Risk Latte - Greeks and the Art of BS

Greeks and the Art of BS

Rahul Bhattacharya
Feb 22,2006

Recently, I sat down with some of the super geniuses in this Company (the so called Team Latte) and asked them five simple questions. The answers that I got were horrifying, to say the least. I cannot imagine any sensible company hiring these guys to advise them or train them or do whatever they normally ask them to do.

Here are the five absolutely simple questions, which any banker can answer even in his sleep.

1. If Einstein were alive today he would be:
(a) a hedge fund manager himself;
(b) working as a quant for a hedge fund manager;
(c) writing books on financial engineering;
(d) kicking himself in the ass for not choosing Finance as the love of his life;

Team Latte's Answer : "We are a bit unclear about the answer to the above question".

2. A financial engineer is a:
(a) a mathematician with a passion for finance;
(b) an engineer with a modest understanding of finance;
(c) a financial analyst with a marginal knowledge of mathematics;
(d) a Physicist who understands finance better than physics;

Team Latte's Answer : "This is a tough one and all the answers seem more or less correct".

3. A freshly minted Ph.D. in Particle Physics who had applied for an investment banking job on Wall Street was asked by the interviewer: "What special skills can you bring to the trading desk of our bank?" The guy answered:
(a) I can do post-doctoral work while watching you guys trade stocks and bonds;
(b) In my spare time, I can assist the Vice President in charge of the mail-room in your bank who was my Ph.D. supervisor in the university;
(c) If you guys lose a lot of money you can blame it on me and I can in turn blame it on
my doctorate degree;
(d) I can make you guys much better at the art of BS;

Team Latte Answer : "This is a real tough one and no one in our team knows what the right answer is but maybe, just maybe, the choice (d) looks correct".

4. The greatest contribution of the ancient Greeks to the world civilization is:
(a) Aristotle;
(b) Helen of Troy;
(c) Olympic games;
(d) Beta and Gamma;

Team Latte's Answer : "This one is a sitter; Even though no one in our team has any knowledge or understanding of Greek (or even world) history we can confidently answer: (d)".

5. BS is:
(a) an art that you have to learn over many years;
(b) is a science which borrows heavily from Physics, mathematics,behavioural finance, psychology, anthropology, portfolio theory and just about everything else;
(c) is heavily used by bankers these days;
(d) is a great way to explain something that is complex, esoteric and less understood by ordinary mortals;

(By the way let me remind you that BS is an acronym for Black-Scholes)

Team Latte's Answer : (Now these guys started beaming and smiles all around!) Unanimously they answered: "Of course option (a) is the right answer"

© Rahul Bhattacharya
This column is written by Rahul Bhattacharya and reflects his own views about life and business. It does not necessarily reflect the views and opinions of other members of Risk Latte Americas Inc., Hong Kong (“the Company”) and the Company accepts no responsibility for any factual errors contained in the column and strongly advises readers not to pay much attention to it.

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