An Investment Banker’s Journey to the World of Physicists -Seeking the Truth in Economics and Finance

I encountered many exciting opportunities to learn, grow intellectually, and teach during my educational, professional, and scientific journey. Life brings chances, and it is up to us to take or leave them. I took my chances, one of the fascinating ones being to embark on a scientific interdisciplinary research collaboration with physicists. My background is in economics and finance, and doing research with physicists has been fascinating from many different points of view, especially in light of being free from any ONE discipline, free to explore research possibilities to answer finance and economic questions based on a boundless horizon of possible solutions.

I worked as an investment banker after my first graduate degree before returning to academia to continue chartering new pathways to research. During my work as a hedge fund manager and a NASDAQ market maker, I had an opportunity to witness firsthand, on the trading floor, the US market collapse sparked by the demise of the Long Term Capital Management in 1998 and later the European market plunge during the tragic events of the terrorist attack on New York City on September 11, 2001, when I lived and worked on Manhattan.

Most world problems today are complex to solve with one discipline, as multidisciplinary THINKING is needed to cover various aspects of scientific inquiry. Experience is essential, translating real-world knowledge into academia even more so. I was fortunate to be in a position to build the bridge between investment banking and academia. Learning about the pioneer of Econophysics, Boston University Professor H. Eugene Stanley, was like discovering a gold mine for me. After an exciting investment banking experience in the 1990s and early 2000s, I left my investment banking job in New York City to join Professor Stanley’s research laboratory, a time I will cherish and remember as formative, enlightening, and transformative for the rest of my life.

One may ask why physicists work with economists on financial economics problems. The answer is simple: physicists are naturally curious, inquisitive, and open to new ideas. Moreover, physicists and economists share the same language, the language of mathematics. The value of the achievement in econophysics research is the results and the empirical outcome based on data obtained with solid models grounded in natural and social science theory. It is not trivial to produce interdisciplinary research, but recognizing its necessity is already prominently featured in many universities’ strategic plans, including Boston University.

Let me lay out several studies and results to give you a glimpse into the research I will discuss today. We analyze economic time series and panel data to understand their relationships and investigate whether some economic data could be informative of the behavior of others. We use a novel approach comprised of Complex Hilbert Principal Component Analysis (CHPCA), Rotational Random Shuffling (RRS), and Helmholtz-Hodge (HH) potential to unearth statistically significant co-movements and identify noteworthy economic and geopolitical events that might influence such co-movement dynamics. I will present results from four cases studied collaboratively with my international research collaborators over the last decade since 2013.