SERVING THE QUANTITATIVE FINANCE COMMUNITY

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twofish
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September 20th, 2008, 2:49 pm

QuoteOriginally posted by: albertmillsSo what's the point of getting a PhD if you know you're not good enough to compete for one of those rare research jobs anyway, and will have to do something else, like say financial engineering! This may be a shocking idea but some of us did the Ph.D. out of the love of knowledge and curiosity about how the universe works, and not for any direct career related reason. (And it turns out that love of knowledge and curiosity about how the universe works turns out to be *VERY* useful in surviving the markets.)
 
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StatGuy
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September 20th, 2008, 3:05 pm

Quote This may be a shocking idea but some of us did the Ph.D. out of the love of knowledge and curiosity about how the universe works, and not for any direct career related reason. There seems to be a shift in mentality of some here. I want to become a quant so let me do a PhD rather than I love what I do and want to know more about this area. Research degrees shouldn't be done for purely career reasons as that is not what they were originally designed for. Also spending 4/5 years on research is a long time for just wanting a quant role at the end.SG
Last edited by StatGuy on September 19th, 2008, 10:00 pm, edited 1 time in total.
 
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Paul
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September 20th, 2008, 3:14 pm

QuoteOriginally posted by: StatGuyThere seems to be a shift in mentality of some here. I want to become a quant so let me do a PhD rather than I love what I do and want to know more about this area.People have been speaking like this for years. But I agree with you and twofish about why you should do a PhD, for the love of the subject not career.P
 
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legacy
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September 20th, 2008, 3:16 pm

QuoteOriginally posted by: twofishQuoteOriginally posted by: ppauperIt's not a fact at all:take a look at the berkeley (haas) mfe:most of the people taking it have already done a PhD (in a different field obviously) and are taking an mfe to switch to quantingTwo things that always concerned me:1) I never understood completely who was hiring MFE's even in the good times. 2) In every single case that I've seen where a Ph.D.+MFE came in for an interview and was hired, they were hired for the Ph.D. and the MFE added nothing to the resume. They could have applied a year early and $40K+ richer and still gotten the job.This isn't to say that someone wasn't doing those things. It's to say that this wasn't happening in our neck of the woods.Well, IMHO:1. Those firms which need people who has enough quantitative knowledge to sell/trade/structure the derivatives products, but don't require them to be a modeler. 2. I've seen many hardcore science PhD's who can't land a job without 'strong' understanding in finance and economics. I also see much fewer PhD's in derivatives sales or strategy.
 
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Paul
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September 20th, 2008, 3:39 pm

There are many unscrupulous universities who will take money off naive 22-year olds in return for a qualification in an abstract subject that does not actually make them the valuable employees-to-be that they are led to believe. Masters degrees are pure scams more often than not. Even in the best years the supply of these outweighed the demand. Finance PhDs, as discussed here many times, are for people who want to become finance professors and so beget more finance PhDs. And you can't say I didn't warn you about all of this. The next few years will sort the wheat from the chaff, not just in banking but in education as well. There will be a flight to quality I expect. (On that topic, the number of people applying for the CQF starting in January is again currently at a record level. A large number of people taking the CQF use it to enter this field, but the majority are already employed by banks and funds, and sponsored by them.)P
 
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DominicConnor
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September 20th, 2008, 3:58 pm

I think it is worth pointing out that education of any kind, be it MFE, MSc or CQF is not necessarily a mechanism to move forward.Education is also a defensive move for when things get tough, either because the market has gone tits up, or because your own personal path is headed down hill. That's part of the reason that the last CQF information evening was full to the capacity, and I find it interesting that as far as I can tell the ratio of people who register for the events relative to those who actually turn up has increased.Also, there is an evolutionary aspect to all this (apologies to any Republicans reading this).Evolution is not survival of the fittest. It is the survival of those that fit best.I'd probably lose a fight with a T.Rex, or a Sabre Tooth Tiger, both are extinct. The lion may be the king of beasts, but my species has nearly destroyed him, more or less by accident.Flexibility and the ability to work with the possibility set is what is needed in this market.As are soft skills...From next month alumni of the CQF will be treated to my thoughts on how to deal with people.From several sources I have learned that "soft skills" is the thing that most quants cite when asked what they feel they lack.
 
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Cuchulainn
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September 20th, 2008, 6:02 pm

QuoteFrom next month alumni of the CQF will be treated to my thoughts on how to deal with people.And TJ?
Last edited by Cuchulainn on September 19th, 2008, 10:00 pm, edited 1 time in total.
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twofish
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September 20th, 2008, 8:07 pm

QuoteOriginally posted by: legacy1. Those firms which need people who has enough quantitative knowledge to sell/trade/structure the derivatives products, but don't require them to be a modeler.True, the trouble is that those jobs often aren't what people have in mind when they say "I want to be a quant."Quote2. I've seen many hardcore science PhD's who can't land a job without 'strong' understanding in finance and economics. I also see much fewer PhD's in derivatives sales or strategy.My own experience was that when people talk about a hard science Ph.D. with a strong understanding in finance and economics, they really mean "very basic" knowledge in finance and economics. Being able to understand greeks are and what duration and convexity and the ability to do some inituitive calculations with those helps a huge amount.The other thing is what sort of Ph.D.'s were in demand before things fell apart. The two types of Ph.D.'s that I saw getting hired were people with extensive numeric experience handling algorithmic coding or people with extensive statistical experience dealing with data. The demand for your stereotypical "pure quant" (i.e. a string theorist that couldn't code) was actually pretty weak before the blowup because the demand for creating new "platonic models" wasn't there and so the demand was with people that could either implement an algorithm in C++ or people that could process large amounts of data.But that was six months ago. The cool thing is that no one has any idea right now what the global economic system is going to look like in 2009 or 2010, or what jobs or skills are going to be in demand. Personally, I find this situation extremely exciting and it was much of the reason that I got into finance. The notion is that in one week, everything you thought you knew may or may not be totally obsolete and useless and that you'll have to learn everything all over from the ground up is precisely what I signed up for.
 
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twofish
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September 20th, 2008, 8:16 pm

QuoteOriginally posted by: StatGuyAlso spending 4/5 years on research is a long time for just wanting a quant role at the end.Especially since you probably won't get it. The thing about markets is that you have a financial crisis about once every six or seven years which changes the rules of the game, so it's almost certain that whatever economic and market assumptions you had going in, will be invalid by the time you get the degree.
 
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HyperGeometric
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September 20th, 2008, 8:21 pm

Some veteran mathematicians at top academic institutions who turned to finance a little over a decade ago always say that the best PhD candidates always go to the industry. Everytime I've asked them (professors) why they don't go to the industry themselves, there's generally no answer - I could be wrong but I get the feeling that they want their 'top' pets to go to the industry and get them consulting contracts; please tell me if there's another reason? Many top PhDs say that academia is too slow for them so that sounds like a valid reason to move out of it. It's also true that despite being great PhD students, most of them correctly believe that getting a top tenure track is nearly impossible, be it economics, finance, math, stats etc and they would rather be at a fund than a second or third tier school. We've had numerous discussions on this board about how most MFEs are a scam. Paul correctly mentions that most of the Master programs are (unless you do an academic-oriented masters to prepare for PhD). I think people who get top 5 MBA or even Princeton, Berkeley MF would not regret the decision 10 years down the road as they might be paying for the experience, alumni network and contacts they build so NPV might be positive - doesn't mean I'm deviating from my original post....drop out if you can. Finally, it's been correctly stated again and again that PhD should be done only if you have a passion for research.... its not uncommon to see candidates dropping out after a year or two into PhD for various reasons and even more common to see many looking at industry after 5 years of PhD for reasons mentioned above. Why waste your time then.
 
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legacy
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September 20th, 2008, 8:29 pm

QuoteOriginally posted by: twofishQuoteOriginally posted by: legacy1. Those firms which need people who has enough quantitative knowledge to sell/trade/structure the derivatives products, but don't require them to be a modeler.True, the trouble is that those jobs often aren't what people have in mind when they say "I want to be a quant.".I'm actually not sure if most people applying to MFE programs really want 'to be a quant'. Many MFE's that I have met explicitly told me that they don't want to be a quant, just use the program to switch into financial industry given their quantitative background.
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StatGuy
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September 20th, 2008, 9:13 pm

Quote I'm actually not sure if most people applying to MFE programs really want 'to be a quant'. Many MFE's that I have met explicitly told me that they don't want to be a quant, just use the program to switch into financial industry given their quantitative background. If this is the case why don't they enroll for a Masters in Finance, which will teach them about the broader aspects of finance rather than just the quant side and be more profitable for them.SG
Last edited by StatGuy on September 19th, 2008, 10:00 pm, edited 1 time in total.
 
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stali
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September 20th, 2008, 10:09 pm

Quote Some veteran mathematicians at top academic institutions who turned to finance a little over a decade ago always say that the best PhD candidates always go to the industry. I would disagree (based on what I have seen in my school and otherwise). Getting a job (post PhD) is way easier in industry than academia. Only 1 in 10 PhDs (from a top 10 school) will get a chance to be an Asst. Professor. Others have to find something else mostly in the Industry. Some even go as far as doing an MFE after their doctorate.I think given a chance most PhDs would like to stay in academia. The problem is that good academic jobs are very difficult to get (you have to be from a top school, must have good publications, soft skills etc. etc.). Plus you have to slog 4-6 years writing proposals, getting external $$$ before you are eligible for tenure.Trust me there are few places better than being tenured at a good school The only catch is that you probably would never be a multimillionaire. Now as with everything else there are exceptions.
 
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Paul
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September 20th, 2008, 10:23 pm

SG,By definition Masters programs have to be difficult otherwise they can't be Masters. Finance is a fascinating mix of business, maths, law, psychology, commonsense, etc. It's hard to teach all of that, each subject being to just the right level. So there tends to be specialization. As far as the maths is concerned the right level is nowhere near the stupidly stratospheric heights that Masters in Financial Engineering reach (although many people wish it were), nor is it the dumb level of an MBA, say. That means it can't be a university course on its own. But ideally to work in this field you do need to be comfortable with probability theory, calculus, linear algebra, etc...i.e. to be some form of scientist, but can you teach business, law and psychology to a scientist? To some yes, but not generally I fear. (I don't think I explained all of that as well as I would have liked, sorry!)What about the "multiple choice qualifications" that you get now in risk management?! Is there anything more ridiculous and dangerous? Not to mention having to study ethics! If you haven't figured out your own personal moral code by the age of six then I'm not going to want to work with you! All that ethics courses are designed for is to show people which naughty things they can legally get away with. I feel very angry about the state of education in finance and risk management, at all levels.P
 
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KackToodles
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September 20th, 2008, 11:32 pm

QuoteOriginally posted by: staliOnly 1 in 10 PhDs (from a top 10 school) will get a chance to be an Asst. Professor. Others have to find something else mostly in the Industry. The accuracy of this statement depends on which department your talking about. In the pure math department or in the string theory or astrophysics dept, what you say is true ... those guys are "true believers", sort of like monks. However, in the finance or management department, academic employment for anybody who does an appropriate thesis is essentailly 100%. In fact, it is well known that hundreds of finance and accounting positions in academia go unfilled because the best phds are lost to industry. Also, remember that many phds who "cannot" get academic positions cannot do so only because they purposely chose a thesis topic that is practical and marketable to banks; that is, they never fully intended to even try for an academic career.QuoteSome even go as far as doing an MFE after their doctorate. this proves that good industry jobs are hard to get -- phd have to go for additional training to qualify.Quote I think given a chance most PhDs would like to stay in academia. YOu also have to remember that most of the best UNDERGRADS go to industry, so the smartest people in society never even pass through phd programs. (Why do you think US and British phd programs have to find their supply of students from outside the country?)QuoteTrust me there are few places better than being tenured at a good school I bet if you took a poll of all the managing directors or CEOs at top banks, 95% of them would not want to trade their current jobs and lifestyle for a tenured academic job at oxford or harvard. In fact, 95% is probably a conservative estimate.
Last edited by KackToodles on September 20th, 2008, 10:00 pm, edited 1 time in total.
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