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Depends really, if your talking about the markets then practitioners hands down. Actually, if you think about it overall I think practitioners really have this.
Read an article yesterday about economists (of which the majority in the article were professors ) and their track records and well, the more famous they are, like Roubini, etc. they're accuracy in making predictions get worse.
There are outliers to this of course, like Jim Rogers teaching at... Where did he teach? Anyway, come to think of it, he was a practitioner before he was a professor so it doesn't really count.
Besides, if professors knew more about finance than practitioners I highly doubt they'd stay professors any long.
I'm just curious, what exactly do you mean by overall?
What article was that? Sounds interesting, so I want to check it out.
Thought it through and ANT and happy do have a point, so I redact that.
Here you go man, took it a bit out of context though, what they're talking about are famous economists who predicted extreme situations and how bad their track records really are.
Depends what you mean by "knows more"?
Professor: The history, theories and principles Practitioners: How to make money
Fixed that for you
Those who can, do. Those who can't, teach.
..Those who can't teach, teach gym.
And my HS gym teacher in an made around 120k (and still does). Good thing Illinois just raised its corporate tax rate.
Exactly.
Words that stick in my mind, my asshole finance professor the first day of class "In case any of you think I'm here because I (making quotes with his hands) couldn't make it on Wall Street, I began my career in [insert absurdly stupid and not banking/trading job at a finance-related firm]"
If they could, they would. No one that has any innate ability or risk appetite to go into banking/trading goes into academia.
This is one of the stupidest and most self-serving comments I have ever seen. I don't think you have any experience at all with academia if that is what you believe. I can assure you that empirically, the very smartest (top 1% or less) students from Harvard and MIT go into academia (though usually in math, physics or CS, not finance), and that getting a job in academia is much harder than on wall street. Go to the securities division of your bank and ask around, you'll find that many people there, especially quants, are there because they could not get a job in academia. There was a thread on WSO a while ago noting that getting a job in academia at a top 25 place is harder than getting into D.E. Shaw. That is definitely accurate.
Have you also failed to notice that all the derivatives pricing models your firm uses (Black-Scholes, Cox-Ross-Rubinstein, etc) were all invented by academics that you think are so stupid? How about all the financial firms run that are run by/primarily hire academics? Just useless firms like Renaissance Technologies, D.E. Shaw, AQR, and Two Sigma come to mind.
george soros, warren buffett, marty whitman
...professors and students go see them talk/present/etc, not the other way around.
Agreed with Cornelius.
There are a lot of different professors. Do remember that academic theory eventually makes it way into the "real" world.Professors don't want to teach, they do it begrudgingly only to satisfy the department head. They want to do research, first and foremost.
We all love to jerk off guy in the industry, but they have a shitty track record also. I wouldn't try and compare academics to investment banking either. Bankers make money, but it isn't because they "know" the market. They just sell shit.
My fixed income teacher was a trader for Goldman for many years. Some people just get sick of the hours and want a normal life. He consults for a lot of firms and teaches on the side. I doubt he is hurting for cash.
True enough ANT, but I think the point is that the best teachers are not pure academics. They were actually practitioners at some point or another.
Prof. Aswath Damodaran > Buffett > Gross & El Erian > All other profs. > Most bankers >> Bernanke > A janitor > a prostitute >> Alan Greenspan
You guys are bafflingly silly. Many of the 'top' practitioners are at the top out of sheer luck/randomness and even idiocy. If you think Jim Rogers is so smart, maybe you should read some of his baffling statements about options.
Just because somebody is successful doesn't mean they know best or know at all. The heads of many fixed-income groups pre-2008 were considered wizard practitioners until they blew out and lost exponentially more than they ever made or ever could make in a lifetime of 'intelligent' trading because of doing incredibly dumb shit, that just so happened to not blow up in their faces in the 2 preceding decades.
In fixed income, practitioners are ahead of academics. Honest academics actually accept that fact.
I think people are basing this off of their UG finance 101 experiences.
I think people also need to realize that a lot of times these two groups can be one and the same. Professors work as consultants to large banks/corps while some professionals teach courses at a variety of schools.
What about the professors that went into finance ;)
And I totally agree happy, its just that when I read "professors" from econ's OP and having the article fresh in mind I jumped into it. My bad. Either way though, I think there is some connectivity between the two and I thought it was relevant to the OP, however slight it may be.
I agree and I actually think there might be more to the whole 'those who can't do, teach' sentiment than most people are willing to admit. Sure there are plenty that don't want to so they teach but even still, for whatever reason, someone who has the stats and ability that it takes to get a PhD in finance would probably, if not certainly, have the option of working in industry at some point.
"Economics is extremely useful as a form of employment for economists." - John Kenneth Galbraith
Jim Rogers only taught at Columbia so he could have access to the squash courts
"I don't buy options. Buying options is another way to go to the poorhouse. Someone did a study for the SEC and discovered that 90 percent of all options expire as losses. Well, I figured out that is 90 percent of all long option positions lost money, that meant that 90 percent of all short options make money. If I want to use options to be bearish, I sell calls."
-Jim Rogers
Next time somebody cites intelligence/wit/creativity/savvy as the reason some of these guys having been greatly successful, just take a minute to read that quote again and realize the truth.
Question is obviously too vague to do anything but stir up quarrel, but I'll emphasize a few points: 1) The statement "those who cant do, teach" really applies to middle/high school teachers. Many of you probably don't realize just how selective academia is, even in finance (which is a relatively bullshit subject). I once went to a PhD info session to accompany a buddy at a top 5 or so program. I wasn't interested at all, but went out of curiosity and actually thought I'd be a competitive candidate....not for long! The dean was making a speech in an auditorium of about 200 people. He began by saying that out of the people present, perhaps two will be admitted, and one will enroll. Taking into account the high self-selection, that statement made an impression on me. He then proceeded to pull stats basically saying that unless you have 3.8+ in a quantitative subject (finance undergrad doesn't cut it, btw) don't bother applying. The most common/mode GRE quant score is 800. I bet not a single person who posted so far can get an 800. And the REAL hurdle is getting a professor dig after graduating, it's insanely competitive even at mediocre colleges.
2) Anthony made a good point that a professors job is not teaching, it is research. Teaching, while enjoyable for some, a burden for most. Reminded me of the movie beautiful mind -- you think John Nash wanted to become an academic to teach stupid college kids Micro 301? I had a Derivatives/Options class a while back, where professor was PAINFULLY slow. The guy would dwell on the most basic concepts forever, repeating himself over and over. I thought he must have been an idiot buried in theory to be thinking that shit is hard/important. I then found out he was hired by a prominent hedge fund (he's under non-disclosure agreement so couldn't even say where) a few years ago to lead a stat. arb desk. He did really well but went back to university for the "intellectual challenge"...and no the fund didn't blow up/he wasn't fired.
This is all just to say that if you think academics can't get a job on wall street, you are terribly wrong. Of course, there are always exceptions...
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