/biz/ - Business & Finance

>>463955
>tldr; why aren't economists rich if they know how markets work?

>if they know how markets work
They don't.

Not to knock on economists or anything, they're generally really fucking smart people, but all that expertise amounts to very little with how complex the stock market is.

>>463959
how are investment banks able to make profits then? what field of study gives them the advantage in understanding the markets?

>>463956
because they don't actually know how the markets work.

and investing isn't always about just having a good idea, it's also about execution and timing.

>>463967
investment banks are able to make profits due to having a tremendous amount of resources (financial capital, human resources, technology) and also they're able to dedicate more time and energy. and there is no particular field of study they just have access to more information than the average person, and the benefit of having more of the aforementioned resources.

>>463970

People like buffett started with very little.

http://en.wikipedia.org/wiki/Long-Term_Capital_Management

Economics has noting to do with real world markets and most economists have no understanding of how real world non-theoretical markets function.

>>463976
Buffet is an exception, highly educated and not the average investor. and buffet's method of investing is entirely different from what most investment banks do.

>>463955
You also have to keep in mind risk, a lot of proffecionals don't like risk so they work for a salary instead, they are too afraid to lose money so they stay out of the game

>hey guys if sports commentators are experts at sport then why don't they dominate every sport?
>hey guys if doctors are experts at medicine why aren't they all constantly living in perfect health?
>hey guys if police officers are a legal authority why are they constantly being sued?

Come on think laterally for once

>>464013

Those are horrible examples.

>>463978
Came to post this.

>>464019

They're as sound as OP's hypotheses

Because markets don't work.

>>463955
>why aren't psychologists the most successful people thanks to knowing how to manipulate others?
Well it's because the field is extremely complex and everything we have right now is just pure theory and speculation.

>>463955
Because those who can't do, teach.

>>464050
That's wrong and you know it.

>>464055
Is it wrong? or is it the truest thing, maybe ever?

>>463955
>>463956

If they're into macro economics, you've gotta study MICRO to get you'll need a shitload of capital in order to do so. Micro specific economists are better suited to stock trading but smart enough to know you can probably hope for 10% annual with risk attached. Need a lot of capital and its easier to just try to get money in a different way

>>463955
Because economics is a joke subject. It doesn't even qualify as a pseudo-science.

>>464144
If your only source of economics info is from internet forums and wikipedia I can see how you can think this, but at least try to not sound so retarded anon.

>>464050
/Thread

>>463955
This could be for several reasons but I think a main one is that this isn't what Economics is all about. Financial economics will deal with these things more, but there are several different fields for Economists now. Law and Economics, Healthcare economics, economics of crime, sports economics, etc. the list goes on.

Economics isn't just the study of the stock market or financial markets. At it's most basic level it's about satisfying unlimited wants and desires with limited resources. It's studying how these resources are distributed, and how it can be done most efficiently.

People who think "oh man you're an Economics guy, you must be making a lot of money" and etc. are pretty stupid as I don't think they have an actual idea of what Economics really is.

Yes, trying to understand financial markets is part of the field, but by no means all the field is devoted to.

Source: Econ grad student

>>463955
studying economics is a trivial pursuits, my college professors spent the majority of their lectures teaching us what economics could NOT do.

>>463994

>Confirmed for never taking upper level Econ courses

>>464190
High school econ must be tough

>>464393
all economics is just a theory, e.g a guess
it has no practical bearing on reality

tl;dr you're dumb

>>464393
>implying i would ever waste my money or time on upper level econ courses.

Have they not taught you to read yet, anon?

>>464188
>At it's most basic level it's about satisfying unlimited wants and desires with limited resources. It's studying how these resources are distributed, and how it can be done most efficiently.
Nah, at its most basic level it is about the study of production and distribution of goods and resources.

That awkward moment when all your econ profs were millionaires and taught because they enjoyed the subject.

>>463955
Economists often don't have the data needed to run their models correctly. Even when they do it is often 2 years behind the real market and only an approximation. It comes down to how big and complex the market really is, also the regular insider trading defeats any gain they would have gotten with such knowledge. It is so big and complex that key players have admitted that they don't even know what is happening any more. We don't even know how much money is in the system anymore, which in concept should never happen. Then there is the fact people are randomly stupid which can move a lot of money in ways nobody can predict.

>>464425
get a fucking job troll

>>464188
how'd you do in real analysis?

Don't a lot people with economic degrees become I-Bankers and make good money?

>>464620
thats exactly what i was wondering. i dont know how someone with a phd in economics couldnt atleast make a profit off of the stock market

>>464449

If you took an upper level Economics course, you would realize that Economists recognize and acknowledge incentive structures that cause the basic models you were introduced to in Intermediate Macro and Micro to fail within the markets they concentrate in. Market specific models which incorporate the aforementioned issues are what are covered in those classes.

>>463955
> why aren't economists rich if they know how markets work?

For the same reason the sorts of people who design rockets tend not to be astronauts, why some software developers avoid promotions to management, and why doctors aren't immortal.

Academics get off on understanding systems, not necessarily exploiting them.

>>463999
>Buffet
>earns less than your average econ professor

Yeah, nah.

>>464776
>why some software developers avoid promotions to management

oy vey, so many problems exactly because of this in my last workplace.

>>463967
investment banks are middle men; they profit by supplying access to the markets. similar to the way media profits by supplying a platform for people to discuss topics (selling access to view/participate in the conversation, so to speak).

>>464803
so this question might be beating a dead horse, but what field of study is best suited to be successful in investing? what field allows to work on wall st?
first year physics student

>>464825

Liberal Arts at an Ivy League school is the best for a job on Wall St.

>>464788
You have no idea what the fuck you are talking about. if you think that the $100,000 salary that people constantly quote is all that Buffet makes, then you should stop posting in this thread. also you completely missed the point

>>464825
there is no best field, because there are several different areas that you can go into if you work on "wall street". if you want to go into a trading or quant role, then a more quantitative field might better prepare you. if you want to do sales or marketing then your business, liberal arts, or communications major might be better suited. it all depends given that there are so many people with different backgrounds there is no surefire answer

>>464425
Yeah, there's no way of knowing wether or not trade will increase the standard of living of a society, or wether printing money will cause inflation

>>463955
>why aren't economists rich if they know how markets work?

EFFICIENT MARKET HYPOTHESIS !!!
EFFICIENT MARKET HYPOTHESIS !!!
EFFICIENT MARKET HYPOTHESIS !!!

I'm not sure if behavioral economists have a excuse of their own.

Kellogg MBA student here, most of my older professors are very wealthy.

>>464630
So.. knowing basic economics is not useful?

>>464790
Care to explain? This seems interesting.

Being an economics professor is guaranteed money, investing in stock isn't.

>predict a collapse

lel. That's like asking why meteorologists don't plan their barbecues weeks ahead because they know the day will be sunny.

>>465162

The basic theory is useful, but different markets have unique quirks that cause them to behave differently from other markets. This can be due to specific laws, asymmetric information, weird industry wide payment practices, or a variety of other options.

>>464825
a Finance major from a reputable business school.

>>464013
Honestly sports commentators should be able to coach in some respect you'd hope.

>>463955
Economists don't look at the stock market, they look at the economy dipshit. They look at resources, output, input, costs, receipts, etc.