anymore: we need hard facts to make sense of what is going on. What are our customers buying? Where can we cut costs? How can we make better business decisions based on the data that we are gathering. Does this smell like opportunity to you? Many people are afraid of numbers and calculations: they find large spreadsheets intimidating, and think of statistical analysis as being more complicated than learning the Chinese language (which I can tell from experience is not true). This is an opportunity to set yourself apart from others, by just knowing a bit more than others. There are three skills to start with: Excel, simple statistics, and learning how to conduct experiments.

Let’s start with Microsoft Excel: it is a program dreaded by many in the corporate world, but it actually offers a lot more possibilities than most people think. Learning Excel will make you extremely useful in your organization: it is a common source of frustration for many, and if you can help them with their problems, you will soon become a very much-liked person in your workplace. In some sectors, like the financial sector, being very comfortable with Excel is even a prerequisite. A good place to start learning about Excel is http://tiny.cc/ExcelFinancial.

Knowing simple statistics can also be a huge asset for you and your organization. Many organizations collect voluminous amounts of data on their customers, but few know what to do with it. Do younger clients default on their loans more often than older borrowers? And if so, is this difference caused by age, or maybe their is some lurking variable that you are missing? Is the correlation that you are finding significant, or caused by simple chance? Without knowledge of statistics, these are impossible questions to answer.

The basics of statistics are actually quite simple to learn: when I was a student, I found that after only a few weeks, I was already starting to see the world in a different light. If you would like to study statistics online, the University of Berkeley has a wonderful three-course series online, starting with descriptive statistics, at http://tiny.cc/BerkeleyStats. You can also start with Princeton University’s introductory statistics course, available at http://tiny.cc/PrincetonStats.

The third skill that will be very useful is knowing how to run experiments: with statistics you analyze data, while experiments are a good way to collect these data points. A big proponent of these experiments is Eric Ries, who wrote the Lean Startup book. In this book, he proposes a radically different approach to rolling out new products: instead of making the product perfect, he thinks businesses should launch fast and fail fast, shorten product cycles, and maximize learning from their failures. Read the Lean Startup, and think about how you can do this in your own organization. Most businesses don’t really know what works and what doesn’t work, but by running experiments you will be able to gather the hard data needed to form a more informed opinion. The Lean Startup book is available here: http://tiny.cc/LeanStartUp

Will these three skills take you years to learn? Absolutely not: if you spend a few hours on this every week, after a few months you will have gained significant knowledge. These are practical skills that you can apply immediately in your organization. Become a quant, make yourself useful for your organization, and advance your career!

GEOCAPITAL MICROFINANCE ORGANIZATION