Career in finance

Lengalicious

Ok if possible I would like to direct this at twofishquant, however if you have any experience please do post. I have seen that he has quite a bit of experience in this area and would really like to hear his opinion. I am going onto second year undergrad from September in Physics, I plan on getting a PHD. So here are my questions, with a PHD in physics what areas of finance are open to me? From what I have seen its basically quantitative analysis but I hear this is quite a broad range of jobs, also what area of physics should my PHD be in to have the most relevance, I see theoretical physics with heavy programming in C++ seems to be quite hot, but in specific what? My last question, will your career take you as far as an MBA for instance? What is the progression like, can you reach the salary of an investment banker and how does your career develop, you start as some fresh off the boat quant analyst and develop into. . . ? Forgive me if that sounds like nonsense but my current finance knowledge is zero. Oh and one more thing, what is starting salary like? I imagine at the start I would have to commute into London or NYC depending on where I work because to finance in-city living comfortably you need like £90,000 or $180,000 respectively. (That is based purely on forum threads I have read through).

twofish-quant

I can tell you want positions in finance would likely to be available in finance to a physics Ph.D. graduating in 2012 or 2013. I have no idea at all what (if anything) would be available to someone graduating in 2018.

It doesn't matter. No one cares what area of physics your degree was in. What matters is how much computer experience and math ability you have.

If you are trying to decide between an MBA and a physics Ph.D., do the MBA. Getting a physics Ph.D. for career reasons is a stupid idea. I'm pretty sure that had I gotten an MBA and spent the same amount of luck and effort, I would be making a lot more money and be much higher on the corporate ladder than I am now.

I didn't get an MBA because I like physics better than management.

No idea. I can tell you how the career of something that gets hired in 2000 or 2005 has developed. This information is likely to be completely useless to someone getting a job now. Since one thing that I'm pretty sure of is that 2012 is not 2005. As for someone entering the work force in 2018, no clue at all.

Personally my plan is to make as much money as I can, retire as quickly as possible, so that I can get back to doing astrophysics.

One thing about finance is that you have to be able to deal with the unexpected and realize that your ability to predict the future is limited. I could be out on the street and unemployed a month from now, or I could be doing what I'm doing for the next two decades.

I would recommend that you get a good background in the liberal arts. Literature, history, and philosophy. One thing that has helped me a lot was high school Latin. It wasn't so much the Latin that was useful but rather getting very familiar with the history of the Roman Republic.

Total comp (salary + bonus) right now for a physics Ph.D. is about $120K, however this is for jobs right now, and I'm sure that it won't be correct in 2018. Something that is a current trend and is likely to be true for the next few years is that salaries have been trending down.

One thing that I've been wondering is whether or not what I'm doing is socially useful. I wonder this less for moral reasons, but out of pure selfish interest. Suppose investment banking is a scam that drains blood from more productive uses. Then at some point things (probably before 2018) are going to fall apart again. Now if the world falls apart in 2018, I'll take my gold bars (and yes, I keep some gold bars in a safe place) and slip quietly out of the picture. If you just start out in 2018, the lynch mobs will be after you.

On the other hand, maybe all this junk about helping to efficiently allocate resources is true. One thing that you'll find about society is that there are a lot of professional liars. You have lawyers, salesman, and politicians whose job it is to lie to you. Sometimes it's a good thing for people to lie to you. One of the jobs of a President or CEO is to lie and say "everything is going to be all right".

There is an entire *industry* of people devoted to convincing people that whats good for banks is good for you. The complicated thing is that a professional liar sometimes stumbles on the truth. Yes I know you are telling me this stuff so that I had over my wallet. But what it they are right?

twofish-quant

One other thing. I stumbled into finance. My first job with my Ph.D. was with an oil/gas company during the middle of the dot-com boom. The CEO of that company was a wonderful gifted amazing person, with drive and vision, who was replaced by someone that totally clueless who ran the company into the ground.

I don't think of finance as a "career" more like a temporary job that pays the bills, so that I can eventually do what I'm really interested in.

Lengalicious

Ok thanks alot for your input, I am in a similar position in that an MBA just seems too bland and simple where as my real interest lies in physics, I would much rather spend 10 years studying physics to get into finance than spend 3 or 4 years studying finance itself. However I find it to be more so a hobby as opposed to a full time career, hell I would happily work as a physicist the rest of my life but if the option is there to work in finance and make a more than mediocre salary, then why not? I'm certainly not uninterested by finance especially if sitting in front of a computer and fixing code is what you do. You say its not a career, I understand your motive but if you really want it to be is it possible? Hypothetically in today's economy, not 2018. Surely having had quant experience behind you for a number of years gives you access to other branches of finance with higher pay? I can't imagine you would be stuck there your whole life (in the case that you weren't made redundant), opportunities must arise?

EDIT: Also I noticed in some of the other threads that you say to others not to get an MBA if they already have a PHD in physics? Why is this? Surely if you just said forget the Physics degree and go for an MBA the MBA must hold some pretty big value in the eyes of the financial employers? I imagine you get quite different jobs from a PHD physicist if you now hold and MBA or MFE? In that sense yeh the Physics degree was pointless, but then surely your opportunities are now DOUBLE as you could potentially make 2 resumes, thus increasing your survivability/stability? AND why would a background in those particular liberal arts be of any use whatsoever? o.0

EDIT: One more thing, I take it you have lived in NYC? Does/did whatever salary you made from this give you a comfortable life style? Or did you commute? I'd like to know someones personal experience, not to be intrusive or anything. .

twofish-quant

No idea. It depends how history moves.

What I was told when I was an undergraduate was that the world in which you worked for a company for the rest of your life was gone. In the late-1990's, it thought that people would move from company to company and field to field that would be a good thing. The "free market" would make sure that everyone would get the job at which they would be most productive, and we'd all live happily ever after.

The problem was that there was this assumption that if you lost a job in field A, that you'd find one quickly in field B. Since 2008, it's a big question about whether that is going to work.

If the world blows up, then I'm selling apples, and I saw the world almost blow up.

Imagine waking up one morning, going off to the ATM and finding that didn't work, and all of your credit and debit cards also stopped working. We were probably days maybe even hours away in a situation in which *no one's* ATM's, credit, debit cards would work. There's a reason I keep some of my wealth in physical gold.

The other thing about finance (and physics) is that you end up meeting people who came from countries which *did* blow up. In some cases, very recently.

I made a scary amount of money the last few years. I really don't see much point in making more money. My interest is to keep the job that I have, and learn more about how the world works.

Because there is no marginal use. An MBA is valuable. A Ph.D. is valuable. MBA + Ph.D. doesn't add much value above a Ph.D. and it might have negative value. The big concern for a Ph.D. is that you can't work outside of school, so if you have a Ph.D. and work as a dog groomer that probably has more value than Ph.D. + MBA.

Nope. Think of it this way. You want a box of nails, you go to a hardware store. You want a gallon of milk, you go to a supermarket. You want a bunch of corporate bureaucrats, you go to a "brain store" (i.e. a university). It's not that the gallon of milk you get at a supermarket is better than a gallon of milk you get somewhere else, it's that if you go to the supermarket, you can fill up your shopping cart quickly and easily.

One good thing about getting a Ph.D. over an MBA is that most physics Ph.D.'s don't want to work at an investment bank whereas most MBA's do. So if you get an MBA you are crawling over other MBA's to get a shot at a bank. If you get a Ph.D., you have to offer a lot of incentives to get people to switch. However, if you try to outguess the system, it won't work, because if you try to game the system so will everyone else.

If you have an MBA/MFE with no Ph.D., the jobs are different. I think the jobs that you get if you get an MBA are awful. But people are different. I'm pretty sure that there are lot's of MBA's that see me doing math all day and it would be hell for them. People are different.

Nope. If you have too many degrees, people assume that you can't operate outside of school, and your marketability goes *down*. Also I have two resumes. One is my finance resume and one is my computer programmer resume.

The other thing is that if you have a Ph.D. you can get more than the equivalent of an MBA with work experience.

What job I will have in 2020 will depend a lot on "future history". Reading "past history" will help you figure out "future history." Also philosophy and literature is useful? What is the meaning of life? Why *do* I want a job? Poetry is useful because it keeps you sane in an insane world.

Looking for a job is a brutal, humiliating experience. Reading Kafka and Tom Stoppard let's you laugh at the situation. The other thing is that doing a job interview is like acting. It helped me a lot to think of an interview as an acting role.

Yes, but my life wasn't that much different than when I was in graduate school. I

One thing about working in finance, you *will* feel poor. The problem is that if you live in NYC or work in finance, you will be constantly running into people that make more money (and sometimes a *LOT* more money than you do). Once you make it to the 1%, you realize that there is a 0.1% and a 0.01% and a 0.001%.

What I did when I was in graduate school was that I wrote down a number, made a list of things that I wanted to buy, and I promised myself that once I made that salary and could buy everything on the list, I declare victory and consider myself rich.

Comfortable is relative. Anyone that is lucky enough to be a US citizen will live a life that most people in the world would seriously envy. In some ways going into finance will make your life much less comfortable. If you live outside of NYC, you hear about mega-rich people buying stuff that you will never be able to afford, but once you get their, you will *see* it, and you will be at the mercy of people whose job and profession it is to make you miserable so that you hand over money to them.

Lengalicious

Ok thanks alot for your replies, this helps a lot. I have one more question I'm guessing you might know a thing or two about, you always hear about physicists being poor because they stay in academia right? So in Industry aside from finance what are CURRENTLY some of the best payed job descriptions for a physics PHD? I'd like to know so I can choose the right modules and plan ahead and do my masters/PHD in something most useful in industry in case my finance goal goes tits-up. I mean from your opinion what do you see as becoming more prevalent and in demand within industry? I'm guessing quantum mechanics will have more applications by 2018, what do you recommend?

intelwanderer

I thought quantum mechanics already had a lot of applications.....The whole semiconductor business being one of them. Maybe semiconductors/solid state stuff? Or you could do policy-see Steven Chu.

There are prediction for certain veins of research(single atom transistors, biotech), expected to make huge gains in the future, or so I've read. But no one knows for sure what will happen. It's research, it wouldn't be research if we knew what would happen.

I'm a new physics major, so feel free to disregard me.

intelwanderer

YES. It's degrading to boot. They almost have you beg for a job, or at least at a couple of the interviews I did this summer. How am I supposed to explain how I'm "passionate" about wiping tables? I wish I could just say-"Look, I need money, you need your tables wiped. So let's get it done so we both end up satisfied." But I know that's impossible considering the multitudes of people applying for the same job.

Sometimes I actually think that employers like the bad economic conditions. Maybe it's just my mood and I'm ignoring bad things that have happened to them, but logically, they can pick and choose more, and pay people less, because people are grateful they "have" a job. They have more power.

At least one good thing that happened to me from all this failure is I'm really not scared of it anymore. So I guess I have learned a lesson this summer(this year, really).

What people?

twofish-quant

People that *stay* in academia tend not to be poor. Tenured physics professors make decent amounts of money. Post-docs are highly underpaid, because they are getting killed by supply/demand, but those are temporary jobs.

It's not the salaries that are the problem in academia. It's the lack of permanent jobs.

This strategy won't work. It's like trying to figure out the winning lottery ticket. Even if I knew the winning number, and even if I told you, it wouldn't do you any good. If you knew tomorrow's winning lottery number, it's reasonable to think that so will everyone else, and if everyone picks the same number, you all are going to lose.

If you can't choose, the take a list of possible classes, tape it to a dart board, and then throw darts at it, and then you have your answer. It turns out that in finance, sometimes doing something *totally random* is the best strategy. If you think about what to do, you'll come up with the same answer as everyone else that thinks, and that will be the wrong answer. If you do something random, you may win, you may lose, but your odds are better than going with the crowd. This is called *index investing* and it works surprisingly well.

The other thing is *fundamental investing*. That's to figure out what fields generate real economic value. This is something that you will have to figure out for yourself. I can't tell you. In order to win at this game, you have to have some information that isn't public. For example, if your parents are Bolivian sugar farmers, and you may see something about sugar farming in Bolivia that no one else does. If I tell you anything, it's public information, and therefore you are at no advantage for listening to me.

I have no opinions on this. I can tell you want is likely to happen in the next year or two, but then you get into Lyapunov exponents.

http://en.wikipedia.org/wiki/Lyapunov_exponent

The Lyapunov exponent tells you at what point a dynamic system becomes chaotic and which tells you how far in the future you can see. I think that the Lyapunov exponent for finance is about a year. One other way of looking at this is the "billard machine". A billard ball goes in a straight line until it hits something at which point it's direction radically changes. I can be reasonably sure that the world won't hit a bumper tomorrow or next week. If you look ahead a year or two, I can be almost certain that the world is going to hit a bumper that is going to change the path of history.

Get good at math, physics, and computer programming, and then have a good background in the humanities. Also find some random skill that no one else has.

The other thing is to think deeply about *why* we are in lottery ticket mode. If you were in a society in which 80% of the people ended up doing something decent, then I don't think there would be as much anxiety about making the right choice.

twofish-quant

That's why I found drama to be useful. If you think about a job interview as "putting on a show" it makes it less degrading.

One reason that I spend as much time as I do studying "professional liars" is that I'm trying to be one. A lot of modern society depends on "professional lying." Do you think that the person at the counter that gets paid minimum wage really wants you to "have a nice day?" So when I go to a job interview, I'm always lying to a degree. But one thing that you learn in drama is to put on a convincing acting job, it has to be based on some sort of inner truth.

Replace "I'm passionate for this job" with "I'm desperate for this job" and that gets you to the inner truth, and then you change desperation to passion.

Something that's fun is to talk to a politician. If you talk to any competent politician, they will make you feel good. When you take to a politician, they make you feel like you are at the center of the world, and getting your problems fixed is the most important thing in the world. Lawyers are often the same way.

Both sides in an interview table are lying. Something that the interviewer won't tell you is how much he hates his job and how scare he or she is of losing it. When you are in an interview situation, the interviewer is *GOD*. Once you get hired, you find that the interviewer can be as scared as you are.

One other skill is to be able to read people. For example, you say "This is a *wonderful* job" and then look at the eyes of the interviewers to see whether or not to what extent they are hiding the truth.

Sales and marketing people. The job of any salesman and any marketer is to make you feel *bad* unless you hand over your money in exchange for some product. This isn't restricted to the business world. Harvard does a *wonderful* job of marketing itself.

NegativeDept

A friend of mine is doing just that. He's a very skilled programmer who made a bunch of money, then decided to get a PhD in astrophysics. His company then offered him even more money to be Director of Technical something or other, so he went back to work. But when he has enough to retire comfortably, I'll bet that he'll come back to finish his thesis on numerical models of stellar dynamics. It sounds like a pretty good plan if you can pull it off!

twofish-quant

If.... One thing that always bothered me about that plan was that I didn't know anyone that had actually did this and I've wondered why.

The good news is that the reason seems to be just a matter of time to move out of the tunnel. If it takes you 15-20 years to save up enough to retire early, that means that the people that got their Ph.D.'s in 1995 when physics Ph.D.'s started going into finance in large numbers then you should start seeing people "punch out" around now, and we are starting to see that. If this is the explanation, then you should have a burst of middle aged astrophysicists suddenly appearing in the next few years.

However, what it means for me is also unclear. I figure I'll need another five to ten years to "get to the end of the tunnel" and it's unclear to me whether the world will let me. One reason that I'm telling juniors not to put their hope in working in finance is that I don't know if I'll be working in finance next year. I'd like to. But the world may have other ideas.

Whether this career path will work for people going into physics now is even more murky.

My gut feeling is that it won't, because history just changes in ways that mean that you just can't "follow a cookbook" and expect to get anywhere.

NegativeDept

This is obviously an extreme outlier, but... the guitarist from Queen got his astrophysics PhD in 2007 at the age of 60.

The link is an NPR interview where May talks about using prime-number delay spacings to create the stomping noise for We Will Rock You.

Adrenaline_

If you are planning to go for MBA, There are better sectors in which you can find a slight touch of maths etc.
MBA, Finance if you wish to be a corporate tyrant, it includes: investment,security,market analysis,economics,costing.
MBA, Marketing if you wish to know more about sales,branding,finance,advertisment and managing people.

Finance job especially in investment firms which are directly dictated by market conditions are more risk prone due to fluctuating market conditions
make sure you have some of these:
Clear communication skills
Rigid and most logical decision maker
Reasoning skills.
and most importantly
Positive attitude.

Lostman11

Hi all,
Lengalicious, hope you don't mind me asking this on your thread but it seemed the most relevant thread and I didn't want to spam the baord and create another one.

I would very much appreciate any advice twofish-quant or anyone else with some experience can provide me with. I am all set to finish my PhD physics sometime next year and I have just begun my job search so I am open to any and all fields. (except academia, have already ruled this out) My area of concentration is semiconductor physics and optics/photonics. I have a lot of publications, conferences etc, but very limited programming skills. (Hardly needed it for my thesis) Also during my PhD I have served as a technical consultant for a big laser company, and received some prestigious fellowships and awards.

Would someone of my background still be of use in finance/business?
If so, how can I spin my background to match what people are looking for? I assume PhD physics would carry some weight but I really don't know? It seems programming is requirement for most places I had seen.

Thanks guys.

cearl

Thank you twofish-quant and others for some great posts, really answered some questions that I have had for a decent amount of time.

I am just about to start my final year of High School, and am in the same position as many of you guys (would not prefer to go into academia, would like to get a higher paying job) however I do not really know what I would like to go into.

I have an interest in both Physics, Astrophysics, and a small amount of interest in business, and I would really like it if I could make a lot of money, and then go back to school.


This is pretty much what I am looking to do.

H2Bro

I enjoy reading how many people want to follow in twofish's footsteps, juxtaposed with how cynical and bitter-sounding twofish is. I liken it to:

"When I grow up, I want to be an old man."

Not saying your old, or anything disparaging for that matter, twofish (love your posts, btw), but certainly you would agree that when it comes to physics PhD's entering finance, the mean path is atypical, and many people are looking for a roadmap that doesn't exist.

I'm speaking as someone who drastically redesigned their life to pursue physics (after various stints in various jobs and background in humanities), naturally drawn to the holy grail of astrophysics, but realizing that "going into finance" is an incredibly crap-shoot fallback plan for when I get denied tenure along with 99% of my graduating cohort.

And you know, I must agree on one point: learn philosophy, theories of language and mind, society, anthropology - all of it. It has helped immensely in formulating what I see as a worthy life, and might make you pause to spend your time chasing money so you can do what you *really* want when your 60 - after all, you might die at the age of 40.