Editor's note: New York University recently launched its MBA/MS in Mathematics in Finance. Designed for the aspiring "super quant manager," the dual-degree program is offered through a partnership of the NYU Stern School of Business and the NYU Courant Institute of Mathematical Sciences.
Gregg Greenberg recently met with three of the architects of this joint program: NYU Stern Professor of Finance and Nobel Prize winner Robert Engle, NYU Courant Clinical Associate Professor of Mathematics Petter Kolm and NYU Stern Dean Thomas F. Cooley. The following is a transcript of that meeting.
Why is now the time to create a dual degree to create a "super quant?"
Professor Robert Engel:
The demand for
quantitative skills on Wall Street and at
investment banks and
hedge funds all over the world has really never been higher. But there's always a question: Who is going to manage these quants? Who is going to be the person that steps above and can take the broad economic viewpoint as to where "rocket science" belongs and where it doesn't belong. And I think that's exactly what we're trying to train.
Where is the demand coming from? Is it coming from Wall Street or is it coming from the students themselves, who want to put themselves in a better position to get that job at a hedge fund or at a place like
Professor Petter Kolm:
I think it's a little bit of both. There's obviously tremendous demand today for people with quantitative talent, but also people who can strike a balance with managerial skills. So those are the demands from Wall Street, but I think that also students themselves want to present themselves
to the professional investment industry with an extra edge.
What are your demands from the students who are applying? What are you looking for in an applicant who wants to become a super quant?
I think first and foremost, very strong mathematical skills -- a strong quantitative background. But for a program like this, it also needs to be a person who is interested in taking a leadership role. They need to be able to communicate well to other people.
You have a very strong alumni networking program, so what are the alumni saying about this particular program? What's the reception been on Wall Street?
Well, we have alums from, of course, both sides. We have lots of alums from the MBA program and lots of alums from the math-finance program. And they both, I think, feel like this is a very exciting extension -- that you can do both
of these things.
I'd like to add actually to what Petter was saying. After I teach my
volatility class at Stern, which is a very popular class -- somewhat technical -- I get all these students coming to me and saying, "What's the next course in this direction? How do I get more quantitative stuff?" Because the MBA program focuses more on general skills and not so much quantitative skills and so now this
the program is a natural blend.
Do you think the focus on quantitative studies blinds people to a certain respect to some of the
qualitative things that happen on Wall Street? For example, the case of
Long-Term Capital Management
: A lot of things can't be solved on that Excel spreadsheet.
You know, you can say that about Long-Term Capital Management, but we see this every day in the newspapers now. We see that a lot of the turmoil in the financial markets today
actually related to
derivatives products, which may not be well enough understood by the economists involved and the people who are sort of looking at the markets as a whole.
So these products are being managed by quants who could use these additional skills.
So people need to understand the theory as well as the mathematics.
It's crucial today. Maybe twenty years ago when Wall Street started hiring the first physics PhDs, it was the pure quant skills that they were looking for, but today we need something more, you need an extra edge.
Are you getting a lot of foreign students coming in saying, "I think this is the type of degree that I really want to take over Wall Street with"?
If you look at my roster of students in my volatility class, they are
from all over the world -- every nationality.
My student roster is a full list of international names. We don't know, of course, who is going to exactly be in this program because this is the beginning. We're very excited about the start of it, but we don't know who the students will actually be yet.
Greenberg speaks with Thomas F. Cooley, the Dean of the NYU Stern School of Business:
Mixing finance with math, do you think this trend is here to stay?
Dean Thomas Cooley:
I think it's definitely here to stay. Increasingly, the world of hedge funds and complex derivatives, and other complex, structured financial vehicles require this kind of in-depth, quantitative, mathematical knowledge just to understand what is going on.
There's a strong link between NYU's alumni and the programs that go on at Stern, so what are your alumni saying about this dual program?
Because of our location, so close to Wall Street, and the "financial capital of the world" if you like, we have a lot of alumni in the field of finance and a lot of very important people who've come through our programs who have gone to the world of investment banking or hedge funds or investment management, and they think this is a magnificent program because increasingly, the kinds of people they're looking to hire have much, much deeper quantitative skills.
Do you expect other business schools to start rolling out programs like this? Are you going to be a trendsetter?
We're definitely a trendsetter, because what we're doing that's different from a lot of business schools is combining the general management education with the possibility of a lot of depth in the field of finance with the kind of mathematical skills that Courant brings to us.
A lot of schools have created what they call M.S. degrees in quantitative finance. So
these programs are very narrowly defined master of science degrees -- somewhat like what Courant was doing, but to my knowledge, we're the trendsetter in terms of combining the mathematical training with the general management training.
With number of quant funds blowing up on Wall Street, what do you think the view is going to be from Main Street about NYU trying to develop a super quant?
I would hope that it gives the individual investor some confidence to know that the people that are designing these financial instruments are extremely well-trained, not just in the purely quantitative aspects of it but also in the broader economic and general management aspects of it.
I think there
been a lot of concern precisely because people don't understand the investment vehicles that are being created. But I would hope that it would give
individual investors some comfort to know that they are being created by some really well-trained students.
To learn more about this program, visit the NYU Stern and NYU Courant Web sites.
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high-net worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.