Career in finance

Moppy

The website is correct but that's not what "ownership" means. Those are still government provided houses and sold at a subsidy. To buy *privately* needs a lot more money.

twofish-quant

The official home ownership rate in Beijing is around 70%

http://www.kth.se/polopoly_fs/1.1220...achment/86.pdf

As with all statistics, this is with some caveats. It likely includes only official residents in Beijing. Also, the reason most urban Chinese own their homes is because the government in the mid-1990's, just gave title to worker apartments to the people occupying them.

One reason Chinese savings rates are high is that there are large numbers of people who don't have to pay rent.

Moppy

This is the first or second thing you've said that I agree with. I asked my financial advisor what he thought about the "euro crisis" when it all started. He said that they didn't care about the political, social or emotional issues. The purpose of a bank is to make money, not prop up the state and "you wouldn't want it any other way, or you'd have moved to China". I thought about it for about 5 seconds, then I realised he was right.

Edit: For those that don't grok, the state in his words refers to all those unimportant things like 'the job market'.

Moppy

And that's the third thing :-)

Many people here (not you) not understanding the concept of "ownership" of state sponored items.

Edit: 3rd thing you have said that I agree with.

StatGuy2000

As you stated earlier, the statistics above will likely only include official residents, and hence would not take into account the large numbers of "migrant workers" i.e. those who originally come from rural areas but who migrate to urban areas for employment. Given the hukou system of residency classification, these people are unable to obtain title to real estate in the urban areas and are often denied many social services such as education, etc.

http://en.wikipedia.org/wiki/Hukou_s..._rural_workers

Furthermore, I would be interested in knowing what the home or land ownership rates for those living in rural China. I ask this due to reports about land seizures in rural areas to make way for industrial development, and violent protests that result from this.

chill_factor

You can buy real estate anywhere you want, nothing to do with the Hukou system.

intelwanderer

For a rural peasant in Guizhou province who wants to move to the city, what good would that do? You could never afford the real estate, and even if you could, you would still need the Hukou in order to get the services that you might be moving to the city for(education for your kids)?

This is getting off track. Beware the mods, people.

twofish-quant

Different places on Wall Street have different cultures. The place that I work at cares a lot about political, social, emotional, and ethical issues.

Ummmm.... Make money from whom????

This is pretty important because when I give my money to a bank, I sort of would like to get it back, and the easiest way for the person I'm giving it to to make money is to stuff that money in his pocket and disappear.

As far as "moving to China"...... Well......

twofish-quant

The first part is false, a migrant worker buy whatever land or real estate that they want, and if you have the money to buy real estate, you probably go through the bureaucracy to get your residency formally changed.

The second part is a big problem having to do with economic reality. If you could wave a magic wand and give rural residents access to free education, pensions, and health care, people would. The trouble is that there is this matter of paying for this, and a lot of tension between different groups. For example, the central government is trying to enforce a rule that says that migrants can get free education. The trouble is that then you have to figure out how to pay teachers, and so you end up with school hinting that they would like gifts.

Finally, there are situations in which someone do *not* want to change residency even if they wanted to. If you have rural residency, then you are legally entitled to farm land. So if you lose your job in the city, you can theoretical return and farm some land. The trouble with this is that increasing number of migrants have actually never farmed anything, so this is theoretical for a lot of people.

It's a tough problem, and I think the government is handling it as well as can be expected. The difficulty is not rights but services. Rural migrants have to pay "market rates" for health care and education whereas people with residency cards get those services from the government for "free".

This is why the government wants scientists. No economic growth = hard decisions. Economic growth from science and technology = you can provide free services to everyone.

In rural China, you are legally entitled to housing but the house is owned by the state. Rural residents don't have title to their homes (i.e. they can't sell the house), but they don't pay rent either.

Farmland is also collectively owned, but you have the legal right to a piece of farmland that you can farm and anything you make out of the farmland assigned to you is yours.

The problem comes in when the village government tries to sell a piece of land to make something like apartments. Personally, I think that the ownership system is *good* because if plots were individually owned then what would happen is that the village government would force an individual farmer to sell. Because the land is owned by the entire village, when the government tries to sell the land and pocket the money, then everyone gets mad. However, there is a another side to the picture. If the government doesn't profit from land sales then how does it pay for the schools? (If fact, the central government has taken over school funding so increasingly protests are over environmental issues.)

One other thing is that the farmers with hukou issues are a different set of farmers than the ones that protest over land sales. The people that migrate to the big cities are from places where it's pointless to protest over the money from land sales, because the land is worthless. Places where farmers protest over land sales are places where people aren't moving to the cities. Also, a poor farmer gets to the city, they generally live in a places provides by "apartment farmers." What happens is that you are a farmer in suburban Beijing and you have an allocation right to farm some land. At some point you realize that you can make more money by building some shacks, and you do it even though legally you are suppposed to use the land for farming.

Yup. It's an issue but people are dealing with it as rationally as they can. People have suggested some solutions and things are progressing, but it's a moderately hard problem, and a lot of the easy, obvious solutions have problems.

Also, none of this is likely to cause the government to be overthrown. Most of these protests are about money, and if you overthrow the government then everyone loses.

chill_factor

What is the difference between a hedge fund and an investment bank? What type of entity do you work for?

Moppy

You're not the first person to ask him that.

twofish-quant

I'm more open about who I work for over private e-mail. One thing I find extremely annoying about the financial industry is that there are a lot of policies and in some cases laws that keep people from being too open. One thing about banking culture is that it's very "why do you need to know this?" After all, would you really trust your money to someone that gives your checking account number to anyone who asks?

The cultural differences are that I was talking about is not so much between hedge funds and investment banks, but rather between different groups and different people. It's a good thing to have a diversity of opinions.

Also hedge fund takes money from rich investors and invests them. The thing about rich investors is that they are allowed to invest in things that "ordinary people" aren't allowed to. However, the reason for this is that rich investors have the "license to be stupid with their money." If you have someone ordinary loses $100,000 in an investment, then this will be a bad thing, and if you have millions of people lose $100,000, they will demand that the government do something about it.

So the government has put in a lot of rules that "protect people from themselves" and banks and mutual funds that take money from ordinary people have to operate under strict rules. From the point of Ph.D. hiring "strict rules=boring math." Hedge funds can take money from rich people and do whatever they wanted with it as long as it isn't fraudulent. The catch is that if a rich millionaire loses $100,000 then we can just laugh at him.

You can think of an investment bank as a "wholesale financial shopping mall". Your typical investment offers a lot of services. If you want to sell real estate, you go to a real estate agent. If you want to sell a company, you go to a investment bank where they have people who are "company sales agents." Also, if you want to sell $10,000 in stocks you go to a retail broker or a mutual fund. However, if the retail broker or mutual fund wants to sell $1 million in stock, then they go to the investment bank.

Moppy

No one is asking you for trade secrets like your position on a stock or your strategy in case Greece exits the Euro. They're asking what you do. I don't understand how client details even come into this, unless you're a wealth manager or something.

My personal opinion is that you are engaged in financial research of some kind in a think tank (private or government) and not directly involved in the business of the market. I think this because you are too much into philisophy and morality to be a let loose as a consultant on businesses and individuals who make enough money to make ethical discussions non-trivial. This is not to say they have none, but it would not be your job to fuss about it. You don't have the belief in your own invincibility that traders have. Every trader I know who is not married has little savings and sees regulation as a barrier to be circumvented. You have some gaps in your knowledge of how the markets work e.g. not knowing what the Fed does etc.

So a researcher. This is not a criticism. This is analysis. I am open to being corrected.

twofish-quant

Well then you haven't taken legal and compliance training..... One reason that people in finance are tight lipped is that by finding out what people do, you can figure out some things that not supposed to leak out. For example, if you know that financial institution X hired Y people to calculate Z, then you can probably figure out a lot about that strategy.

Well you are wrong.

Different places have different standards. I prefer to work somewhere with high moral and ethical standards. Now ethics is very non-trivial. It's sometimes very difficult to figure out what the *right* thing to do is, but that means that you should think about these things more rather than less.

And any trader that thinks themselves to be invinciable will get very quickly fired where I work. Good thing too.

One of the major functions of the Fed is to serve as the chief regulator for US-based financial holding companies under the Graham-Leach-Billey Act. This is actually an interesting trick question. Who is the major regulator for US investment banks? Most people would incorrectly guess the SEC.

Well consider yourself corrected.

Also, if you really wanted to know what I do, you could try asking? I may or may not tell you, but it's worth a shot.

Moppy

I checked and you're right, the Fed does regulate. I had no idea they did. The guys I deal with are always complaining about two US regulators (US OCC and New York State's one, is it the DFS?) and the FSA (UK) being in the UK. I don't know why the Fed doesn't cover them, or perhaps it does in an way that they don't care about. The big talk right now is the New York State one because the OCC does less than nothing (i.e. it's bent and you can pay it to look the other way they know people aren't in compliance, but do nothing).

No-one is asking you for trade secrets. You could say "I am working on automated trading systems" without giving anything away.

I'm really having trouble matching your experience of traders with mine. I know the US says British regulation is "lapse" but they're still bankers.

Edit: I don't for one minute believe saying you can talk about in private email and not publically makes a difference. Nothing in email is private.

twofish-quant

DFS was recently created by New York state. In the case of a federally chartered bank, federal laws preempt state ones, so the state regulators have almost no role. OCC is important for commercial banking operations but they don't have much of a role in investment banking.

If they are a UK bank which is not a US primary broker-dealer, then it's likely that the Fed doesn't take an active role in regulation and relies on the FSA to do oversight. Also, state regulators can't really regulate Federally chartered banks, but non-US banks need state permission to operate so state regulators do regulate non-US banks.

Whereas in NY you have a governor that wants a lot of good press.

One reason the Fed has a lot more teeth than OCC has to do with funding. OCC is funded from banking fees which means that it doesn't have either the money or the interest to enforce regulations, and if it tries, it is looking at a long and expensive court fight. The Fed on the other hand can just stop loaning you money if it doesn't like what what are doing, and if you are a primary dealer, that will kill you.

Ummm... I know of someone that got into trouble by saying something they thought was innocent. I'm going to err on the side of saying nothing publicly.

In fact, the *only* reason that I post anything at all on this is because when I went through the pain and agony of getting work, I was frustrated by the lack of good information, and I made myself the promise that if I got in, that I'd make life easier for other people.

We just know different people then. One good thing about Wall Street is that there are so many different firms with different cultures, and to a large extent that is a good thing, as long as no one blows up the world.

Something that the compliance people tell you is that everything that say over a corporate e-mail address is recorded and monitored by the regulators, and if they really want to, it's not hard to subpoena stuff over your personal e-mail.

But that's not the point. The point is that if I say something over private e-mail, I can keep track of and control who I talk to, whereas I can't do that over a public forum. I can make reasonably sure that the person I talk to won't abuse any information that I give them, and if they do I know who did it.

Mr.Watson

How hard is it actually to break into finance after theoretical physics phd? Im still undergrad and I'm hoping to get into academia after phd (and postdocs off course), but I know that there is huge competition for faculty openings and Im sometimes pretty worried that I won't find any job where I can use my education. Lately I have being reasonably interested about career and finance as a second choude.

Offcourse things change, and everything might be different when I will get my phd, but just out of curiosity: How hard is it right now to break into finance as a physics phd? And is there regional differences, like is it easier in NYC than London as a physicist? And is it easier to break into finance with physics or mathematics background?

And yeah, I know that things might be entirely different when I have gone trough grad school, but just out of curiosity I would like to know how things are right now or how they have been in previous couple of years. I remember that twofish-quant once wrote that He doesn't know any physicist who wouldn't be able to get some job from finance. Is the job outlook really so good?