Econometrics? (1 Viewer)

[gm]

Hey who can tell me about econometrics?

Especially in relation to financial markets...

Is it hard/easy? Employability? etc etc...

Any info!

Thanks!

GM

 

[ohne]

I think econometrics is the mathematical side of macroeconomics. I can't really comment on it any more than that I'm afraid as I haven't started it.

 

[alman]

so far, we're learning about statistical methods...but i would never use these methods in investments (thats my opinion)..relying on pure numbers does not make common sense

 

[Raiks]

Originally posted by alman
so far, we're learning about statistical methods...but i would never use these methods in investments (thats my opinion)..relying on pure numbers does not make common sense

It makes sense if it works.... thats just a general rule. If it's stupid and it works, it's not stupid.

Econmetrics is basically your quantitative and statistical approach to macroeconomics... more mathematical concepts such as mathematical economic models and the like, for which there are limited specialised jobs but many banks will take you into their finance areas due to your mathematical grounding.... they'll use you as a number cruncher which can be profitable. A friend who graduated managed to get counter offers from 2 big banks and ended up with a $170,000 a year job before bonuses which could potentially double that figure, and thats a first year students, although he was like the top student at USYD which probably explains a bit.

 

[alman]

I made no mention of stupidity. Rather, its the concept of "common sense". Something that some people do not lack. I mean, how reliant are numbers?

I'll give you an example: Long Term Capital Management (LTCM)..this firm was notorious for relying on mathematical models to do their investments. Then they needed to be bailed out by the Federal Reserve and almost killed the global financial system (almost to the tune of $100 billion worth of exposure to derivatives). Also note, that LTCM had 3 Nobel Prize winners.

It just shows how a mathematical grounding may not be a good thing.

 

[gm]

Alman's right...

Over the years, alot of people have really been burned by blindly following the numbers. LTCM is a major example.

Although statistics, used in the right way can be a great tool.

For example, George Soros. Founder of Soros Funds Management, former manager of his Quantum Fund, the best performing fund in history. 30% annual returns for 20 years (or something close to that). He's currently worth $7 Billion (USD).

Soros uses common sense in relation to his bets on financial products. He times alot of his trades through statistics.

I think when it comes down to it. Common sense and forward thinking (as well as a few accurate calculations) makes for good stock investment.

For speculative trading, statistics can make give someone a huge edge.

GM

Edit: FYI, when i say statistics, i mean "the numbers" in general...

 

[gm]

Raiks,

That sounds like a job Macquarie Bank is famous for.

What he just an econometrics major?

Which division was he in?


Alman,

What are your commerce majors?

GM

 

[Raiks]

Originally posted by alman
I made no mention of stupidity. Rather, its the concept of "common sense". Something that some people do not lack. I mean, how reliant are numbers?

I'll give you an example: Long Term Capital Management (LTCM)..this firm was notorious for relying on mathematical models to do their investments. Then they needed to be bailed out by the Federal Reserve and almost killed the global financial system (almost to the tune of $100 billion worth of exposure to derivatives). Also note, that LTCM had 3 Nobel Prize winners.

It just shows how a mathematical grounding may not be a good thing.

For sure, thats what I was getting at, mathematical or not, if the system works no matter whether it is maths based or common sense based, as long as it works its viable... when its not, thats when you start looking for other options.

And no, It was Macquarie, Deutche Bank outbidded them for the position, Deutsche sealed the deal when they offered him training in New York or London for 3 months and being set up with an expense free penthouse in either city for him and his girlfriend if she chose to go with him.... it was surreal. He did a Commerce/Engineering Degree and majored in Finance with a minor in econometrics... or maybe the other way around... i'm not quite sure.

But a year and a bit on and he already tossed the job in, 100 hour weeks can do that to you I guess.

 

[redslert]

econometrics/finance works out the numbers

us actuaries works out if it is worth taking the risk of using your numbers

 

[Minai]

Originally posted by redslert
econometrics/finance works out the numbers

us actuaries works out if it is worth taking the risk of using your numbers

us accountants cover your mistakes