PhD Physics Student Seeking Quant Advice

[oreliphan]

Hi All, (Especially Bankers reading this forum!)

I first want to thank twofish-quant for giving very great and sound advice throughout the forums - I have learned so much from this helpful person. I hope they can comment here as well!

I'm a PhD high energy experimental student, going to graduate anywhere between 1-2 years. I'm working on the LHC, and I know it's the last step of physics research for me.

I want to go into investment banking, and become a quant. Can you please give some advice on what I can start doing? Would it be a good idea to do an internship this summer?
What ideal things should I do so that I can have a greater edge to break into the finance industry?

I read a little about the different fields, but the things I'm looking for are interesting, challenging, and hectic work. (and lucrative pay, though I know this is something that shouldn't be admitted). I would love to work directly on Wall St.

I offer good communication skills due to working on such a large collaboration (institutes from all over the world convene for a single experiment), and C++ everyday I've been a grad student.

So, please, if you can, offer me some advice based on your own experience to get me that edge! (I know it's tough to get in, but I'll do what it takes!)

Also, do you like your job? Is it stressful, long, etc? Cons, Pros? (psst: for you, twofish-quant!)

-Oreliphan

 

[twofish-quant]

I want to go into investment banking, and become a quant. Can you please give some advice on what I can start doing?

The big thing is to learn C++. Most quant positions are glorified coding positions, and even if you don't get a heavy coding position, C++ is the standard language. If you have done much coding in your Ph.D., this is what banks are looking for, but if you haven't try to get as much as you can.

What ideal things should I do so that I can have a greater edge to break into the finance industry?

The first thing to remember is that banks are looking specifically for numerical modellers. So keep your math skills sharp.

I read a little about the different fields, but the things I'm looking for are interesting, challenging, and hectic work. (and lucrative pay, though I know this is something that shouldn't be admitted). I would love to work directly on Wall St.

One thing that is sort of refreshing about Wall Street is that you don't have to be ashamed to admit that you are doing something for the money. People will think that you are weird if you *aren't* doing something for the money.

But you have to keep the money in prespective. Salaries for Ph.D.'s all Wall Street are good, but don't expect anything totally insane. NYC is a *very* expensive city, and the money you get from Wall Street is going to be only somewhat higher than you can get at high end coding positions in other places. Typical salary for a starting Ph.D. is ($90K base + $40 bonus) whereas you can probably get a job as a C++ coder in Texas for $90K. After a few years of experience, the total salary ends up in the $200K range.

The other thing is that you are likely to feel poor, even though you are not. The weird thing is that *because* there are vast amounts of money that flow on Wall Street, you end up feeling poor. I've had bizarre conversations with people that are convinced that they are desperately poor because they make $150K, and the reason people feel that way is that they have social contact with people that make $500K+. If you live in Grand Rapids, Michigan, you aren't ever going to bump into someone that makes $1M/year, whereas in NYC there are 50 billionaires, and they make their presence known. If you go down 5th Avenue, you end up hitting entire stores that are devoted to selling things to people that make way, way, way more money than you ever well.

So, please, if you can, offer me some advice based on your own experience to get me that edge! (I know it's tough to get in, but I'll do what it takes!)

It's not difficult for a physics Ph.D. to get a job on Wall Street. I don't know of anyone with a physics Ph.D. that has tried to get a job on Wall Street that has failed to do so. It may be tough to get a particularly *type* of job, so if you want to be a bond trader, you are in for a struggle. But just like universities need massive numbers of serfs to teach undergrads, Wall Street banks need massive numbers of serfs to babysit computers. The only real difference is what Wall Street considers "serf wages" is very different than what universities do. Physicists on Wall Street generally are pretty low on the food chain. It's just that there is so much money that "low salary on Wall Street" is "high salary everywhere else."

It's important to realize that it isn't *that* tough to get in, because you will be dealing with headhunters that will make it seem that your life will be over if you don't take the job they have. If you realize that you do have some choices, then you can say no. Something that I'm very firm on is that I will not work people that I do not trust, and I will not do jobs which I don't believe to be socially useful.

Also, do you like your job? Is it stressful, long, etc? Cons, Pros? (psst: for you, twofish-quant!)

I like my job. The reason I like my job is that the work environment is pretty much exactly like graduate school. Sitting down in front of a computer. Code. Answer e-mail. Code. Get a frantic call of the phone that something broke. Put down what you were coding, and code something else. Fix the problem. Code. Code. Read some papers. Code. Attend meeting. Code. Go home. My job is extremely stressful, but it's pretty much the same sort of stress that I had while I was doing my Ph.D. dissertation, so I sort of like it if it doesn't get too far out of hand.

 

[oreliphan]

Do you find that you have time for a social (read: love, family) life? And, should I expect to work on Wall St (move to NYC) for better chances at landing a job?

If I do end up working on Wall St., is it possible to put in a few years work and then will it be easier move to a more desirable location?

I'm under the impression that there is sort of inflexibility of location.

Does prestige of your PhD University matter? (I know it can definitely help, but can it hurt to come from the lower end?)

 

[twofish-quant]

Do you find that you have time for a social (read: love, family) life?

The work hours are reasonable. Also a lot depends on the company that you work for and your supervisor. If you work for some firm in which the CEO often gives talks about the importantance of making time for family, then family is not going to be a problem. I don't think that Wall Street firms work programmers particularly hard in comparison to other industries.

I don't know of any Ph.D.'s that work killer hours. There are a lot of MBA's analysts that work killer hours, but this is a supply-demand thing.

And, should I expect to work on Wall St (move to NYC) for better chances at landing a job?

That's the big catch. Pretty much all of the jobs are in NYC / London or in a few cities in Asia. There are a *few* jobs in Chicago, San Francisco, Dallas, and maybe Houston but they are very, very few. Also one thing that I found was that companies outside of NYC just would not hire me, because they assumed that once I found out how much more NYC paid, I'd leave, and I had a few interviewers tell me this directly.

It turns out they were right for not hiring me, because I would have left.

One other irony is that there is almost no finance being done on Wall Street itself. Wall Street is where the stock exchange is, and everyone has moved to electronic trading so there is no need to be physically there, and NYSE is becoming a ghost town. Also 9/11 changed things, when banks realized that it was a bad idea to put all their operations in one place, and so banks have changed their operations so that their eggs are scattered.

Most of the big banks are in mid-town, and the hedge funds are scattered in various places with a lot of them on Long Island or Connecticut. Much of the back end operations work is happening in Jersey City.

The only thing left on Wall Street itself are high end condos.

If I do end up working on Wall St., is it possible to put in a few years work and then will it be easier move to a more desirable location?

Maybe, but this would be semi-retirement. There are a lot of hedge funds outside of NYC, and most of them are run by people that have been burnt out by NYC and want to leave. Also, if you really don't like NYC, you'd probably be better off getting a non-financial job elsewhere. The reason that you have to be realistic about money, is that Wall Street does pay high salaries, but they aren't "forget about everything else" high.

Does prestige of your PhD University matter?

Very little. It might help a little in that you can use alumni networks to find open positions and it might help with getting past a headhunter, but you get contacted for the interview, it doesn't matter at all. There are some interesting forces at work...

1) You aren't competing with people with the really high prestige Ph.D.'s and very deep social networks. People that have Harvard and MIT physics Ph.D.'s and tons of recommendations and publications, aren't looking for jobs on Wall Street, they are looking for academic positions. I've never met a physics Ph.D. for which working on Wall Street was first choice of careers. If some university offered me a job as tenured astrophysics faculty with a 30% cut in salary, I'd be gone, gone, gone.

2) The interviewers and the hiring managers are also Ph.D.'s. If you say that your research is on lattice gauge theory, your interviewers and hiring managers are going to know what that means, and they are also likely going to know the reputations of the people in the field.

School branding works on people that don't know what you've actually done. If you have two people one that says that they are working on Hodge theory and the other says that they are doing Shockman-Teller Q analysis, then I know that the second guy is talking total gibberish (since I made that up), but your average HR person will not know this, so he needs to know that one guy went to Princeton. Someone who knows mathematical physics knows when someone is talking total gibberish so it's less important that they went to Princeton.

Also this is different from MBA hiring. For MBA hiring, branding is everything since business schools are putting out MBA's by the truckload. Something to realize is that the US puts out about 1000 physics Ph.D.'s each year, while Harvard alone puts out about 900 MBA's each year.

It turns out that on Wall Street there are really few jobs for physics Ph.D.'s, but there are even fewer physics Ph.D.'s

 

[comp_math]

The big thing is to learn C++. Most quant positions are glorified coding positions, and even if you don't get a heavy coding position, C++ is the standard language. If you have done much coding in your Ph.D., this is what banks are looking for, but if you haven't try to get as much as you can.

The first thing to remember is that banks are looking specifically for numerical modellers. So keep your math skills sharp.

What about knowledge on finance, for e.g., things contained in the Hull book?

 

[twofish-quant]

What about knowledge on finance, for e.g., things contained in the Hull book?

Reading finance is useful, but the important thing to remember is that they are looking for a physics Ph.D. with maybe some knowledge of finance. If they wanted to hire a finance expert, they'd hire a finance expert, but it's important to understand *why* they are looking at physics Ph.D.'s.

If you look at Hull's book is looks like an nice intro textbook, that introduces finance in the same way that Halliday and Resnick introduces classical mechanics. The trouble with Hull's book is that about half of it is wrong or irrelevant. There are serious problems with all of the bond models for example. So you should read Hull not so much as you would an intro physics text, but rather as a review paper for an area that you are interested in. You can get the jargon and the basic concepts, but just realize that much of the book is wrong.

Now you might ask if Hull is wrong, where you can find a better textbook, and the answer is that you probably can't, because a better book hasn't been written, and Hull is probably busy himself trying to fix up the next edition. So if the equations and techniques in Hull are wrong or irrelevant, where are the right equations and techniques written down? The answer is for the most part they aren't. People are still trying to figure out lots of stuff. OK then, if there are no good texts, and no one really knows what is going on, what are you supposed to do... Hmmmmm... Sounds like a dissertation...

The thing about physics Ph.D.'s is that if they put you in a front of a computer, with instructions that are vague, confusing, and possibly wrong with textbooks and papers that may also be either irrelevant or wrong, you'll figure out what to do, because you did something similar before on your dissertation. If you put a MBA in the same position, they may or may not be to cope, because they are waiting for someone to tell them what to do, and it make be that no one knows.

Also one thing that you'll find that's cool is that a lot of the important information are things that people, or someone just knows, and hasn't been written down anywhere. You may find that yourself writing a program and the suddenly how you code an algortihm depends critically on the dates of Brazilian holidays or exchange rate restrictions on the Thai Baht, and so you have to start e-mailing people to figure out who the expert on Brazilian holidays is. You may find that that person left the company six months ago, and so you are going to have to become the local expert on Brazilian holidays.

The book I'd recommend is Fusai and Roncoroni "Implementing Models in Quantitative Finance: Methods and Cases" since thaty book gives the best example of the "flavor" of the types of problems you see in finance. Also Kuznetsov's "The Complete Guide to Capital Markets for Quantitative Professionals" is good with the standard caveat that a lot of what he has written is probably someone outdated.

 

[oreliphan]

For good measure, are there any C++ books you like?

 

[xepma]

This is some good stuff written here. Thanks a mill twofish-quant.

 

[Dolphiney]

For good measure, are there any C++ books you like?

I graduated in CS 1o years ago, I was learning Hilbert and Deitel's books on C++. But I changed my direction into fashions couple of years later. SOftware making is old and I am not interested any more

 

[oreliphan]

Twofish-quant, can you tell me a little bit about the future finance career options of a PhD physicist quant who started out on Wall St.? I'm looking at some job postings at QauntFinanceJobs.com, and there are some hedge funds in New York looking to hire Quants with a salary of $450k. Is that plausible?

Here's the link to the job posting:
http://www.quantfinancejobs.com/jobdetails.asp?dbid=&guid=&JobID=7745

Is that not the same "quant" we're talking about? What's the deal?

What's the career ladder like, basically?

 

[spb]

While we're on the subject of quantitative finance and other related jobs, can I get into that field with a PhD in computer science? MS in computer science?

EDIT: I do know that masters programs in computational finance exist (Carnegie Mellon), but how is that different than entering the field with an advanced computer science degree or a physics PhD?

 

[twofish-quant]

I'm looking at some job postings at QauntFinanceJobs.com, and there are some hedge funds in New York looking to hire Quants with a salary of $450k. Is that plausible?

It's plausible but unlikely. You can get $450K if you happen to have a few years of experience, if you are in a prime position in a hot field. But I wouldn't count on it. My guess is that with three to five years of experience, a physics Ph.D. would have a 1 in 10 chance of making $450K. On the one hand, you shouldn't count on making that much money, but on the other hand, having a 1 in 10 chance of making $450K and a 8 in 10 chance of making $180K isn't that bad.

Part of the reason I'm doing what I'm doing is that I figure that I have maybe a 1 in 50 chance of making $1 million/year sometime in my life. Now 1 in 50 isn't great odds, but I can't think of anything else that I could be doing that realistically gives me 1 in 50 of making $1 million/year.

Something that does happen is the window case effect. A recruiter is going to put their best job in the showroom window so that you walk in the store. You probably can't get the diamond necklace that they show out in front, but they might have something else for you. One thing that you have to be very, very careful about is to realize that getting rich is largely a matter of "dumb luck." If you think to yourself, I'm smart so I'll be number one and get that $450K, well it doesn't work that way.

For example, this year people doing bond products made a ton of money because you had a sharp interest rate yield curve. Next year, someone else will get the jackpot. Even if the market totally self-destructs, someone will win big. So whether you get the really big money is luck not skill.

Is that not the same "quant" we're talking about? What's the deal?

"Quant" is like "webmaster" it was a job that existed a while ago, but because the industry has grown a lot, people now tend to specialize. One curious thing is that people really don't have fixed job titles.

What's the career ladder like, basically?

Hard to say. The industry is so new that people are just making things up as they go along. One thing that people that enter the field have to think about is long term sustainability. Personally I think that I'm doing things that are wealth-creating and socially useful. There are intelligent people that disagree. This matters because since I think that I'm creating real wealth, there will be enough money to keep me in business. Now if Paul Krugman is right and we are just faking stuff, then it's all a bubble that's going to fall apart.

I think Paul Krugman is pretty smart, he might be right, but ultimately I have to make my decisions based on what I think is going on. This matters, because I look around me and figure out that with the salaries that people are making, this is sustainable. If everyone were making $2 million/year then it wouldn't be since we are just not creating that much wealth, and so everything is going to blow apart.

Also part of the reason I'm careful not to get scammed by Wall Street is that I got scammed by academia before.

 

[twofish-quant]

For good measure, are there any C++ books you like?

Books by Meyers, and Lakos are good

Skiena's The Algorithm Design Manual are also good.

Two things that you need to have basic knowledge on are STL, and some template programming.

One other thing is that the more important knowledge in writing C++ is what not to do.

 

[oreliphan]

For interested readers, here is a very interesting discussion I found by twofish-quant in these forums discussing the same topic:

https://www.physicsforums.com/showthread.php?t=354287

 

[98whbf]

It's plausible but unlikely. You can get $450K if you happen to have a few years of experience, if you are in a prime position in a hot field. But I wouldn't count on it. My guess is that with three to five years of experience, a physics Ph.D. would have a 1 in 10 chance of making $450K. On the one hand, you shouldn't count on making that much money, but on the other hand, having a 1 in 10 chance of making $450K and a 8 in 10 chance of making $180K isn't that bad.

Part of the reason I'm doing what I'm doing is that I figure that I have maybe a 1 in 50 chance of making $1 million/year sometime in my life. Now 1 in 50 isn't great odds, but I can't think of anything else that I could be doing that realistically gives me 1 in 50 of making $1 million/year.

Something that does happen is the window case effect. A recruiter is going to put their best job in the showroom window so that you walk in the store. You probably can't get the diamond necklace that they show out in front, but they might have something else for you. One thing that you have to be very, very careful about is to realize that getting rich is largely a matter of "dumb luck." If you think to yourself, I'm smart so I'll be number one and get that $450K, well it doesn't work that way.

For example, this year people doing bond products made a ton of money because you had a sharp interest rate yield curve. Next year, someone else will get the jackpot. Even if the market totally self-destructs, someone will win big. So whether you get the really big money is luck not skill.



"Quant" is like "webmaster" it was a job that existed a while ago, but because the industry has grown a lot, people now tend to specialize. One curious thing is that people really don't have fixed job titles.



Hard to say. The industry is so new that people are just making things up as they go along. One thing that people that enter the field have to think about is long term sustainability. Personally I think that I'm doing things that are wealth-creating and socially useful. There are intelligent people that disagree. This matters because since I think that I'm creating real wealth, there will be enough money to keep me in business. Now if Paul Krugman is right and we are just faking stuff, then it's all a bubble that's going to fall apart.

I think Paul Krugman is pretty smart, he might be right, but ultimately I have to make my decisions based on what I think is going on. This matters, because I look around me and figure out that with the salaries that people are making, this is sustainable. If everyone were making $2 million/year then it wouldn't be since we are just not creating that much wealth, and so everything is going to blow apart.

Also part of the reason I'm careful not to get scammed by Wall Street is that I got scammed by academia before.

How did you get scammed?

 

[twofish-quant]

How did you get scammed?

See Supplement 2 of "Education and the Supply of Physicists" An Overview: Physics Through the 1990's.

http://books.nap.edu/openbook.php?record_id=626&page=91

I'd be less annoyed at these sorts of lies if they weren't still telling them...

http://www.nsf.gov/nsb/documents/2003/nsb0369/nsb0369.pdf

Or if they had always been telling them.

http://www.usatoday.com/tech/science/2009-07-08-science-engineer-jobs_N.htm

Or that they hadn't always been telling them. If you look back to the 1960's, there has always been this mythic shortage of scientists.

What really gets me upset is

*** But Education Secretary Arne Duncan says a surplus of STEM graduates is a problem he'd like to have. ***

 

[twofish-quant]

Personally, I think it's a great thing if people study science and engineering, and I do think that in the long run having more people study science and engineering will help the economy. But please *DO NOT LIE TO ME*. And especially *DO NOT LIE TO ME TO FOR YOU OWN PERSONAL BENEFIT*. The weird thing about all of these studies is that they always end with some stirring call for more funding for universities.

What's basically happening is the moral equivalent of a Ponzi scam or Nigerian advance fee scam. Actually it's worse than a Ponzi scam. When someone sends you a Nigerian spam e-mail or sell you a bad used car, they don't claim to care about you. This ain't some guy in the alley lying to you, it's the damn National Science Foundation and the damn National Academy of Sciences.

There is this wonderful quote by Michael Nesmith.

"It's like finding your grandmother stealing your stereo. You're happy to get your stereo back, but it's sad to find out your grandmother is a thief."

 

[twofish-quant]

Also the fact that I've been lied to makes me very careful about saying anything that would turn into a lie to other people.

For example, physics Ph.D.'s on Wall Street make decent money right now, but if tomorrow I found out that there were tens of thousands of people getting their physics Ph.D. in the hopes of making tons of money on Wall Street, I'd cash out and find something else to do. So I'm *not* encouraging people to get their physics Ph.D. to make big money, and in fact if that's the reason you are getting your Ph.D. you are in the game for the wrong reasons, and you probably won't make big money either, since you have tons of people trying to "get rich quick" you've formed a market bubble that is going to pop.

 

[oreliphan]

Twofish, in your experience, what are the chances of a PhD Physicist being able to work a hedge fund? Is this the 1 in 50 chance you were mentioning earlier?

How about doing high frequency trading?

Are these qualifications tougher than what you mentioned in the previous posts about becoming a "quant"?

I did some searching around, and found out about Renaissance Technologies, which seems to hire mostly Math and Science PhDs. (Not that what they do is high frequency trading - they seem very confidential about their methods). They also seem to try and get people before they get on Wall St., so it seems like something one could apply for right out of grad school. Seems extra competitive though.

Can you tell us what your opinion is on high-frequency trading?

 

[mgb_phys]

Does Wall St still just look for physics PhDs?
In the mid-90s only physics/maths people knew this stuff, now it seems that every university in the world is offering courses on derivatives, options pricing and Black-Scholes.
The local CS dept even has a final year course on writing derivative pricing models.

So physics PhDs are good IQ/$ ratio compared to MBAs but it seems that this isn't arcane knowledge anymore.

 

[oreliphan]

now it seems that every university in the world is offering courses on derivatives, options pricing and Black-Scholes.

But in the first place, it seems like Wall St. wasn't hiring physicists based on their "knowledge" of those things (derivatives, Black-Scholes, etc...)

It's the skills, and if you can acquire the same skill set with these "year courses," then it can become competitive.

Otherwise, a PhD can give you a better edge. As twofish says, it shows you can complete something even though you're miserable, and you can do original work without any hand-holding. So, it's not about the knowledge, and my impression is that banks expect you to learn finance on the job.

 

[twofish-quant]

Twofish, in your experience, what are the chances of a PhD Physicist being able to work a hedge fund?

It changes from month to month, but pretty high. On the other hand working at a hedge fund isn't a big deal, and the odds are that if you are working at a hedge fund with a physics Ph.D., you are going to be babysitting computer programs. *Owning* a hedge fund is a big deal.

Is this the 1 in 50 chance you were mentioning earlier?

There are a lot of different ways of making money. One problem is that when people talk about Wall Street they focus on the small number of senior executives. There are a lot of nice jobs that involve working in the trenches, but most people don't know that they exist.

How about doing high frequency trading?

Lots of physicists/EE/CS people involved in that. The thing about high frequency trading (or anything else) is that you don't have a lone genius setting in a basement, you have a hedge fund with maybe a 100-300 people of which you have a few Ph.D.'s that are doing some work trying to beat down latency.

I did some searching around, and found out about Renaissance Technologies, which seems to hire mostly Math and Science PhDs. (Not that what they do is high frequency trading - they seem very confidential about their methods). They also seem to try and get people before they get on Wall St., so it seems like something one could apply for right out of grad school. Seems extra competitive though.

There are lots of different firms in the business. RenTech is one of them, and they are more secretive than the NSA. But RenTech is only one of about 1500 hedge funds in the NYC area. One thing that's weird about a lot of the hedge funds (including RenTech) is that they don't like computer programmers with financial experience, so if you want to work on for them, it helps to have never worked on Wall Street.

Can you tell us what your opinion is on high-frequency trading?

It's an example of how things change very quickly. Last year when the stock market fell apart and then came up again, you had huge amounts of volatility, and when that happens, high frequency traders make a ton of money. When things settle down there is less money to be made there. It's why you can end up chasing your tail. If you in June 2009, you happened to have done a Ph.D. in high frequency software signal processing of radio interferometery data, you win. The trouble is that if you did something else, then by the time you get skilled at high frequency data, even if it takes you only six months, the gravy train would have moved elsewhere.

 

[comp_math]

Is it true that many of the super high pay quant jobs are related to algorithmic trading, more towards computer science/networks? This seems like a very small and specialized area, i.e. hard.

 

[twofish-quant]

Is it true that many of the super high pay quant jobs are related to algorithmic trading, more towards computer science/networks?

Q1/Q2 last year, yes because algo trading was "hot" last year. It cooled down in Q4, and I don't see that field being particularly "hot" this year. It's not that the field is dead, it's just that I think this year, algo quants will be making "rather high" bonuses rather than "totally insane crazy" bonuses.

One problem (which I suppose is a good thing) is that you get a "gold rush" syndrome. Someone strikes it rich doing one thing, which means that everyone else rushes in after the gold until not much is left. If you are the first three firms to do algo, you win big. If you are the 100th "me-too" firm, you are competing against the other 99 firms that are basically doing the same thing.

This seems like a very small and specialized area, i.e. hard.

Yes, which is why you struck the jackpot if you had relevant skills last year. You still can make decent amounts of money if you have those skills this year, but just remember that the big chunks of gold got mined out last year. If you want to know where the next "big thing" is just keep reading and thinking about the news.

 

[creepypasta13]

what if one just obtained a BS in math+physics, and is now debating between a career in mechanical engineering vs a quant/actuary? would it be feasible to obtain a MS in ME, then work for a few years, and if he doesn't like the work, he can just apply and obtain quant positions? or would that be a total waste of time to get the MS ME, and just get a MFE or some MS that's related to financial mathematics? if that person got offered a full-time position in programming with his BS degrees, should he take them, or instead just apply to grad school programs ASAP?

is it typical for quants to work 60 hrs/week, and make salaries in the 150k+ range? how are the salaries different for quants who have a phD in physics vs those with a BS physics + MFE or MS in some other field?

 

[ferm]

Thank you twofish-quant for your explanations, they are very helpful. If you don't mind, I would like to ask you some personal doubts:

I am doing a PhD in theoretical physics, and when I finish I am unsure if I will go for postdoc and misery, so I was considering finance as a possible "escape".

I am not doing much programming, just numerical stuff with mathematica and matlab. I don't think I can get to learn C++ for my PhD work, but I could start learning it at some point. Does this restrict a lot my future possibilities of finding a job as a quant, or basic knowledge of the language would suffice as long as I have sufficient mathematical skills?

Another question I have is about the future of physics PhD hiring in finance. Some universities are offering quantitative finance M.Sc., so I guess it will become more and more difficult to get to work as a quant with just a PhD in particle physics. Am I right or they are still hiring?

Finally, I am doing my PhD in an European university and I am not from the US. Does that play against finding a quant job in NY?

Thank you very much!

 

[twofish-quant]

I am not doing much programming, just numerical stuff with mathematica and matlab. I don't think I can get to learn C++ for my PhD work, but I could start learning it at some point. Does this restrict a lot my future possibilities of finding a job as a quant, or basic knowledge of the language would suffice as long as I have sufficient mathematical skills?

There are three core skills, finance, mathematics, and programming. No one is outstanding at all three, and if you are outstanding at one, and decent at the others that is enough. Also the difference between no C++ and basic C++ is huge. If you can use a compiler and code an algorithm in C++ that greatly improves employability.

Also, if you are a wizard with statistical packages like R, you want to make that the thing that you are really, really, really good at.

Another question I have is about the future of physics PhD hiring in finance. Some universities are offering quantitative finance M.Sc., so I guess it will become more and more difficult to get to work as a quant with just a PhD in particle physics. Am I right or they are still hiring?

I don't think very highly of MFE degrees, because they usually train people with a specific set of skills, and those skills become obsolete very quickly. Personally, if I were going after a masters degree, I'd avoid the MFE and go after a CS, applied math, statistics, finance, or MBA degree. The reason that I think that those are better degrees is that those other degrees aren't tuned toward investment banking, so you don't have a few people competing for the same jobs.

Something that is interesting about investment banking is that the fraction of jobs in banking that require a Ph.D.'s is a tiny fraction of the total, it's just that the scale is different. There are 800,000 jobs in the securities industry in the US, and 200,000 securities jobs in the US. The fraction of these jobs in which a Ph.D. is useful is really tiny, but it's enough to provide a few hundred new jobs each year for Ph.D.'s. Something interesting is that the US graduates 100,000 MBA's each year. Harvard B-school alone puts out about 900 new MBA's each year, which is almost as many people as all physics Ph.D.'s in the US.

Finally, I am doing my PhD in an European university and I am not from the US. Does that play against finding a quant job in NY?

I don't think any cares, although you might want to look at jobs London if you don't want to move too far.

 

[creepypasta13]

I don't think very highly of MFE degrees, because they usually train people with a specific set of skills, and those skills become obsolete very quickly. Personally, if I were going after a masters degree, I'd avoid the MFE and go after a CS, applied math, statistics, finance, or MBA degree.

what about MS in engineering?

 

[ferm]

Thank you for your answers, twofish-quant, your opinions are really useful!

Just another question:

Something that I'm very firm on is that I will not work people that I do not trust, and I will not do jobs which I don't believe to be socially useful.

Could you please elaborate a little on which kind of socially useful works can be done in finance and why you think they are useful?

Thank you!

 

[gatorphys]

what about MS in engineering?

You should be able to transition over with an engineering degree, but you should really try to figure out what you actually want to do. You mentioned engineer vs quant vs actuary, all of which are completely different fields, with completely different career paths. So I would first figure out what you want to do, and then start thinking about grad schools.

 

[creepypasta13]

You should be able to transition over with an engineering degree, but you should really try to figure out what you actually want to do. You mentioned engineer vs quant vs actuary, all of which are completely different fields, with completely different career paths. So I would first figure out what you want to do, and then start thinking about grad schools.

how does one figure that out? by working in industry? i already got my BS degrees

 

[gatorphys]

how does one figure that out? by working in industry? i already got my BS degrees

Well, I guess that's the problem with choosing any career right? How do you know what you'll like or dislike before you actually work at the job? But you could start by thinking about what your interests are. Do you like engineering? Programming? Hard-core math? Analyzing risk and uncertainty (actuary)? Do you follow the markets? Keep up with the financial news? etc...

 

[twofish-quant]

Could you please elaborate a little on which kind of socially useful works can be done in finance and why you think they are useful?

It's something that you need to read yourself and make up your own mind with.

Elizabeth Warren, Simon Johnson, and Paul Krugman pretty much think that the type of work that I'm doing is useless and ought to be banned. There are also lots of things on the net that take the opposite position. Some of it is corporate propaganda, but one thing that makes thinking difficult, is that just because something is corporate propaganda, doesn't make it incorrect.

One thing that that does influence my thinking is that I'm not interested in social usefulness to make myself feel good, since if your goal is to make yourself feel not bad, then it's trivial to come up with arguments that make you feel good. The reason that I'm interested in whether what I'm doing is socially useful or not is that I'm interested in my own bottom line. My paycheck has to come from somewhere, and if it turns out that what I'm doing *isn't* generating real wealth, then I'm in the middle of a bubble, and I need to figure out how to get out ASAP.

 

[Locrian]

If you look back to the 1960's, there has always been this mythic shortage of scientists.

What really gets me upset is

*** But Education Secretary Arne Duncan says a surplus of STEM graduates is a problem he'd like to have. ***

I liked http://www.urban.org/UploadedPDF/411562_salzman_Science.pdf quite a lot. Apologies if I've posted it before, but it seemed relevant to your argument here.

 

[osmosis]

Twofish-quant's advice is excellent, and I'd like to add a few thoughts from the perspective of a trader-quant for what they are worth. There are many different roles for physicists in finance. In this sense, wall street is similar to academia. Your individual experience, career development, and pursuits are highly dependent on the specific group in which you work. Though there is mobility between firms, to a variable degree within a firm, and to a rapidly diminishing degree between niches, the initial step you take likely will determine the course of you career. So make it carefully.

There are several types of firms and roles for quants. Large firms such as the major investment banks are good starting points. They have the pluses and minuses of a postdoc at a top tier university. They look great on the resume and have many exciting areas to work in and high quality people to learn from, but you probably won't end up there permanently. Many people start at these firms on the "sell-side", learn a lot, and then move to some sort of "buy-side" firm -- either the prop branch of an IB or a hedge fund. Hedge funds can be great places to work, though I tend not to recommend them as a first job. Often the starting compensation is higher, and the environment can be cozier for a quiet academic. Generally, your boss is your entire world there -- so choose carefully if you follow this route. Also, they have traditionally been considered career destinations rather than entry points. Be mindful of whether the hedge fund is large and well known. Only a few of the biggest, best will help your resume.

Some common roles for physicists are listed below. Bear in mind that preparation is difficult without knowing your ultimate path. Programming experience in C++ and/or Java is important, as is knowledge of at least one scripting language (Python, Perl, etc). Knowing your way around a *nix environment can't hurt either. Be careful how you portray yourself, however. Unless you want to become a programmer, avoid pegging yourself that way.

(1) Developer/Programmer: If you enjoy programming, this can be a great route. Large institutions can be challenging for the starting physicist, and long term career growth tends to be along the managerial route. My personal opinion is that small firms are much better in this regard, even if the risks are higher, because you probably don't really know what you want to do. Despite copious claims to the contrary, my observation has been that it is very hard to move from I.T. or other purely programming roles into research or trading positions. If you are targetting such roles, expect to be grilled hard. Re-reading Stroustrup's book on C++ isn't a bad idea. Some additional topics people tend to ask about: STL, Boost, Template Metaprogramming, various simple containers and algorithms.

(2) Statistical Arbitrage: If you want to play with statistics and write programs to beat the markets this is a good area. It combines lots of programming with statistical inference and computer theory. This can be an excellent field for an experimental particle physicist such as yourself. The data issues and statistical analysis are quite similar. If you're lucky, a role in statistical arbitrage can combine research and trading.

(3) Options theory/interest rate modeling (MBS, etc): This uses path integrals, Monte carlo analysis, etc to integrate over paths. There are elements of stochastic analysis, etc, as well. If you like heavy duty math and aren't too worried about statistical validity, this is a very interesting field.

I would suggest that you not apply through HR (firmwide or I.T.) at most large firms. As in academia, you are much better off contacting a specific group that is of interest. Ask for an informational interview with the head of the group. If you make a good impression, they either will consider you for their group or pass you along to colleagues. Despite the apparent competition in this job market, there is a matching inefficiency and good candidates are scarce. Almost all my hires have been referred to me.

My best suggestion is that you allocate a few months to shamelessly networking, determine the specific opportunities available to you and whether they are of interest, and make a decision by a fixed date. Assume that you will remain in your first job for at least 3 years and ignore any promises about your career path. It's great if they transpire, but things change quickly on wall street and you can't count on them. Also, don't worry about the money once you start. The first few years are for learning and building a reputation; think of them as a postdoc. All of the quants I have know who stuck it out for 8+ years were happy financially (though as twofish-quant points out, it is relative). The one thing you cannot afford to have on Wall Street is an ego. If you compare yourself to the next guy, then you will always be unhappy. The worst career blunders I have seen have arisen from that sort of thinking. Otherwise, the $$$ can be quite nice.

On the practical points:

Hours: This depends on your goal. If you want to take the fast track (or have a good shot at it), you will have to work very long hours. This should be fun, though. If not, the slow track is fine. You will do well financially and can find the balance you desire. If you can afford to, I would suggest committing yourself 100% the first few years and then things should ease up a bit (and you'll have a sense of what you want).

Social life: Same as anywhere. Others are in the same boat, and the city abounds with ways to accommodate young people with money who want to meet. Starting a family can be rough if both of you are working. After a couple of years, when you know your way around the city, you would have an easier time. I've known many people who've done this and are quite happy with their lives.

Location: NY, London, Tokyo. There are some hedge funds in Chicago, Greenwich/Stamford, and California, but most likely you will spend your career in one of those 3 cities. There are worse fates as these things go.

Money: You will be poor the first year. My standard of living during my first year on Wall street was lower than as a grad student. After a year or two most people seem to do ok. Bear in mind that pay can be high on wall street, but there is no job stability. That's the tradeoff. This is something to consider if you one day wish to raise a family.

Internship: This can help, and may give you a sense of whether a firm, group, or field will work for you. If you are well received, there is a chance they may try to buy you out of finishing grad school. Approach this as you would a job -- target individual groups if you can.

Pros: Money. Can be challenging and exciting. There is a satisfaction to being in the middle of the action.

Cons: It's not physics.

I hope this helps. Best of luck.

Cheers,
Osmosis