-a woman Kuank said in an interview with the media.
2.5 billion dollars! While the United States is preparing to divide the bonus of $65.438+0.000 million for more than 654.38+0.000 executives of AIG, the American financial community contributed an even more jaw-dropping figure this week: Simmons, a hedge fund manager with a mathematician background, earned a net profit equivalent to RMB 65.438 +0.7 billion in dividends. Represented by Simmons, a secret group of Wall Street is exposed to the world: they used to be reading seeds in the ivory tower, bearing the aura of physicists and mathematicians, but they have successively moved to Wall Street to find market opportunities and make big money with data and models. These people, who are called lenient, are called the chief culprit of the financial crisis by some media. Warren Buffett once bluntly said: Be careful of these people who can do arithmetic.
Physicists moved to Wall Street.
1985, when Emanuel de Man left the field of particle physics and went to Wall Street, some people said that he might be a little depressed. After all, he has been dealing with physics for 20 years-he obtained a doctorate from Columbia University, was a disciple of Chinese Nobel Prize winner Li Zhengdao, and conducted postdoctoral research at Oxford University and the University of Colorado to explore Einstein's "The Theory of Everything". Wall Street seems to have nothing to do with all this.
But Derman never lost or regretted it. On the contrary, he likes trading stock options. "Option theory is profound in some ways. In my opinion, physics has also penetrated into it." Derman said. Today, he is the head of risk management at Prisma Capital Partners, a hedge fund based in New Jersey. Previously, after 17 years of hard work, DeMan became the managing director of Goldman Sachs Group. He was one of the first physicists (or scientists) who "immigrated" to Wall Street. People used to call these people "generous".
Physicists active on Wall Street like Derman estimate that there are thousands, and a large number of people flock here, and the financial storm has not stopped them at all. Some broad-minded people mainly study the stock market; Some people are committed to creating models to evaluate investment risks and profits; Some people run their own hedge funds; Others focus on academic research to better analyze people's market trading behavior.
In today's international financial market, generous people are good at dancing with their sleeves rolled up and making big money. In the latest income ranking of hedge fund managers, Simmons, a hedge fund manager who used to be a professor of mathematics, ranked first with the income of 2.5 billion US dollars (about RMB1700 million yuan) by virtue of computer program trading strategy.
The financial model is not omnipotent. Since the 1970s, a large number of physicists have flocked to Wall Street. At that time, the United States was in the "post-satellite era", the government stopped supporting physics, and more and more people could not find jobs. Moreover, because inflation makes the financial market more unpredictable, the market urgently needs mathematicians to analyze every investment, even simple bonds.
"Bonds involve many numbers, such as price," said Derman. De Man's first job was to write a program to calculate the price of bond options. When he first showed his achievements, the computer suddenly crashed, but the boss was still interested in his graphical user interface, which was still a new thing on Wall Street at that time.
With the birth of stock options, fischer black of Goldman Sachs, Miron Shoals of Stanford University and robert merton of Harvard University pointed out how to price and how to hedge these options in a way that seems to guarantee profits. This is the Black-Shoals model, which will be regarded as the gold standard by quantifiers in the future. Black-Shoals model is similar to the differential equation used by physicists to describe thermal diffusion and other natural stochastic processes. However, it is not molecules and atoms that move around randomly, but the price of positive shares.
However, the price of stock options is far more complicated than the model. Dr Merton and Dr Shoals won the 1997 Nobel Prize in Economics for their stock option models. But just one year later, the long-term capital management company could not escape the fate of bankruptcy, even though the board of directors of the company included these two Nobel Prize winners.
Merrill Lynch once pointed out that we should not rely too much on these financial models. But this lesson has obviously not been learned.