Fundamentally oriented investors tend to think that quants, like blondes, have all the fun. As ConvergEx’s Nick Colas notes - it all looks like easy money – scalping trades with lightning fast computers, front running news with preferential access to press releases, or managing leveraged portfolios with thousands of small but profitable positions – but quants face their own significant challenges. Finding common rule sets that work in a wide array of stocks is not easy, and markets adapt quickly to close opportunities that seem historically profitable – the number of potential signals is seemingly endless; and regulators are now aware of quantitative investing and, in some cases, don’t like what they see. Here are 10 reasons why why “it’s not easy being a quant.”
In summary, Colas points out, the fundamental/quant investor divide is a case of “The grass is always greener on the other side of the fence.â€
Via ConvergEx’s Nick Colas,
Have you ever had one of those dreams where you are out in public and suddenly realize you’ve forgotten to put on your pants?  Everyone is staring at you, and for a while you just wonder why. Do you look especially attractive today? No, that can’t be it; some people are laughing at you. Then you realize: no pants! General embarrassment ensues. And then, hopefully, you wake up.
I had an analog experience today while presenting at a conference entitled “Quantitative Investing with News & Sentiment Analysis†hosted by Deltix and RavenPack, two preeminent vendors in the front-page world of quant investing.  The organizers asked me to give the lead-off talk to the room of about 100 number-crunchers, the topic of which was basically “What does the rest of the investment world think about quants?â€Â  My message was as follows:
Capital markets connect investors, managements, employees, retirees and other savers – basically everyone in society – together into one economic ecosystem.  As such, markets are hugely important and their credibility is a lynchpin social issue.
Fundamental investors – I used famed Fidelity Magellan Fund manager Peter Lynch as one example – are useful spokespeople for capital markets.  They connect what goes on in asset prices, especially equities, to economic outcomes in a way people can understand. And, if they do as well as Peter Lynch did for his investors, these “Heroes†of capital markets can act to give the broad population some confidence that market-based capitalism really is a sensible way to organize the allocation of scarce resources.
The issue quant investors face is that their newer approach to capital allocation, based on technology and math and speed, hasn’t yet developed the utility of their narrative back to society as whole.  Indeed, its opaque and fragmented nature can engender suspicion from existing capital markets participants and regulators.
