# Finance or Economics degree?



## Ryano91 (25 May 2011)

G'day.

I would like to study an engineering and buisness double degree at QUT next year, however, I am stuck between choosing economics or finance as a major. Im interested in trading and am curious as to which major would be more suited to a career in this field as well as for my own personal trading and investments.

Cheers


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## opulence (25 May 2011)

Ryano91 said:


> G'day.
> 
> I would like to study an engineering and buisness double degree at QUT next year, however, I am stuck between choosing economics or finance as a major. Im interested in trading and am curious as to which major would be more suited to a career in this field as well as for my own personal trading and investments.
> 
> Cheers




I study both finance and "financial economics" at unsw.... The obvious answer is to choose finance and then choose some economics based electives such as econometrics. You should do a decent stats course as part of your engineering too though. 

Most stuff you learn at uni is bollocks anyway and they'll tout non-stop EMH. 

Do either and then do your own research. Try and read broadly both technical, fundamental, short and long term, read about money management too (seems to be the only thing everyone agrees on is important). Then make a judgement on what you think works best and run with it.


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## Unintelinvestor (29 May 2011)

Finance is probably more suitable if you wanna get into investing?


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## tothemax6 (29 May 2011)

Finance.
I personally would not waste money on the educational garbage currently referred to as 'economics'. I might buy a book or two from the masters (von Mises etc). And what would I be able to do with an economics degree? For me it seems there is obviously much more upside in terms of making money or career excitement, in getting into finance.


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## IB12 (30 May 2011)

Both majors (or minors) can be garbage depending on what you study.
It all comes down to what do YOU want to study? 
What do YOU want to do? 

Studying finance if your focus is modern portfolio theory can be garbage too.


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## skyQuake (30 May 2011)

Either. Both. Doesn't matter. Note this is coming form someone disillusioned by the University system - 60 year old theories taught by 40 year old lecturers to 20 year old students.

Meanwhile a hedge fund somewhere has just developed an algo that feeds off fund managers rebalancing portfolios.

Its _how_ you learn that matters, the method of thinking that is important. Not where the dot is on the optimal portfolio frontier


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## pixel (30 May 2011)

opulence said:


> I study both finance and "financial economics" at unsw.... The obvious answer is to choose finance and then choose some economics based electives such as econometrics. You should do a decent stats course as part of your engineering too though.
> 
> Most stuff you learn at uni is bollocks anyway and they'll tout non-stop EMH.
> 
> Do either and then do your own research. Try and read broadly both technical, fundamental, short and long term, read about money management too (seems to be the only thing everyone agrees on is important). Then make a judgement on what you think works best and run with it.



 Brilliant suggestion, opulence.
*Study "studying" and never stop studying*, is my advice to anybody. In a few days, my degree will be 40 years old - and the subject of my thesis is as irrelevant today as last year's snow. Some of the minors (Mechanics, Nuclear Physics, Operations Research) I've never had an opportunity to use in my working life; Computer Science and Business Management weren't even taught when I studied for a degree. It's the ability to study and apply myself to new subject matters, which allowed me to run projects from Laboratory Automation to Newspaper Production, from Steel Plants to Space Probe mission control. It also comes in handy in my current "career" in share trading 

PS: Yes, also what skyQuake said; ours crossed 
When I interviewd applicants for a new position, I asked as a routine question "How much of the subjects you learned at Uni do you estimate you'll need in practice?" I was looking for guesses around the 10% mark. Anything higher resulted in a "don't call us, we'll call you" reply.


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## IB12 (30 May 2011)

If you want something of practical value then study accounting.
Especially if some of your courses help you achieve your CPA/CA.

I still find that accounting subjects in university study are still relevant today. Especially understanding how the cashflow, P&L and balance sheet all link together and how cash flows through the business. 

Unfortunately accounting is a bit dry for finance and economic types. 

There are no black and white answers, do what YOU want and what you are passionate about.


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## mazzatelli (30 May 2011)

IB12 said:


> If you want something of practical value then study accounting.
> Especially if some of your courses help you achieve your CPA/CA.
> 
> I still find that accounting subjects in university study are still relevant today. Especially understanding how the cashflow, P&L and balance sheet all link together and how cash flows through the business.
> ...




I find it extremely humorous that for a person completing a business/engineering course you are suggesting accounting.

There is no practical value in a CA/CPA qualification. It's a rehash of accounting subjects completed in any bachelor. Fees for subjects and memberships are what CA/CPA's are all about.

I'd agree why skyQuake, its how you learn, but imo, if one is smart and quantitatively inclined, push yourself into math/engineering/comp sci fields. Not everything is useful - but the way these fields make you think can give an edge.

Accounting is a load of bs


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## IB12 (30 May 2011)

mazzatelli said:


> I find it extremely humorous that for a person completing a business/engineering course you are suggesting accounting.
> 
> There is no practical value in a CA/CPA qualification. It's a rehash of accounting subjects completed in any bachelor. Fees for subjects and memberships are what CA/CPA's are all about.
> 
> ...




Depends where you work and what your field is. 
If you're say going to one of the big accounting firms, then completing the CA is mandatory. So there's practical value there. 

Investment bankers who need to understand deals have to understand the accounting and where the cash is going. 

Sorry to disappoint you in that I'm not suggesting any of that quant stuff, which by the way is what caused the GFC with all those assumptions around normal distribution curves and the peddling of CDOs. 

The finance world is unlucky in the sense that physicists and engineers, who by a desire to make money, bully their way into the industry and apply their scientific methods and models which unbeknownst to them, are completely useless in a world where humans are responsible for market behavior. 

This means that nearly all the stuff you will learn in your engineering degree will be hazardous, if not completely useless to you in your financial markets career, and you'd probably have to unlearn most of it. 

_As if we did not have enough problems, banks are now more vulnerable to the Black Swan and the ludic fallacy than ever before with “scientists” among their staff taking care of exposures. The giant ﬁrm J. P. Morgan put the entire world at risk by introducing in the nineties RiskMetrics, a phony method aiming at managing people’s risks, causing the generalized use of the ludic fallacy, and bringing Dr. Johns into power in place of the skeptical Fat Tonys. (A related method called “Value-at-Risk,” which relies on the quantitative measurement of risk, has been spreading.)_
~ N Taleb, "The Black Swan"

Good luck with your choice.


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## mazzatelli (30 May 2011)

IB12 said:


> Depends where you work and what your field is.
> If you're say going to one of the big accounting firms, then completing the CA is mandatory. So there's practical value there.
> 
> Investment bankers who need to understand deals have to understand the accounting and where the cash is going.
> ...




And accounting would have picked up on that?
I completed my cadetship at a Big 4 firm in the audit division, before leaving the entire field. I haven't seen many make the transition to funds/trading side. Most wouldn't even know how to invest, and doomed to a life in back/middle office. Yeah doing GL/recs and ticking numbers together are going to put you ahead of the curve 

If you complete a finance major, there are subjects for financial statement analysis, which is more akin to IB side of things. They'd actually prefer a finance/law double majors student

Quants are already unrealistic as it is, accounting even worse.

You quote Nassim Taleb - does he not have a quantitative background? Or was it his CA/CPA that made him money during the '87 crash?


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## Dowdy (30 May 2011)

IB12 said:


> Both majors (or minors) can be garbage depending on what you study.
> It all comes down to what do YOU want to study?
> What do YOU want to do?
> 
> Studying finance if your focus is modern portfolio theory can be garbage too.





Agree 100%. Most of the so called 'economics' is just garbage. Just read "Economics in one lesson by Henry Hazlitt" (just look at my footer - it has one of his quotes)





pixel said:


> Brilliant suggestion, opulence.
> *Study "studying" and never stop studying*, is my advice to anybody. In a few days, my degree will be 40 years old - and the subject of my thesis is as irrelevant today as last year's snow. Some of the minors (Mechanics, Nuclear Physics, Operations Research) I've never had an opportunity to use in my working life; Computer Science and Business Management weren't even taught when I studied for a degree. It's the ability to study and apply myself to new subject matters, which allowed me to run projects from Laboratory Automation to Newspaper Production, from Steel Plants to Space Probe mission control. It also comes in handy in my current "career" in share trading
> 
> PS: Yes, also what skyQuake said; ours crossed
> When I interviewd applicants for a new position, I asked as a routine question "How much of the subjects you learned at Uni do you estimate you'll need in practice?" I was looking for guesses around the 10% mark. Anything higher resulted in a "don't call us, we'll call you" reply.




Aren't you contradicting yourself.  Study and never stop studying and then less then 10% is only used in a given job


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## sptrawler (30 May 2011)

There is no university like the "school of hard knocks". There was an old saying that went something like, an intelligent person can earn a lot of money, but a person with common sense can take it off them.
No matter what degree you decide to follow don't think the principles that apply there apply to the stock market.


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## tothemax6 (30 May 2011)

mazzatelli said:


> Quants are already unrealistic as it is, accounting even worse.
> You quote Nassim Taleb - does he not have a quantitative background? Or was it his CA/CPA that made him money during the '87 crash?



Medallion fund disagrees (2,478.6% cummulative return of fund over 11 years) , http://en.wikipedia.org/wiki/Medallion_Fund.
Its all very well calling certain events 'black swan', but there is always someone who sees it coming (Marc Faber I believe also foresaw the 1987 crash, as well as the 2000 crash, and the 2008 crash).


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## pixel (31 May 2011)

Dowdy said:


> Aren't you contradicting yourself.  Study and never stop studying and then less then 10% is only used in a given job



 "Study Studying" I said; that means it doesn't really matter what SUBJECT you're studying, as long as you know how to obtain the knowledge you need for the task at hand.
The 10% related to whatever it is you learned at Uni. Many students with a fresh diploma "know it all" and are disappointed to find that the theory they picked up doesn't cut it in practice.

In theory, there is no difference between theory and practice. In practice, there is.


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## mazzatelli (31 May 2011)

tothemax6 said:


> Medallion fund disagrees (2,478.6% cummulative return of fund over 11 years) , http://en.wikipedia.org/wiki/Medallion_Fund.
> Its all very well calling certain events 'black swan', but there is always someone who sees it coming (Marc Faber I believe also foresaw the 1987 crash, as well as the 2000 crash, and the 2008 crash).




Disagrees with what? That quants are unrealistic? 

On another note, it's one thing to forsee the crash, it is another to structure you're position to take advantage of it. Of course there is always a few who forsee it, but the premise behind the black swan, is the *majority* don't forsee it and don't *price* it into their risk.

CDS', in large part, were priced with close to zero percent default. It's all empirical now what happened to mortgages in the US. People like John Paulson were putting these trades on with little risk premium priced into the security.

So on that note, do you know why Taleb couldn't take advantage of of the recent crash like he did in '87 using equity options?


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