Why do analysts on Wall Street use excel?

Why do analysts on Wall Street use excel? by John Hwang

Answer by John Hwang:

There are two questions that we need to ask here:

a) Are most analysts on Wall Street capable on coding a solution quicker in python or MatLab versus doing something on Excel?

b) Do most problems in finance require a programmatic solution?

I have a CS degree from Stanford, so when I arrived at GS in 2006, I had the same question as you. And here's what I realized.

#1. Most Wall Street analysts are not programmers.

Most of them come from non-CS backgrounds, and had limited exposure to programming classes.  Thus, there's a tremendous mental barrier for them to program a solution than using a GUI based tool like Excel.

#2. Most finance programs are "micro-data" programs that easily fit in Excel.

Unless you are at a quantitative investing fund where you need to backtest and optimize a gazillion strategies, you will probably not deal with datasets exceeding 200K rows.

Think about it. There's <10,000 tickers in the U.S. And for any given company, there's maybe 500~ indicators & metrics worth looking at.

So if your job is to create a basic revenue model for a specific industry or a basket, you  probably won't be dealing with more than 50,000 rows of data.

Not only that, all the data is clean and structured, so you don't need to do complex data munging.

Thus, you take out the needs for 1) big storage, and 2) data munging, and you remove the biggest reasons why anyone should feel compelled to program in Python versus Excel.

If you liked my writing, follow me for more in depth finance posts.

Why do analysts on Wall Street use excel?


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