"To be or not to be a Quant ?"

What characterizes financial markets most of all, aside from trading volume, is the abundance of information that circulates through them. Active management strategies must make efficient use of this ample information if they are to deliver on their promise. Quantitative management hinges on processing these data in a special way and adopting a distinctive attitude to them.

Being a Quant means taking an objective view of information. Thanks to the use of models, the same facts are always dealt with in the same way. Adopting this approach, based on formal decision-support tools, means accepting that the context and facts at any given time -in other words, economic and financial information - can be whittled down to a limited set of variables. It also means accepting the possibility of overlooking a genuine innovation, a new era or the latest paradigm. That said, how frequently do such novelties actually arise?

Being a Quant also means taking a realistic view of one's ability to get the most from all the available information. The explanatory power of financial forecasts is somewhat restricted, whatever the approach adopted. Accordingly, an attitude that consists in confining analysis to a handful of variables in order to forecast investment returns, paying close attention to risk management when constructing portfolios, and endeavouring to implement strategies efficiently while cutting costs is both cogent and effective.

By contrast, being a Quant means not riding roughshod over the fundamental principles of economics and finance. A model-based approach is most effective when it is underpinned by economic and financial theory. With this theoretical grounding, it is possible to make sense of the data collected on the market. The black-box syndrome, whereby a steady stream of information is fed into a computer without prior critical analysis, is not synonymous with quantitative management. On the contrary, it is a caricature of the truth, and one that has regularly proved ineffectual.

Being a Quant means not living in ivory towers, far removed from the realities of financial markets. Knowing what a model can't do is just as important as understanding the results it produces. Moreover, a sense of perspective is needed to judge whether its recommendations are relevant in a particular market context. This is an integral part of being a Quant and is doubtless one of the reasons for the success of quantitative management.

Above all, a Quant is an asset manager, constantly obliged to interpret the flow of information that moves markets upwards or downwards. This role does not depend on the quant approach but, in view of the challenges involved, it certainly warrants a painstaking attitude to the choice of tools.