Norman Y. - Rutgers MQF

New Responsibilities    Well, the markets haven’t been doing well with the war in Libya heating up and a disastrous situation in Japan. However, my own life just went on an upswing!

I just got elected as President of the Quantitative Finance Student Association for our school which has been a great honor. I think there’s a lot of room for improvement, and hopefully I will be able to implement some of the ideas I have planned.

Also, I just secured an internship for the summer! It came as somewhat of a surprise to me but I’m elated. I’ll be interning at a BB firm in Hong Kong doing equity research. I think the role fits me very well as I’ve done a lot of similar work in the past, but I’m going to have to get up to speed on SQL. Just ordered the book online so hopefully it will arrive soon. I guess my only other concern is getting used to the jetlag before work kicks off - can’t get caught snoozing on the job!

So since this all happened within such a short time frame, all of a sudden I’ve got a lot more responsibility than I have before. I think it’s good in the sense that it’s keeping me motivated to do work and hopefully I won’t fizzle out. Back to the grind.


A brief look at the situation in Libya — In terms of recent events, the on-going chaos in Libya has been causing quite a stir. Its president has resided in the position for 42 years (!!!) and not surprisingly has resorted to violence and military power to suppress the people. This has been causing quite the stir in the markets and I thought I’d just add my two cents on what kind of impact it has / is going to have.

One thing that is interesting to me is the momentum the Middle East has been on in terms of protests against the government. Even if the situation in Libya stabilizes, another incident may not be too far away. Most times, these sorts of events tend to be negative indicators for the market but most of the drop I feel is due to investor fears and mainly not following from the fundamentals. Because of this, I think volatile events like this are a good time to buy, particularly during a day where a decrease in the market is likely due to news associated with Libya.

There are certain scenarios that can play out though that may throw this for a loop. For instance, trade sanctions currently being enforced against Libya will cause spikes in prices of commodities and the situation can even worsen. This will cause downward pressure on the US economy and it is unknown when prices will go back to normal if at all even if Libya’s situation stabilizes.

Another cause for concern is how the armed forces, in particular for the US, will react to continued violence and armed resistance. By itself it may not cause much impact on the global economy but it’s possible that its influence in the Middle East may be enough to send other countries around it into chaos. So the black swan in this case is the particular set of events that have catastrophic consequences for the global economy. Personally, I wouldn’t put too much merit in this sort of idea unless the situation remains stagnant or continues to get worse over an extended period of time.

Overall, I would still say that this situation creates more investing possibilities and one should not be hesitant to participate even if the outlook may seem bad.

Job Market - My experience so far in trying to get an internship has been tumultuous to say the least. I’ve applied to numerous job postings, tapped into networks that I have, and gone to almost all career fairs and information sessions that I can. Through this process, I’ve realized that I can’t be so rigid and flexibility has proven to be a strong asset. Recently, this has manifested itself in job location itself.

Previously, I was dead set on getting a job in the US. I was born here, lived here all my life, and am used to the culture and life here in America. However, my experience in the MQF program has been a pleasant surprise. I did not go into the program expecting so many international students, international Chinese at that. Being of Chinese descent, I’ve had a fair amount of exposure to its culture afforded to me by the pleasure (and pain) of Chinese parenting, but after befriending so many of my Chinese classmates I’ve somehow gotten a taste of modern Chinese culture here in America. I guess I have to say that I don’t adamantly seek out learning about new culture and people, yet I find it very interesting when I do get the chance to experience it. Now, being with so many people from a different culture has really pushed my desire to go out and live in a different environment.

I’ve always felt that location is an important factor for determining where to work, and I’ve begun to realize I’ve placed too many limitations on this. I may not get the chance to travel around when I get older, so I should be taking every opportunity now. Going over potential places in my head, I’ve decided that it would be best if I didn’t have to completely learn a language at whatever place I would like to intern or work at. So this leaves me with a few options, two of which are appealing to me - the UK and China. I’ve had friends who are from England so I wouldn’t mind it, but the harsh weather is something I don’t think I’d like to deal with. I feel China is an attractive choice due to it being my native country and the fact that the opportunities are there now. Hong Kong would be my first choice to go because it’s a financial center in Asia, and I’ve heard good things about it from many classmates.

So despite the hardships so far in the job hunting experience, I think it presents itself with a good opportunity to travel abroad. Here’s to hoping that job conditions continue to improve.

Perspective from an online poker player

Being my first blog post, the first thing that I want to touch upon is my experience as an online poker player and the comparisons I’ve drawn to trading. I’ve had a strong prior interest in poker, and this has developed into an interest for trading and the markets in general. I should note however, that I have close to no practical experience in trading so thoughts I have on this are based on the research I’ve done. If I come off as naive then this would be the reason why.

The main thing that stands out to me is that both poker and trading are, at its core, a game. Specifically, it seems that both are games where volatility is prevalent but having the right skills can allow a player to have positive expectation in the long-term. I’ve read a few books on how trading has evolved over time, from the frenetic chaos in the pits where brokers and dealers met eye to eye to the computer screens made up of numbers and graphs, and it’s interesting to me how greatly technology has influenced the advancement of strategy in both. In both poker and trading, the old days were dominated by those who went with their gut instinct and fearlessness.

What a Badass

However, technology has significantly changed the landscape. For trading, this has resulted in faster execution times and the advent of computer-driven trading strategies as well as a way to crunch huge amounts of data. The amount of data that can be displayed in real time must be staggering compared to the old times and it makes me wonder just how profitable a trader could have been if he had access to current technology in the past.

This is what I imagine when I think of day trading

The face of poker now

Poker has been influenced in a very similar fashion. It seems that the majority of casual players still play in the traditional brick & mortar casinos, but for the enthusiasts, the action has certainly moved to online. From my own personal experience, I would say that online has accelerated the learning curve tremendously. Just to put this in perspective, playing a live hand typically means that you’ll see an average of 20-30 hands / hour. Online, this amount is typically between 70-80 hands / hour but a person can also play up to 24 tables! I typically have 8-10 tables playing at once, which would result in ~560-800 hands / hour. That’s about 30 times the volume of sitting in a casino for one hour! I would say both poker and trading require a lot of hands on experience, so playing online results in a person gaining experience at a much higher rate.

What has also had a big impact on poker is the influence of mathematical models and statistics. Most certainly strategies based on equity calculations and odds existed before poker went digital, but combining the sheer volume of hands that can be played within a short period of time with statistical software has meant that strategies can be analyzed and dissected in a much clearer manner. Not only that, but real time data of all sorts of poker-based analytics can be displayed in real time on each specific opponent which makes it significantly easier to come up with an optimal strategy versus each specific opponent. I understand that in trading, it seems something similar has happened, with more and more traders learning about mathematical concepts to aid in trading such as stochastic calculus and numerical analysis.

Keeps track of important poker statistics. Won't keep track of how many times you've gone on tilt and thrown the keyboard at the wall. Just kidding

In both cases though, a pure mathematical / statistical approach won’t do it. If that were the case, we could just have computers run all the strategies and sit back while we printed money. Definitely there’s a a very delicate balance between the models the strategies are based upon and how it pertains to the current environment. No day ever looks the same and it requires the players to always learn and evolve.

I guess the last point I’d like to leave is this evolution and its affect on competition. Once more and more people begin to learn how to implement technology and a more quantitative analytical approach to both games, profit margins will keep shrinking. Will something new show up to change all of this? Who knows, but right now it’s the best thing available.