Problems- From a Finance Student

I don't know why CFA is even mentioned because very few bankers have it or even care about it. The only exception is if you work asset management or research. Most of the top banks hire right out of Ivy Leagues and the CFA is normally just eye candy unless the person interviewing you just happens to have one.

There are too many people claiming to know more than they really do. A student without work experience is about the same as anybody else who watched this movie except the terms are more familiar. Top banks don’t really care what your degree is; there are investment bankers with art history degrees. There is nothing worse than training an undergrad or MBA coming in thinking they already know everything. At least a history major wouldn’t have to be told that what they learned is useless here. Majority of the bankers may still have financial degrees but that’s more due to the fact that not too many art majors would apply to banks.

Even people with work experience shouldn’t claim to know anything just because they worked insurance. There’s no correlation between the two different businesses. Citing a few scams that’s was prevalent after the housing bust isn’t really related to banking. The news covered those scams for months and all different kinds of companies were doing it so why single out just banks? Also, nobody ever describes Harvard or Wharton as “rated number 1 by WSJ”. It could be rated number 1 for getting a job as a bus driver as far as I can tell. If you’re going to claim that your school is the best than don’t be afraid to say the name of it.

A lot of MD’s at the banks are more like glorified car salesmen. They are not as knowledgeable as a car engineer or how the new hybrids work but know enough to push for a sale. Before the crisis, people were in love with the new mortgage derivatives because finally they found a way to trade it but not many people who purchased it really understood much of it. They were simply sold on the dumb down premise that people would do anything to keep a roof over their heads. Of course it also helped that real estate value hasn’t gone down for like 100 years.

My point is to just enjoy the movie. Stop going around saying well I studied this field or worked at some totally unrelated field and this is or isn’t how the banking industry works. The good managers often are the ones who would be willing to ask questions regardless if it’s answered by an analyst. The know-it-all managers are normally the ones that end up taking down their own firm.

Well, it's a movie, and the audience might not understand what's going on without some exposition. It would look kinda stupid if the top people parroted it back to their underlings who just demonstrated they understood what was going on. It's not like this is the first movie where the technique involving the "speak to me in plain english" line has been used.

Your statements are not entirely accurate. The movie was based on complicated Math Equations. Traders would not and do not know those equations. They trade in milliseconds and rely on FRACTIONS of a penny to make money. The people who make these equations are called "Quants". I've seen their resumes. I saw a guy with an M.I.T. PhD, who had worked with Nuclear Reactors and had all kinds of statistical requirements a "Quant" could meet and the firm *STILL* said he was not good enough. These guys come from a different planet, the code monkeys and I guarantee you the Paulson's, et.al of the world do not have a clue what a Quant equation looks like, much less that a "day in the life" of a Quant is.

A LOT of people in many fields with idiots for bosses are laughing at your comment. The assumption of competence is one of the biggest flaws in management theory, from the boardroom on down.

I'm not too familiar with finance but I have spent 40 years in engineering and R&D. In my experience there are three nearly universal reasons why management is technically out of the loop, 1, managers are selected for ability to focus on goals rather than means and to motivate rather than analyze, and its a rare person who excels at both, 2, management loses contact with the technical aspect of things simply by being out of practice (in my first job as a 22-year old chemist in a chemical plant, the senior management were chemical engineers who brought all their chemical engineering problems to me because they simply didn;t remember how to do calculus -- and of course now I'm in the same boat) and 3, as others have mentioned in this string, technical innovation in rapidly moving fields leaves most people stranded high on the beach after only a few years.

Try this experiment. Go into your bank and ask them how they calculate the payments on instalment loans. May I predict the outcome? They will tell you they just get it from a table. I would be surprised if anyone in your entire bank corporation knows how to do the calculation from scratch. It's all prepackaged software that they buy off the shelf. If I'm a math wonk and I find a flaw in the software, it's going to take me a half a day to bring my boss up to speed -- if I'm lucky.

To the OP (I didn't read all subesequent posts, so don't crucify me if this has been covered):

I come from a screenwriting background, and, while I agree with you that Spacey and Bettany's characters DEFINITELY would have understood the numbers, etc. I look at it this way: sure, they probably understood, but without Quinto's character repeatedly explaining the problem "to a child or a golden retriever," the audience would probably have no idea what the blazes was going on. This is kind of a throw-away writing trick. For instance, in the Princess Bride, a great line from Fezzik the Giant sounds, "Who's Guilder?" to which Vizzini responds, "It's the country across the sea! The sworn enemy of Florin!" The whole point of those interchanges is to educate the audience, rather than the characters. It's kind of obvious in my opinion, but I was happy that the screenwriter put in those "golden retriever" lines so that a shmo like me with no financial background (my wife balances the checkbook for heavens' sake) could get an idea of what was going on.

It is like that in most professions. Managing/leading requires an entirely different skill set than analysis/modeling. Cptn Kirk was probably the stupidest one on the bridge, but he was still the captain.

Oh, and if you really want to be a trader for one of those bigs, you shouldn't major in finance. You should earn a Ph.D. in theoretical mathematics from a fairly prestigious university.


If you don't get everything you want, think of the things you don't get that you don't want.

Nonsense, when John Paulson asked Jamie Dimon about CDO's at JP Morgan, the guy had no idea what he's talking about. A lot of heads at finance corporations are trained lawyers not CFA's, so they have no idea what these guys at risk management trained as physicians and mathematicians are doing day to day. They might know the definition of CDO, but not the mechanics of how they work and the extent of damage they might cause.

i think its more from a narrative point of view for the screenplay to pan out to the "non finance " guys.. For the finance guys there was always quinto's character fleshing out the details ! In fact Paul Bettany's character just took a glance at the figures for like 5 seconds and knew it was all *beep* up".. that just proves my point.. Plus I think the senior guys, they like to keep it simple as being in this trade for this long they are good at fleshing out the bones ! hope that answers your query to a certain extent !