With Finance Disgraced, Which Career Will Be King?(nytimes.com)
nytimes.com
With Finance Disgraced, Which Career Will Be King?
http://www.nytimes.com/2009/04/12/weekinreview/12lohr.html
9 comments
The financial industry has long been populated with far too many lazy, incompetent people with Ivy-league degrees and egos. I work with a bunch of older guys who are from the non-Ivy-dominated era of Wall Street, and it really appears this was a far more enjoyable time to have been a part of the industry. Perhaps it will be good for the mindless status-seekers to head elsewhere; just don't be surprised when their output doesn't exactly look like an answer to Sputnik. That being said, 90% of the "quantitative finance" world was and still is utter nonsense that legitimately drains other fields of technically savvy people, so it will be good to see them in other places. These guys are just a tiny percentage of the financial industry, however; most of the young guys in finance today are arrogant paper-pushers, no different from the sort of annoying people you'd encounter at a Hollywood talent agency.
"The financial industry has long been populated with far too many lazy, incompetent people with Ivy-league degrees and egos."
Lazy!?! Investment bankers tend to be douchebags, but they put 90-100 hours per week, 50 weeks a year. Sure, there's a lot of face time to be put, too... but "lazy" is not the word.
I get the impression you don't even know what you're talking about. There are many areas in the financial industry: investment banking, trading, risk management, insurance, private equity. These areas attract all sorts of people, with all sorts of academic backgrounds and personalities. Traders are completely different beasts than, say, investment bankers.
"That being said, 90% of the "quantitative finance" world was and still is utter nonsense that legitimately drains other fields of technically savvy people, so it will be good to see them in other places."
Nonsense. There are simply not enough positions in academia and industrial research labs for all the Math, Physics PhD's out there.
Lazy!?! Investment bankers tend to be douchebags, but they put 90-100 hours per week, 50 weeks a year. Sure, there's a lot of face time to be put, too... but "lazy" is not the word.
I get the impression you don't even know what you're talking about. There are many areas in the financial industry: investment banking, trading, risk management, insurance, private equity. These areas attract all sorts of people, with all sorts of academic backgrounds and personalities. Traders are completely different beasts than, say, investment bankers.
"That being said, 90% of the "quantitative finance" world was and still is utter nonsense that legitimately drains other fields of technically savvy people, so it will be good to see them in other places."
Nonsense. There are simply not enough positions in academia and industrial research labs for all the Math, Physics PhD's out there.
Making something people want would be. Except I doubt it will actually stop being possible to make lots of money by speculation.
Possibly something taking advantage of the coming "Green Bubble".
I bet farming makes a comeback.
yeah, i know a brilliant young mathematician who wants to become a beef farmer. for real.
actually has finance really been disgraced? the bailouts are still on, aspiring bankers still know that big bonuses are there (once the down turn ends) when they create wealth, with no downside (to the bankers) when they destroy it... bankers and banks have been disgraced yes, but finance as a profession, has it really been tarnished?
compare this with careers in CS... dont know about the valley, but here in Sydney, engineers rarely negotiate for salaries and benefits the same way bankers do (ie directly arguming risk and rewards). Having to work crazy hours for "prestige" is still the norm... and engineers are treated as "costs" in most organisations...
compare this with careers in CS... dont know about the valley, but here in Sydney, engineers rarely negotiate for salaries and benefits the same way bankers do (ie directly arguming risk and rewards). Having to work crazy hours for "prestige" is still the norm... and engineers are treated as "costs" in most organisations...
Finance
politics
Medicine
It'd be best not to have any single industry be "king". The power careers tend to suck in a lot of people with bad motivations and, when talent is difficult to measure, such as corporate management, starkly insufficient ability.
Also, it's not the case that the most talented undergraduates pursue careers in finance. It's more accurate to note that finance is a backup plan for the most talented people, because it's available and pays well. Only the douches specifically tailor their college experience to getting an investment banking job. So to the extent that there are a lot of talented people in finance, it's because a lot of smart people end up falling back on plan B, usually because of the intractable systemic problems and corruption within academia and the sciences.
Also, it's not the case that the most talented undergraduates pursue careers in finance. It's more accurate to note that finance is a backup plan for the most talented people, because it's available and pays well. Only the douches specifically tailor their college experience to getting an investment banking job. So to the extent that there are a lot of talented people in finance, it's because a lot of smart people end up falling back on plan B, usually because of the intractable systemic problems and corruption within academia and the sciences.
It's pretty hard to do something like getting a job setting up new quant models for Soros unless you've specifically tailored your college experience to learning how to do that. The interesting jobs in finance are pretty hard to stumble across as a backup plan.
Soros does not use quant strategies.
Yes, he does. I've spoken to a few quants at Soros' fund.
He doesn't use them as his main strategy, but if he is, e.g. betting that GM will go bankrupt, he still wants a quant to tell him which CDS to buy, or to determine what happens to his portfolio as a whole if X happens to the market.
He doesn't use them as his main strategy, but if he is, e.g. betting that GM will go bankrupt, he still wants a quant to tell him which CDS to buy, or to determine what happens to his portfolio as a whole if X happens to the market.
let me simplify -- he did not become a billionaire by using quant strategies. He may use them to optimize his trades, but has doesn't actually NEED them.
It would have been better if you mentioned Renaissance or one of the funds that are actually driven by quant strategies.
It would have been better if you mentioned Renaissance or one of the funds that are actually driven by quant strategies.
I disagree, having worked on Wall Street for a couple of years. Finance prefers that you learn these sorts of things on the job. It's much better received to have majored in math or computer science than business, at least for an undergrad.
It's also very unlikely that Soros is going to have an undergraduate building new quant models in his first year. If he's lucky, he might get to write the code to test someone else's models. There really isn't an undergraduate course that sets you up to be a quant, and most quant jobs are unattainable without a PhD.
An MFE degree (Master's in Financial Engineering) can give you the basic skills expected of a junior-level quant trader, but tends to underplay a critical component: programming. (Most quant jobs are programming jobs; unfortunately, the lingua franca is C++, and at most financial firms, the quants are strong mathematicians but third-rate coders.)
It's also very unlikely that Soros is going to have an undergraduate building new quant models in his first year. If he's lucky, he might get to write the code to test someone else's models. There really isn't an undergraduate course that sets you up to be a quant, and most quant jobs are unattainable without a PhD.
An MFE degree (Master's in Financial Engineering) can give you the basic skills expected of a junior-level quant trader, but tends to underplay a critical component: programming. (Most quant jobs are programming jobs; unfortunately, the lingua franca is C++, and at most financial firms, the quants are strong mathematicians but third-rate coders.)
"most quant jobs are unattainable without a PhD."
Not really, you just need to do your summer internships at hedge funds and make them lots of money.
Not really, you just need to do your summer internships at hedge funds and make them lots of money.
What project is a summer intern going to be assigned that can has huge P&L potential? A senior trader or quant would take it.
"at most financial firms, the quants are strong mathematicians but third-rate coders."
Truer words have never been written. Various friends of mine who are former mathematicians / physicists now working as quants do rock at stochastic calculus, but suck at C++. Maybe a solution would be to separate the coding tasks from the modeling tasks. A friend of mine recently took a quant position at a hedge fund, and while he gets to do a lot of modeling and data analysis, the actual implementation is carried out by a 1st rate coder with whom he works in tandem. That sounds very smart to me...
Truer words have never been written. Various friends of mine who are former mathematicians / physicists now working as quants do rock at stochastic calculus, but suck at C++. Maybe a solution would be to separate the coding tasks from the modeling tasks. A friend of mine recently took a quant position at a hedge fund, and while he gets to do a lot of modeling and data analysis, the actual implementation is carried out by a 1st rate coder with whom he works in tandem. That sounds very smart to me...
What's your take on why this is? It is very perplexing to me: my intuition says that strong math almost implies suitability and predisposition for strong programming. Why is this not the case?
I am not supplying a guess now, because this comes as a total surprise.
I am not supplying a guess now, because this comes as a total surprise.
People who are really good at math often find programming boring and mundane. I used to work with some guys who had physics PhDs from MIT and they all referred to their programming jobs as "whoring." I've read a few articles about Stephen Wolfram where he makes the admission that he can't stand programming.
I'm not very good at math but I'd prefer working through a trigonometry textbook to working on another ruby on rails website.
I'm not very good at math but I'd prefer working through a trigonometry textbook to working on another ruby on rails website.
I'm pretty good at math (broke 50 on the Putnam) and I don't find programming to be boring. On the other hand, knowing that I've had problems with jobsite boredom in my past, I'm pretty sure that I'd hate the majority of programming jobs out there. Lisp and Haskell, which make programming beautiful in the mathematical sense, make a lot more sense to me than Java, and tasks like chasing down dependencies and hacking makefiles I find painful.
The type of programming and the language matter a lot. Most PhDs despise programing because of the problems they encounter in the professional sphere: most numeric programming focuses on details (numeric behavior of algorithms, efficiency in speed and memory use) that most researchers would find boring. A cutting-edge algebraist doesn't want to spend his time cutting clock cycles off of a vanilla matrix multiplication, nor does an academic analyst ("analysis" being a specific field of math, as in real/complex analysis) want to spend his time fretting over the (often jarring and unpredictable) discrepancies between floats and real numbers. There are people who love those kinds of problems, but they're rarely research mathematicians.
The type of programming and the language matter a lot. Most PhDs despise programing because of the problems they encounter in the professional sphere: most numeric programming focuses on details (numeric behavior of algorithms, efficiency in speed and memory use) that most researchers would find boring. A cutting-edge algebraist doesn't want to spend his time cutting clock cycles off of a vanilla matrix multiplication, nor does an academic analyst ("analysis" being a specific field of math, as in real/complex analysis) want to spend his time fretting over the (often jarring and unpredictable) discrepancies between floats and real numbers. There are people who love those kinds of problems, but they're rarely research mathematicians.
Good insight, thanks.
I find cutting clock cycles quite gratifying. Admittedly there is less math in that than having a bottom-up understanding of what's going on. But you could also reframe it like any other optimization problem, given some number of inputs of a certain type. You can also prove your solution correct. It is a math problem all over.
Is it safe to say that those that despise programming, also despise certain branches of math?
I should add a little story. I once asked one of my friends who is very gifted in math why he prefers CS instead of pure math. His answer was something like: CS is the only field where mathematical truths can be immediately applied to reality (within the machine). It's a good balance between limitless mental masturbation and unpredictability of nature.
I find cutting clock cycles quite gratifying. Admittedly there is less math in that than having a bottom-up understanding of what's going on. But you could also reframe it like any other optimization problem, given some number of inputs of a certain type. You can also prove your solution correct. It is a math problem all over.
Is it safe to say that those that despise programming, also despise certain branches of math?
I should add a little story. I once asked one of my friends who is very gifted in math why he prefers CS instead of pure math. His answer was something like: CS is the only field where mathematical truths can be immediately applied to reality (within the machine). It's a good balance between limitless mental masturbation and unpredictability of nature.
Is it safe to say that those that despise programming, also despise certain branches of math?
Yes. At the graduate level, the various branches of math are quite different, especially between pure vs. applied. A logician would probably not enjoy a course that involved a lot of PDEs, for example.
Yes. At the graduate level, the various branches of math are quite different, especially between pure vs. applied. A logician would probably not enjoy a course that involved a lot of PDEs, for example.
That's quite probable. Honestly, I can't understand why purists tend to dislike PDEs. I mean... Terry Tao does PDEs and he's a Fields medalist! Is it because PDEs are usually associated with Physics, and hence, are not "pure enough"?
Strong math background implies an ability for solving problems analytically. Programming requires this, but also requires a fair amount of implementation work which may not be related to the core analysis problem.
Speaking strictly for myself (physics grad), it's easy for me to get caught up in some sort of interesting data analysis, but programming can be a bore because it involves so much extra stuff. I firmly believe that this is the reason software like Matlab survives: not because its analysis functions are faster or better, but because it tends to push everything but the math and visualization out of the way.
Speaking strictly for myself (physics grad), it's easy for me to get caught up in some sort of interesting data analysis, but programming can be a bore because it involves so much extra stuff. I firmly believe that this is the reason software like Matlab survives: not because its analysis functions are faster or better, but because it tends to push everything but the math and visualization out of the way.
Ah, actually, I have a guess; it is quite simple. Please don't read it until you thought of one first.
Writing code requires knowledge of code conventions, syntax, and as importantly, the libraries. This is a declarative/episodic memory task, less so of working memory, symbolic manipulation, and abstract reasoning task. The latter traits are dominatingly important in math/physics. In coding there is a mix of the two, with the former taking precedence after the program logic has been deduced.
Which brings about the next question. The mathematician part cannot be learned merely through patience, but becoming expert at a language can be. Now, why is it that your brilliant math/physicist friends cannot become such experts? Do they lack the patience? Or, does coding simply not "click" with them? Is there a causal relationship? Now my intuition says there is none, and so we are back to square one: it is perplexing that they are not good programmers, unless there is some personality reason behind it.
Writing code requires knowledge of code conventions, syntax, and as importantly, the libraries. This is a declarative/episodic memory task, less so of working memory, symbolic manipulation, and abstract reasoning task. The latter traits are dominatingly important in math/physics. In coding there is a mix of the two, with the former taking precedence after the program logic has been deduced.
Which brings about the next question. The mathematician part cannot be learned merely through patience, but becoming expert at a language can be. Now, why is it that your brilliant math/physicist friends cannot become such experts? Do they lack the patience? Or, does coding simply not "click" with them? Is there a causal relationship? Now my intuition says there is none, and so we are back to square one: it is perplexing that they are not good programmers, unless there is some personality reason behind it.
People who view programming as implementation-oriented grunt work (this describes a surprisingly high percentage of those who are smart enough that they "should" be able to program) have no interest in becoming good at it. Sucking at programming means that it never becomes anything more than grunt work for them, and before they become decent at it, they have enough authority to delegate their coding.
It doesn't help that they're trapped in C++ and an environment that rewards guts-'n'-glory over finely crafted code.
It doesn't help that they're trapped in C++ and an environment that rewards guts-'n'-glory over finely crafted code.
"It's pretty hard to do something like getting a job setting up new quant models for Soros unless you've specifically tailored your college experience to learning how to do that."
I strongly disagree. Finance is not Theoretical Physics. In Physics, the best and brightest are in Academia and have access to high-quality experimental data (unless you're doing high-energy stuff, where experimental data is hard to get). In Finance, the best and brightest are in the financial services industry, and the finance academics have no access to high-quality data because such data costs millions. Data aside, the kind of Finance which is taught in college is somewhat of a fantasy. I will be crude and claim that Academic Finance is as scientific as literary criticism...
Cutting a long story short: anyone who's proficient at building models (like a physicist or a math-oriented engineer) can build models for a hedge fund without having been trained to do that in college. At D.E. Shaw they like to say that "you can teach smart people how to do finance, but you can't teach financial people how to be smart".
I strongly disagree. Finance is not Theoretical Physics. In Physics, the best and brightest are in Academia and have access to high-quality experimental data (unless you're doing high-energy stuff, where experimental data is hard to get). In Finance, the best and brightest are in the financial services industry, and the finance academics have no access to high-quality data because such data costs millions. Data aside, the kind of Finance which is taught in college is somewhat of a fantasy. I will be crude and claim that Academic Finance is as scientific as literary criticism...
Cutting a long story short: anyone who's proficient at building models (like a physicist or a math-oriented engineer) can build models for a hedge fund without having been trained to do that in college. At D.E. Shaw they like to say that "you can teach smart people how to do finance, but you can't teach financial people how to be smart".
"I will be crude and claim that Academic Finance is as scientific as literary criticism..."
I submit that you are not aware of what is actually taught in academic finance. What principles of it do you disagree with?
I submit that you are not aware of what is actually taught in academic finance. What principles of it do you disagree with?
I disagree with the methodology, mostly. I believe that teaching Finance as if it were a hard science is dishonest. I believe that mathematical rigor is no substitute for data and empiricism. I would also claim that a MSc in Statistics may be way more valuable than a hardcore MFE. Just my 0.02 USD.