How universities are failing finance students

One of us (Marcos Lopez de Prado) has been interviewed on the topic of educational training in the finance field by Institutional Investor. A brief synopsis of this interview is below. The full article is HERE.

How Universities Are Failing Finance Students

With investment shops fighting over mathematicians and engineers, a Guggenheim executive argues that finance degrees and departments “face irrelevancy.”

In an “Invited Editorial Comment,” in Institutional Investor, Marcos López de Prado takes higher finance education and academic research to task for operating in a vacuum outside the pragmatic world of industry. Holder of a couple of PhDs himself (financial economics and mathematical finance, both summa cum laude), López de Prado believes the discipline and its practitioners face irrelevancy without implementing major changes. In fact, asset managers are already feverishly competing with one another for ivory tower–raised mathematicians, engineers, and scholars of physics and statistics.

“The presence of financial academia is fading, something that was unthinkable 10 years ago,” writes López de Prado. “The edge is not yet another reincarnation of the capital asset pricing model,” he says. It’s in analyzing untapped data sources, such as satellite images of crops and tunnel traffic, via techniques learned outside the classroom. FinTech, big data, machine learning, and even quantum computing will render formal finance education even more irrelevant, he believes. …

“Half of the books about finance are written by authors who have not practiced what they teach,” he says in an interview. “They contain extremely elegant mathematics that describe a world that does not exist. The other half of the books are written by authors who offer explanations absent of any academic theory. They misuse mathematical tools to describe actual observations.”

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