Physics Why spend 10 years to get a physics PhD and then go to work for Wall Street?

[pnptruong]

Hi everyone,
I have been on this forum since December last year. I have read many interesting threads by twofish-quants and many other members about the possibility of working in Wall Street after obtaining a Physics PhD. Although I understand that a career in Wall Street is really financial rewarding and challenging to intelligent people such as physics PhDs, I don't really know whether people following this track have an ultimate goal in mind when they start their PhDs.

So my questions are:
1/ For those of you who have followed this track, did you really plan to work in Wall Street when you started your PhDs? Or was Wall Street only a escape for you when you realized you could not get a position in the academia? What did you gain(knowledge, money) or lose(dream, passion) when you exited academia and worked for Wall Street?

2/ If you had a purpose of working for Wall Street in mind when you started your PhD, why did you choose to do a Physics PhD then? I mean there are many less challenging degrees out there that allow brilliant people like physicists to make a lot of money.(finance - engineering - economics - business) Why did you choose to pursue a physics PhD? I understand the fact that an average person with a B.A in Business cannot earn as high as an average person with a PhD, but I see no gap in salaries of brilliant people from both groups.

Thank you

 

[twofish-quant]

I don't really know whether people following this track have an ultimate goal in mind when they start their PhDs.

I don't know of anyone that has done a Ph.D. in physics or math specifically to work on Wall Street. Personally, I think it's an awful idea. You do the Ph.D. in physics and math because you like physics and math, and then you look for jobs that are useful.

1/ For those of you who have followed this track, did you really plan to work in Wall Street when you started your PhDs?

That would have been impossible because my job didn't exist when I started my Ph.D. I seriously doubt my job will exist ten years from now.

I started my Ph.D. about six weeks after someone released something called the "World Wide Web." If you go to the physical "Wall Street", it's a total ghost town. There is no finance happening on the physical Wall Street, it's all apartments and condos now. Wall Street is in cyberspace. The internet has a lot to do with that.

Or was Wall Street only a escape for you when you realized you could not get a position in the academia?

The big decision that I made was not to go out for a post-doc. Part of the reason I did that was that I was in a Baby R' US surrounded by things that I couldn't afford. Money is terribly important, because you are not going to be able to spend time thinking about differential geometry, if you are worried about car payments.

The other thing was that it was clear to me that I was not going to survive academia. I didn't get into my choice of graduate schools, because I was a bit too curious about history and computer science. Things were only going to get worse with post-docs and tenure-track. Also, I didn't go directly from Ph.D. to Wall Street. I spent a few years working as a programmer in other areas.

What did you gain(knowledge, money) or lose(dream, passion) when you exited academia and worked for Wall Street?

Wall Street turns out to be closer to my ideal of academia than anything I was likely to get an a university. So at least in my mind, I am in academia. The work environment is pretty much the same as when I was in grad school.

2/ why did you choose to do a Physics PhD then?

Because I like physics.

I mean there are many less challenging degrees out there that allow brilliant people like physicists to make a lot of money.(finance - engineering - economics - business)

There is a quote from Kennedy, "We do these things not because they are easy, but because they are hard."

One thing that that makes Wall Street like grad school is that physicists on Wall Street tend to make low salaries. Managers like hiring physics Ph.D.s because physics Ph.D.'s will work for peanuts, and if you give them some challenging problems you can ruthlessly exploit them while you make mega-millions from their work. You are going to have to pay an MBA a *lot* more money than you pay me for the same type of work, because I like math and they don't.

So physicists on Wall Street get paid rather low salaries... Except the definition of a "rather low salary" on Wall Street is something people elsewhere would find shocking.

For me it's a great deal. There is some group of MBA's and finance people that are making multi-millions from the work that I do, and because I like doing math, they pay me peanuts and make huge amounts of money from what I do, and I don't mind as long as they just give me equations to crunch.

One piece of advice. If you want to feel rich, you don't want to go anywhere near NYC. If you make $200K in pretty much any other city in the US, you are going to be king. If you make $200K in NYC, you end up being a peasant. You aren't going to be able to afford an apartment in Manhattan, you aren't going to be able to afford to shop in or eat at the high-end restaurants, your kids aren't going be able to go to the best schools, and you are going to be constantly reminded about how little money you make.

But since I like a challenge, I think that's cool.

 

[pnptruong]

So would you recommend a Wall Street job for a person with many family responsibilities? (My family is living in a sloppy apartment now. I want to buy my parents a house and send my sister to a good private school on the east coast...)

 

[Medwell]

People get PhDs in physics because they like physics, not to make money.

 

[mgb_phys]

People get PhDs in physics because they like physics, not to make money.

Speak for yourself - I did it for the women.

 

[Locrian]

People get PhDs in physics because they like physics, not to make money.

Yea. And people who get degrees in management do so to manage. And people who get degrees in accounting do so to work as accountants.

People who want to make money get degrees in money.

Everybody knows this.

 

[sEsposito]

I don't know of anyone that has done a Ph.D. in physics or math specifically to work on Wall Street. Personally, I think it's an awful idea. You do the Ph.D. in physics and math because you like physics and math, and then you look for jobs that are useful.



That would have been impossible because my job didn't exist when I started my Ph.D. I seriously doubt my job will exist ten years from now.

I started my Ph.D. about six weeks after someone released something called the "World Wide Web." If you go to the physical "Wall Street", it's a total ghost town. There is no finance happening on the physical Wall Street, it's all apartments and condos now. Wall Street is in cyberspace. The internet has a lot to do with that.



The big decision that I made was not to go out for a post-doc. Part of the reason I did that was that I was in a Baby R' US surrounded by things that I couldn't afford. Money is terribly important, because you are not going to be able to spend time thinking about differential geometry, if you are worried about car payments.

The other thing was that it was clear to me that I was not going to survive academia. I didn't get into my choice of graduate schools, because I was a bit too curious about history and computer science. Things were only going to get worse with post-docs and tenure-track. Also, I didn't go directly from Ph.D. to Wall Street. I spent a few years working as a programmer in other areas.



Wall Street turns out to be closer to my ideal of academia than anything I was likely to get an a university. So at least in my mind, I am in academia. The work environment is pretty much the same as when I was in grad school.



Because I like physics.



There is a quote from Kennedy, "We do these things not because they are easy, but because they are hard."

One thing that that makes Wall Street like grad school is that physicists on Wall Street tend to make low salaries. Managers like hiring physics Ph.D.s because physics Ph.D.'s will work for peanuts, and if you give them some challenging problems you can ruthlessly exploit them while you make mega-millions from their work. You are going to have to pay an MBA a *lot* more money than you pay me for the same type of work, because I like math and they don't.

So physicists on Wall Street get paid rather low salaries... Except the definition of a "rather low salary" on Wall Street is something people elsewhere would find shocking.

For me it's a great deal. There is some group of MBA's and finance people that are making multi-millions from the work that I do, and because I like doing math, they pay me peanuts and make huge amounts of money from what I do, and I don't mind as long as they just give me equations to crunch.

One piece of advice. If you want to feel rich, you don't want to go anywhere near NYC. If you make $200K in pretty much any other city in the US, you are going to be king. If you make $200K in NYC, you end up being a peasant. You aren't going to be able to afford an apartment in Manhattan, you aren't going to be able to afford to shop in or eat at the high-end restaurants, your kids aren't going be able to go to the best schools, and you are going to be constantly reminded about how little money you make.

But since I like a challenge, I think that's cool.

You know, I'm compelled to say that I admire the genuine nature of all your posts. I think for a lot of people (on this forum, in our schools etc.) you represent a huge side of our disciplines that is otherwise shunned. Just recently a Professor of mine overheard two of my peers talking about what they could do when they're ready for the working world; of course one of them mentioned working as a "quant" and my Professor immediately scoffed. He then jokingly said "Shh! Don't say that around here! They won't let you in the mathematician's union if they hear you talk like that!" As funny as it was it really describes the sentiment in a lot of universities.

I think working on "the street" might be more intriguing that I would ever imagine... Would you mind telling us 1) if you're "satisfied" by the math that you do on a day to day basis and 2) maybe you could explain some of the more interesting aspects of your job. I'm genuinely curious.

Also, I will back you up about the physical Wall Street being a ghost town. I live in the NYC area and I'm over there very often.. It's a surprisingly quite neighborhood.

 

[twofish-quant]

of course one of them mentioned working as a "quant" and my Professor immediately scoffed. He then jokingly said "Shh! Don't say that around here! They won't let you in the mathematician's union if they hear you talk like that!" As funny as it was it really describes the sentiment in a lot of universities.

Which is rather self-destructive. The thing about having a decent paying job is that it gives you time and money to do physics. There really isn't any money or time constraints that would keep me from publishing papers in astrophysics. The main constraints are creating the social networks that you need to do research, which is why I end up posting a lot on this topic because the internet is good at creating social networks.

One mistake that I made was that I spent about five years after I got my Ph.D. feeling like an "outcast" and in those few years, a lot of the professional relationships that I could have used to still be actively involved in astrophysics research went cold.

The problem with the current situation is that there are more people outside the system than inside, and the people on the inside don't have any original ideas for how to change it. That's the general situation that you have before revolutions.

I think working on "the street" might be more intriguing that I would ever imagine... Would you mind telling us 1) if you're "satisfied" by the math that you do on a day to day basis and 2) maybe you could explain some of the more interesting aspects of your job. I'm genuinely curious.

My work is more CS oriented than math oriented, but on the other hand so was my Ph.D.

The more interesting part is the political aspects of the job. Personally, I'm quite interested in differential geometry so I'm looking for excuses to use differential geometry in my work. This involves "selling" differential geometry which is part of the challenge. There is also an educational aspect to this. To be able to sell differential geometry, you have to teach non-math people enough about differential geometry so that when you start talking about covariant vectors, people see $$$$$$.

The one part that I *don't* like about my job is that I'm under more restrictions about what I can publicly say than I would like. I'd like to write a short summary saying, here is the mathematical finance problem for which I think differential geometry would be useful, but I'd likely get fired if I posted that on the net. (Hint: Think of everything that can influence a stock price. There are probably 1000 factors. Now each one of those factors is a dimension so you are dealing with this monster functional space.)

Some people get frustrated by the politics and the bureaucracy, but for me, it's part of the challenge. One of the really cool things is that there is a lack of time. I could spend a month or two studying hyperreal numbers to see how this might be useful for callibration, or I could be thinking of something else. There's not a lack of interesting problems, and the focus on $$$$ is for me a good thing since it keeps me from getting too unfocused.

Also, I will back you up about the physical Wall Street being a ghost town. I live in the NYC area and I'm over there very often.. It's a surprisingly quite neighborhood.

The reason Wall Street became big was that before the internet, you had to be close to the stock exchange, and so finance companies clusters downtown. Today, it's not essential to be close to the exchange, and there are reasons why this won't work.

The NYSE and floor traders there is something like colonial Williamsburg. Echos of a by-gone era. I think you could shut down the floor of NYSE and no one would notice. But NYSE-Euronext moved to electronic trading about a decade ago. The other thing that pushed the market into cyberspace was 9/11. Something that happened was that 9/11 showed how a relatively small physical attack could shut down markets for a long time, so after 9/11 all of the major banks started distributing their assets. You could shut down the markets with a tactical nuclear weapon, but you couldn't with anything conventional. Also people talk about cyberattacks but that's more alarmist science fiction than anything else.

 

[sEsposito]

The problem with the current situation is that there are more people outside the system than inside, and the people on the inside don't have any original ideas for how to change it. That's the general situation that you have before revolutions.

So, in your opinion, will we soon see a change in the way research is conducted and how the findings are published? And out of pure curiosity: do you consider yourself an astrophysicist, amateur physicist or do you not affiliate yourself with the discipline at all?

My work is more CS oriented than math oriented, but on the other hand so was my Ph.D.

The more interesting part is the political aspects of the job. Personally, I'm quite interested in differential geometry so I'm looking for excuses to use differential geometry in my work. This involves "selling" differential geometry which is part of the challenge. There is also an educational aspect to this. To be able to sell differential geometry, you have to teach non-math people enough about differential geometry so that when you start talking about covariant vectors, people see $$$$$$.

I can definitely see why that aspect of your job would hold your interests. In a way, it's must be like teaching or lecturing -- just to a different audience with different goals.

I think what you do is a fine example of applied mathematics and I don't know why it's so shunned (for lack of a better word). I mean the other day I read an article in some pop-sci magazine called "Keeping Mathematicians Off of the Street". It's not just like it is ignored, it's out there in a very negative light.

Thanks for your inputs and kind of being that other side of the fence that we might need. The way I see it, anyone that can make a nice living and still enjoy what they do is ahead of the game. I just can't understand why subjects like physics and upper maths, which are always scrutinized for that lack of real world applications, would not be looking for any possible way to put this very real application in the forefront for aspiring students.

 

[twofish-quant]

So, in your opinion, will we soon see a change in the way research is conducted and how the findings are published?

The internet has already massively changed the way research is conducted and findings are published. It's also massive changing the way that education is being done. One other thing is that isn't quite commonly realized is that the cultural aspects of scientific publication are quite different from area to area. I happen to be fortunate that in astrophysics, the referred journal article is already considered obsolete as a mechanism for transmitting current research. It's used for other things.

And out of pure curiosity: do you consider yourself an astrophysicist, amateur physicist or do you not affiliate yourself with the discipline at all?

I try not to label myself. Labels just complicates things.

I think what you do is a fine example of applied mathematics and I don't know why it's so shunned (for lack of a better word). I mean the other day I read an article in some pop-sci magazine called "Keeping Mathematicians Off of the Street". It's not just like it is ignored, it's out there in a very negative light.

It's one of those things that makes perfect sense when you are in a society, but makes no since once you are somewhat outside of it. It's the type of thing that would make a great study for cultural anthropologists and sociologists to try to figure out. Personally, I think one big consequence is that it totally wreaks havoc with status hierarchies. If you argue that it is "better" or at least "not worse" for academics not to be shunned if they go into industry then at some point you have to ask the question, so why shouldn't I be on an NSF funding committee or a department search committee?

The way I see it, anyone that can make a nice living and still enjoy what they do is ahead of the game. I just can't understand why subjects like physics and upper maths, which are always scrutinized for that lack of real world applications, would not be looking for any possible way to put this very real application in the forefront for aspiring students.

I think it's a turf issue.

 

[sEsposito]

Another point of interest on this topic is the comparison of a quant to an actuary. In my experience, actuarial science is a respected and loved applied subject, some universities even have dedicated degree programs for it. I wonder if at some point becoming an actuary was an outsider's job that same as becoming a quant is now. Which leads to the very obvious question of: if so, will the profession become more and more accepted as goes on? I have seen a few universities offering degrees in Quantitative Finance (NYU's Courant Institute is the one that sticks out in my head). Personally, I think I'd much rather work as a quant than an actuary, but that's nothing more than an educated guess.

 

[twofish-quant]

Which leads to the very s question of: if so, will the profession become more and more accepted as goes on?

I think the question is accepted by whom?

have seen a few universities offering degrees in Quantitative Finance (NYU's Courant Institute is the one that sticks out in my head).

Those degrees have gotten hit hard by the financial crisis. The problem is that the financial crisis changed a lot of the rules of finance and models that worked fine before the crisis, just don't work now, and people are scrambling to figure out what the new rules are. This is something that physics and math Ph.D's don't have any problem with, but it's a pretty serious problem for people that don't have research backgroundsuand expect the formula in the book to actually work.

One thing that I would strongly advise physics Ph.D's that want to go into finance is *NOT* to spend too much time studying finance. You are better off studying something that has no obvious connection to finance like numerical relativity and machine vision than to go over the finance textbooks. You need some basic knowledge, but you are going to be more valuable if you have some insights that come because you *haven't* been reading the same textbooks as everyone else.

 

[sEsposito]

I think the question is accepted by whom?

By the cognoscenti, I suppose. I just feel like the general consensus is academia (from people inside academia) is that going into finance is a "sell-out" but becoming an actuary is a viable career for a mathematician. I think you hit the nail on the head when you said its a case of things making sense for those on the in and not to those on the out.

 

[twofish-quant]

By the cognoscenti, I suppose. I just feel like the general consensus is academia (from people inside academia) is that going into finance is a "sell-out" but becoming an actuary is a viable career for a mathematician.

But who is "inside academia". What is academia?

One of the reasons I ended up on Wall Street was that it was become obvious to me that a lot of the world depended on money and power, and one big reason I ended up in finance was that I felt my education would have been incomplete without studying money and power, and Wall Street is one of the better places to study these sorts of things.

One irony is that I'm very much a Marxist, and a lot of my views on how society really works comes from Karl Marx and critical theorists that are built on topic of Marxism. One of the things that critical theorists study is power and the subtle ways that power works, and if you have the power to "define good" then that's a lot of power which you will generally use to preserve the status quo.

If academia thought it was a good thing to "sell out" then that would irrevocably change the power structure in academia in ways that the current power holders find unacceptable. But personally I think the system is rather unstable. One key part of any power structure is to set things up so that you don't have anyone on the outside wants to blow things up, and on this point the current system has failed for economic reasons.

I think you hit the nail on the head when you said its a case of things making sense for those on the in and not to those on the out.

But then you have ask a deeper question. *Why* does it make sense for people on the inside, and if you ignore the Marxist idea of power and class struggle, I think you miss the the core dynamics.

The basic issue was that Marx was basically right. In a closed society, the rich get richer and the poor get poorer. What Marx got wrong was that in the general society, the rich can generate enough wealth to basically buy off the middle class. However because academia doesn't not internally generate wealth, you end up with the classic society that is described in the Communist Manifesto.

The core crisis of the university is that you cannot teach liberal arts which is about freedom with a system based on serfdom, and truth cannot be taught within a system that institutionally lies.

One thing that fascinates me about the University of Phoenix is that they have gotten around the serfdom dilemma.

 

[Locrian]

In my experience, actuarial science is a respected and loved applied subject, some universities even have dedicated degree programs for it.

Probably the biggest difference between actuarial work and quantitative finance in this social context is that actuarial work is ultimately regulatory in nature. While there are lots of exceptions, the vast majority of actuaries have jobs because of regulations imposed on financial companies by State or Federal Governments. Actuaries are also part of a profession with barriers to entry, with its own rules and code of conduct. I believe that this creates a significant difference in how the two careers are perceived and how they change over time.

As a side note though, I don’t think actuarial science is really all that respected, and I’m quite sure it isn’t loved. I think maybe you meant to say it is established.

 

[Locrian]

The core crisis of the university is that you cannot teach liberal arts which is about freedom with a system based on serfdom, and truth cannot be taught within a system that institutionally lies.

Great quote and a very thought provoking post.

 

[ferm]

Just recently a Professor of mine overheard two of my peers talking about what they could do when they're ready for the working world; of course one of them mentioned working as a "quant" and my Professor immediately scoffed. He then jokingly said "Shh! Don't say that around here! They won't let you in the mathematician's union if they hear you talk like that!" As funny as it was it really describes the sentiment in a lot of universities.

I usually see attitudes like that in my field; not only with "quants", but with anything that is not directly related to particle physics. I agree with twofish in that these attitudes are really self-destroying, since if people were more open to collaborate in other areas, it would probably be good for the field itself. (For example, the Higgs mechanism idea came from condensed matter).

One thing that seems absurd to me is how difficult it seems to be to get a postdoc to work on a different topic that what you did your PhD about (at least that's my impression after what I heard). If a Physics PhD is useful in finance industry, how come he wouldn't be useful in a slightly different field of Physics?

A consequence of this is that many people who finally succeed end up being rather narrow-minded and would never consider working in anything else (at least that's my impression).

 

[sEsposito]

But who is "inside academia". What is academia?

I would say academia is a community built around the exchange of knowledge. Who is inside academia is another story. I'd say the obvious students and scholars, but I know there is a better answer somewhere. I'm intrigued by your remarks thus far because I know the way knowledge is exchanged is changing, and I believe it's a natural evolution in the process. It's clear to me that you share a seemingly similar belief.

If academia thought it was a good thing to "sell out" then that would irrevocably change the power structure in academia in ways that the current power holders find unacceptable. But personally I think the system is rather unstable. One key part of any power structure is to set things up so that you don't have anyone on the outside wants to blow things up, and on this point the current system has failed for economic reasons.

I think the point you make here is the truly striking remark of this conversation. Money is what this comes down to. Any one will surly tell you that the problem with "academia" is too many Ph.Ds hunting for too little positions. So you have a classic supply and demand problem. After that, things get complicated; those in control can manipulate academia as they wish because they hold the power and ultimately they hold the money making ability in the system.

The way I look at it is that if I'm going to spend my time, money and life studying mathematics I should be able to contribute something at some point. And it is at that point that I should be able to make a living from my contributions. In reality, I may never get a chance to lecture at a university or to publish any worthwhile papers, but I'll take my chances. And the only reason I wouldn't be able to do these things is due to a lack of money-generating positions. I recognize the very real possibility of not getting a dream job, but I also know that there is a plethora of other careers I can enter into -- which is much more than can be said for any other people I know. The question remains, why are these other careers looked at in a different light than those inside academia?

But then you have ask a deeper question. *Why* does it make sense for people on the inside, and if you ignore the Marxist idea of power and class struggle, I think you miss the the core dynamics.

You've opened my eyes to this side of the argument. I hadn't thought of this in such a manner before, but it makes a lot of sense. Too much sense to ignore.

The core crisis of the university is that you cannot teach liberal arts which is about freedom with a system based on serfdom, and truth cannot be taught within a system that institutionally lies.

One thing that fascinates me about the University of Phoenix is that they have gotten around the serfdom dilemma.

How so?

 

[sEsposito]

As a side note though, I don’t think actuarial science is really all that respected, and I’m quite sure it isn’t loved. I think maybe you meant to say it is established.

In my experiences, actuarial science is a respected avenue of applied mathematics. I know plenty of people that are studying mathematics just to become actuaries and they are intrigued by subject of actuarial science -- which to me makes it a loved subject.

 

[Mathnomalous]

You know, I'm compelled to say that I admire the genuine nature of all your posts. I think for a lot of people (on this forum, in our schools etc.) you represent a huge side of our disciplines that is otherwise shunned. Just recently a Professor of mine overheard two of my peers talking about what they could do when they're ready for the working world; of course one of them mentioned working as a "quant" and my Professor immediately scoffed. He then jokingly said "Shh! Don't say that around here! They won't let you in the mathematician's union if they hear you talk like that!" As funny as it was it really describes the sentiment in a lot of universities.

I don't know if this describes the sentiment in many universities but that's the kind of behavior that would turn me away from a place, field, or person. I dislike individuals that feel superior to me just because they are able to compute Pi or because I chose to use whatever skills I may have in an area not of their approval. Really sad that some people look down upon others just because they were lucky enough to be born in a good socioeconomic tier and got lucky on their random string of genetic code.

Does this only happens in Mathematics and Science? I've never heard of a stigma associated with going into specific Medicine or Law subfields. I think I understand why a buddy told me that a masters in Chemistry is given as a "consolation" prize, I didn't get it at the time.

 

[ferm]

I don't know if this describes the sentiment in many universities but that's the kind of behavior that would turn me away from a place, field, or person. I dislike individuals that feel superior to me just because they are able to compute Pi or because I chose to use whatever skills I may have in an area not of their approval. Really sad that some people look down upon others just because they were lucky enough to be born in a good socioeconomic tier and got lucky on their random string of genetic code.

Does this only happens in Mathematics and Science? I've never heard of a stigma associated with going into specific Medicine or Law subfields. I think I understand why a buddy told me that a masters in Chemistry is given as a "consolation" prize, I didn't get it at the time.

In my opinion, this kind of attitudes come from the fact that you need to "feel superior" in order to have a real motivation to follow the career path in academics. If they thought that what they are doing is similar to what they would do in industry, then many of them would move to industry (which wouldn't be bad for academia).

Otherwise, it wouldn't make any sense for some very intelligent people to work for very little money and not being able to decide where to live (usually you can't decide where you will do your next postdoc, and where you will find tenure). You need something to make you justify your choice, like feeling "superior" or that "what you are doing is the only thing you would be happy to do".

I think this feeling applies specially well regarding quants: they make a lot of money using strong math and physics skills. I previously thought that a difference is that they don't work in what they want, but I realized that neither do university professors (to get funding they must work in the "hot topics", and usually they don't decide what the "hot topics" are).

Another thing is the feeling of closed community. For what I have seen, whenever someone announces his intention to leave academia, the reactions of many people are similar as if he had had an accident (or worse). Usually a PhD advisor will never ask what you are going to do after your dissertation, since they expect you to go for a postdoc, which is the "correct" thing. (Personally, I am a little worried about how and when to tell my advisor I am considering not to continue in academics, since I feel that may spoil the good relationship we have and make him lose interest in my work).

 

[sEsposito]

I don't know if this describes the sentiment in many universities but that's the kind of behavior that would turn me away from a place, field, or person. I dislike individuals that feel superior to me just because they are able to compute Pi or because I chose to use whatever skills I may have in an area not of their approval. Really sad that some people look down upon others just because they were lucky enough to be born in a good socioeconomic tier and got lucky on their random string of genetic code.

Does this only happens in Mathematics and Science? I've never heard of a stigma associated with going into specific Medicine or Law subfields. I think I understand why a buddy told me that a masters in Chemistry is given as a "consolation" prize, I didn't get it at the time.

Here's the thing: this is not a situation where those that have the "smarts" are looking down on those that don't have or a lacking in knowledge of education, they're looking down on other people that have the "smarts" because of their choice of career. No one ever said that a qaunt, actuary, cryptanalyst, etc. is any less learned than an academic. I think that's an ignorant remark to make and we all know that it's untrue.

Also, I'm fairly certain that there is a great deal of divide over the subfields in medicine and law. These are among the most competitive careers and subjects in the world, you can bet anything we're speaking is present in those communities as well.

 

[sEsposito]

Another thing is the feeling of closed community. For what I have seen, whenever someone announces his intention to leave academia, the reactions of many people are similar as if he had had an accident (or worse). Usually a PhD advisor will never ask what you are going to do after your dissertation, since they expect you to go for a postdoc, which is the "correct" thing. (Personally, I am a little worried about how and when to tell my advisor I am considering not to continue in academics, since I feel that may spoil the good relationship we have and make him lose interest in my work).

I think this is major point of contention. Everyone likes feeling like they're part of something special and I'm sure it's not any different for mathematicians or scientists.

 

[twofish-quant]

Probably the biggest difference between actuarial work and quantitative finance in this social context is that actuarial work is ultimately regulatory in nature.

And quantitative finance is moving in that direction.

While there are lots of exceptions, the vast majority of actuaries have jobs because of regulations imposed on financial companies by State or Federal Governments.

And Wall Street is about to hire *tons* of physics/math/CS Ph.D.'s because of the regulations that Congress passing. Basically every model that is now in use or will be in use is going to have to be checked, double checked, approved, reapproved. That's tons of paperwork and bureaucracy, and it's something that you need someone with extremely high levels of math and computer skills to deal with.

Basically, the Fed and SEC is going to *DEMAND* that you show your models won't cause another blowup, and most MBA's just don't have the math ability to go through five pages of partial differential equations reviewing everything for anything that could cause another blowup.

 

[Locrian]

So what (roughly) percentage of quants would cease to have jobs if the company they worked for didn't need them to satisfy government requirements?

 

[MaxManus]

Those degrees have gotten hit hard by the financial crisis. The problem is that the financial crisis changed a lot of the rules of finance and models that worked fine before the crisis, just don't work now, and people are scrambling to figure out what the new rules are. This is something that physics and math Ph.D's don't have any problem with, but it's a pretty serious problem for people that don't have research backgroundsuand expect the formula in the book to actually work.

Isn't math and mathematical finance quit similar? At my university it seems like mathematical finance, master degree, is the same as a degree in stochastic analysis. The difference is that you are allowed to also take statistics courses.

 

[sEsposito]

Isn't math and mathematical finance quit similar? At my university it seems like mathematical finance, master degree, is the same as a degree in stochastic analysis. The difference is that you are allowed to also take statistics courses.

Every university structures the programs differently, but I was referring specifically to degrees geared toward quantitative finance -- which I'm sure covers a good deal of mathematics and statistics courses, probably some business as well.

On a side note, you go to a university where you can get a degree in stochastic analysis? That's quite specific and uncommon.. Interesting, though.

 

[chingkui]

Isn't math and mathematical finance quit similar? At my university it seems like mathematical finance, master degree, is the same as a degree in stochastic analysis. The difference is that you are allowed to also take statistics courses.

The level of rigor required in a quantitative finance course is nowhere near a math course. For example, in a course that mainly covered the Back-Scholes model, we were "taught" how to solve the stochastic differential equation that arise, without knowing much about Brownian Motion.

The curriculum for quant finance is designed for people with quantitative background (i.e. computer science, engineering, etc.) You just can't make it like graduate level math.

 

[StatsGuy]

You'd probably be better off getting a PhD in Statistics or Applied Mathematics if you eventually want to work in finance/Wall street.

About 1/3 the of people in my PhD program, from the moment they start grad school, intend on getting a job in industry. Graduates have gotten great positions at banks/insurance companies/pharmaceutical companies.

 

[Sean1218]

I get that most people think going into physics with the intention of working on wall-street or something to that effect is a bad idea. I love physics though, so if I pursue a physics masters/PhD, I don't see what's so bad about considering being a quant. It'd be practical and I'd have time, and money, to work on physics in my spare time -- or is this still not a good idea? I'd also always have the option to go into academia.

 

[MaxManus]

Every university structures the programs differently, but I was referring specifically to degrees geared toward quantitative finance -- which I'm sure covers a good deal of mathematics and statistics courses, probably some business as well.

On a side note, you go to a university where you can get a degree in stochastic analysis? That's quite specific and uncommon.. Interesting, though.

We don't have anything called quantitative finance in my country so I assumed it was the same as mathematical and assumed that the degrees was standardized. Was I wrong on both points?

In my eyes all you need to make a degree in stochastic analysis are professors who are willing to supervise the thesis. All universities must have some courses in stochastic calculus and everyone has topology, functional analysis, measure theory etc.

Or maybe a math degree with specialization in stochastic analysis is a better name for the degree. I'm a bachelor student in physics, but considering changing degree, so I could of course be wrong.

 

[ferm]

The thing about having a decent paying job is that it gives you time and money to do physics. There really isn't any money or time constraints that would keep me from publishing papers in astrophysics.

You commented in a previous post that you work 60h/week, I don't see how could you still have time to work in physics! I understand the major constraint is being outside the "community", but it usually takes months of full-dedication to have something publishable (and if you take too long, you are likely to get scooped), not to talk about "defending" your work. Can you usually take some time off work?

Thanks for your posts, they are really useful!

 

[sEsposito]

Or maybe a math degree with specialization in stochastic analysis is a better name for the degree. I'm a bachelor student in physics, but considering changing degree, so I could of course be wrong.

That's a much better way to describe it. I was just curious, when you said it.. I always find it interesting to hear what kind of specialized degrees are granted at some universities.

 

[StatsGuy]

I get that most people think going into physics with the intention of working on wall-street or something to that effect is a bad idea. I love physics though, so if I pursue a physics masters/PhD, I don't see what's so bad about considering being a quant. It'd be practical and I'd have time, and money, to work on physics in my spare time -- or is this still not a good idea? I'd also always have the option to go into academia.

This is not at all practical. If you want to be a quant, get the correct training (in Finance, Mathematics, Statistics etc...) and study physics as a hobby. You can always take some Physics courses on the side during graduate school. Also, if you want to go into academia, your attitude will NOT fly --- getting into academia requires 150% dedication to graduate school from day 1. You need to absolutely focus on that end-goal from the start. Also, a Physics PhD is not a guarantee to a quant job, especially if a company can hire someone who was specifically trained for quantitative work (in the fields I mentioned above) and the Physics PhD is certainly no guarantee of an academic position.

I admire your dedication to physics, but you need to be realistic.

 

[justinlj]

i hated it when people who studied science and engineering went on to do business and finance. i believe that many of them left because there weren't sufficient opportunities or pay to continue working in science and engineering.

in that case, won't there be a brain drain in the area of science and engineering itself?

but it can't be helped i guess. money is a very important motivation for people to work.

i really dread the day when all our inventions and discoveries are made by china and india, while the rest of us are busy generating cash out of nowhere and getting ourselves into bigger debt.

i feel that a big change is needed to make science and engineering seem more profitable and a worthwhile investment in the long run.

i live in a small country, singapore, and even as an undergraduate, i have seen how much science and engineering have declined in my country. singapore is used to be considered one of the four asian tigers which include hong kong(now part of china alr), taiwan and south korea.

in my country here, there has been an exponential increase in people going into finance rather than engineering and science. and our government is trying to make our country into a financial hub like the wall street. just imagine, the whole country, surviving largely on finance.

our semi conductors mncs have all relocated to china and india, for lower cost. the manufacturing industry has since moved away long ago, since singapore doesn't have sufficient land for big manufacturing plants. and we only have a small government backed R&D agency that tried to come up with something. all there is left is petroleum, which has an offshore island dedicated to this particular industry. almost a large portion of our engineering sector is already outsourced to china and india.

but is it good that for a country to be so dependent on the finance sector?

i don't think so. because i have only seen so many of our own people losing jobs in economic crisis and our economy is in fact picking itself back far too slowly. that's because we are too largely dependent on the world's economy and we don't produce our own goods and exports anymore.

do you want to see something like that happen in your own country one day? while taiwan and south korea are still exporting large amount of consumer goods and growing strong in their engineering and semi conductor industry, all that is left in singapore is nothing. despite being a strong economy in asia, we never had any famous consumer brand worldwide or any important scientific discoveries done here.

taiwan has famous electronic brands like acer, south korea has samsung. and we all know too well about japan, they are one of the leaders in technology. and yea, in the US, apple, microsoft, just to name a few.

and these are the companies that will make the country grow stronger. not banks like lehman brothers and insurance company like AIA or watever there are.

you might be amazed though, our government encourages us to study science since young, and similarly like the rest of the asia countries, we have been drilled with maths and science since childbirth.

LOL. but look at what we have become.

this is what that could happen when nobody is interested or deprived in opportunities in science and engineering.

that's why i firmly believed that my country could have done better if we had been given more opportunites to become more outstanding engineers and scientists who could make products to be exported rather than having tonnes of bankers and managers trying to shift assests into their own pockets.

 

[twofish-quant]

Every university structures the programs differently, but I was referring specifically to degrees geared toward quantitative finance -- which I'm sure covers a good deal of mathematics and statistics courses, probably some business as well.

If you are a physics geek, then you are far, far, far more likely to get a job on Wall Street with a Ph.D. in which study something that seems to have nothing to do with finance (say accretion disk theory) than you are with a quantitative finance degree. The general belief amount employers is that if you can handle numerical relativity, then you are going to be able to teach yourself all of the math and statistics you need for the job, and what's more, you can teach yourself math and statistics that *isn't* in the standard curriculum.

On a side note, you go to a university where you can get a degree in stochastic analysis?

It's not what you know but how quickly you can learn. If you've done differential geometry, then if you need to know stochastic differential equations, you just order Okesendal or Shreve.

 

[twofish-quant]

You'd probably be better off getting a PhD in Statistics or Applied Mathematics if you eventually want to work in finance/Wall street.

There are about a dozen ways into finance and Wall Street.

 

[twofish-quant]

I understand the major constraint is being outside the "community", but it usually takes months of full-dedication to have something publishable (and if you take too long, you are likely to get scooped), not to talk about "defending" your work.

In academia, you'll need to author several papers a year, and personally, I think it would be possible to author a paper a year as a "amateur" provided that you were working with co-authors.

 

[ocean drive]

Actually, society needs more string theorists and academics working in research in order to develop new technologies for our future. Fundamental physics has the potential to create new technologies like faster ways to bring people, goods and information from point A to point B, alternative and cleaner energy sources and even faster computers.

If every physicist quit physics and went into finance, our society will be in trouble eventually since there will not be enough people working on ways to develop new technologies and products.

Modern society has enough people not producing technology: sportspeople, dancers, artists, gamers, actors, lawyers and people in government. Only people working in industry and manufacturing and those doing research in academia actually develop new technologies.

 

[moogull]

Modern society has enough people not producing technology: sportspeople, dancers, artists, gamers, actors, lawyers and people in government. Only people working in industry and manufacturing and those doing research in academia actually develop new technologies.

Amen to that, I have a friend in aero engineering at purdue and he and I always talk about how our society isn't motivating the development and production of new amazing technologies like we have in the past. It's almost like we have lost our competitive edge in science and engineering and put it all in finance and management...

That being said, as a Physics B.S. student (sophomore) I have always liked building things so I have really wanted to be part of engineering projects when I am out of school. But I feel like I am in the wrong position (aka Not a student of engineering) to go into that field. Will I be able to participate in the R&D of products at all? or have I locked myself out by not going to an engineering school as undergrad?

 

[Ryker]

Amen to that, I have a friend in aero engineering at purdue and he and I always talk about how our society isn't motivating the development and production of new amazing technologies like we have in the past. It's almost like we have lost our competitive edge in science and engineering and put it all in finance and management...

Huh? If anything, there's now more people motivated and eager to develop new technologies than there have in the past.

 

[fasterthanjoao]

To keep this simple,

Will I be able to participate in the R&D of products at all?

Yes, absolutely.

or have I locked myself out by not going to an engineering school as undergrad?

No. You'll still have great skills for things like this, and some engineers like to work with physicsts and bring them into work - it's a different way of thinking and can really excel if you choose to make the transition.

 

[twofish-quant]

Actually, society needs more string theorists and academics working in research in order to develop new technologies for our future.

I really, really don't think so. You really don't need that many Einsteins to develop new products. One Einstein can produce an idea that changes the world. You do need a ton of finance, marketing, and MBA's to manage production of said product.

Physics is not a warm model problem. You don't need huge numbers of people to think up new ideas, because once one person thinks of a new ideas, then he just needs to write it down and everyone can copy it. Management is a warm body problem. Managing people and cleaning toilets are warm body problems. If you need to clean a toilet, you need to have a person physically there to do the cleaning, so the consequence is that there are more jobs for toliet cleaners than string theorists.

Fundamental physics has the potential to create new technologies like faster ways to bring people, goods and information from point A to point B, alternative and cleaner energy sources and even faster computers.

Not without an economic support structure. If you just have brilliant physicists and a bad economy, it ends up looking like the Soviet Union. A good idea is totally useless.

If every physicist quit physics and went into finance, our society will be in trouble eventually since there will not be enough people working on ways to develop new technologies and products.

You need a lot more physicists in finance than in academia. A lot of finance involves dealing with rather complex equations that describe the world. If you get that wrong, then you send the world into another great depression in which case you don't have money for physicists.

Modern society has enough people not producing technology: sportspeople, dancers, artists, gamers, actors, lawyers and people in government. Only people working in industry and manufacturing and those doing research in academia actually develop new technologies.

Totally false.

 

[twofish-quant]

Amen to that, I have a friend in aero engineering at purdue and he and I always talk about how our society isn't motivating the development and production of new amazing technologies like we have in the past. It's almost like we have lost our competitive edge in science and engineering and put it all in finance and management...

,

I think we should colonize Mars. The problem is that most people in the US when you ask them to pay for it disagree with me. Now I'm not the type of person to just sit back and grumble about this, I want to do something about it, but changing US society so that people think that they ought to be taxed more so that we can colonize Mars involves understanding money and power.

There is the golden rule. People who rule get the gold, and people who have the gold rule. So if you really want to change the world, you just have to get yourself in finance and management. If you think that there should be more jobs in astrophysics, fine, I agree with you. The trouble is that the people making the decisions are people with money and power, and if you want to change society, you just have to get into the meeting rooms with these people and become one of them.

 

[twofish-quant]

Huh? If anything, there's now more people motivated and eager to develop new technologies than there have in the past.

Also, being motivated and eager to develop new technologies involves hiring lots of people in finance with science and technology skills, because the fundamental decisions involve technical issues. If you are a VC firm you are going to get mobbed with proposals wanting money, and the people making decisions about what EE firm gets the money, tend to be people with large amounts of experience with EE.

 

[twofish-quant]

i hated it when people who studied science and engineering went on to do business and finance. i believe that many of them left because there weren't sufficient opportunities or pay to continue working in science and engineering.

This is false. Modern finance *is* science and engineering.

A modern investment bank and hedge fund are extremely high technology places. Look into a picture of a trading floor what do you see, tons of computers. Everyone in finance is staring at a computer, and inside those computers there are just tens of million lines of code making critical decisions that literal influence the fate of the world. Writing and babysitting computer programs is a huge issue of science and engineering. Every investment bank has got several massive supercomputers with thousands of nodes.

The science comes in because a lot of what these supercomputers do is basically modeling how the world works or is supposed to work.

I really dread the day when all our inventions and discoveries are made by china and india, while the rest of us are busy generating cash out of nowhere and getting ourselves into bigger debt.

Who is "us". There are a lot of people in this group who are Chinese or Indian. If the US self-destructs and leaves India and China in charge of the world, people in India and China won't consider that a bad thing.

One thing about international finance is that you meet lots of people from different countries and people have different viewpoints. If you talk to someone from France, then you figure out that they aren't particularly interested in the well being of people in the United States. Why should they be?

One thing that gives me a smile is "peace through greed." In any multi-national corporation you see lots of people from different countries, with different religions, and different political views, all putting aside their differences to make a ton of money.

i live in a small country, singapore, and even as an undergraduate, i have seen how much science and engineering have declined in my country. singapore is used to be considered one of the four asian tigers which include hong kong(now part of china alr), taiwan and south korea.

in my country here, there has been an exponential increase in people going into finance rather than engineering and science. and our government is trying to make our country into a financial hub like the wall street. just imagine, the whole country, surviving largely on finance.

Ummmm... It looks like a good decision, Singapore grew at 10% last year. Hong Kong has done the same thing. Singapore and Hong Kong are both city states, and having it be the management and finance centers are a good idea.

i don't think so. because i have only seen so many of our own people losing jobs in economic crisis and our economy is in fact picking itself back far too slowly. that's because we are too largely dependent on the world's economy and we don't produce our own goods and exports anymore.

Singapore and Hong Kong are doing better than the rest of the world, and I really don't think that there really is much of a choice. Singapore and Hong Kong are both much too small to produce its own goods and export.

In the case of Hong Kong, it's part of China, so moving all of the manufacturing slightly up the Pearl River is not a bad thing. To get from HK to the big giant factories that produce the world's stuff is a two hour bus ride.

All that is left in singapore is nothing. despite being a strong economy in asia, we never had any famous consumer brand worldwide or any important scientific discoveries done here.

So partner with someone that's better at science.

that's why i firmly believed that my country could have done better if we had been given more opportunites to become more outstanding engineers and scientists who could make products to be exported rather than having tonnes of bankers and managers trying to shift assests into their own pockets.

Ummmmm... Singapore grew at 10%/year last year.

I do think that healthy competition is a great thing, and Singapore's big competitor is Hong Kong. HK is doing quite well because it's tightly linked with the manufacturing centers in Dongguan, and people are pushing to interface it with the science centers in Beijing. Singapore has to do something different. A lot of Chinese factories are moving to Indonesia because China is getting too expensive, so there may be some opportunities there. Also Singapore is a lot closer to India and the Middle East than HK is. HK has the backing of the Chinese Communist Party, which is sometimes a good thing, sometimes not. Both HK and Singapore are "neutral territory" but HK is less neutral than Singapore which an advantage and a disadvantage.

Personally, I don't think that HK can by itself become a major center or science and technology. The big problem is that HK is a nice orderly giant gated community, and if you want science and technology to flourish you have to let random people in and put up with more "chaos" than people in HK feel comfortable with. But rather than to it in HK, you can keep the "chaos" in Shenzhen, and figure out how to take advantage of it there.

 

[Shackleford]

Marxism? Really? -_-

 

[twofish-quant]

Marxism? Really? -_-

Yes really. I'm quite a devoted fan of Karl Marx. The Marxist idea that the basis of understanding society is to understand economics and class struggle is one of the major reasons why I ended working in finance.

At its core, capitalism consists of the exploitation of the working classes by the power elites. However, the core mistake of Lenin and Trotsky was to believe that you could end this exploitation through revolution. What happened was that after the revolution, you have a new elite that is just as exploitative than the groups they replaced.

Therefore, I think that the way forward is not to try to end exploitation, but to increase the generation of wealth through technology so that you can have massive exploitation yet still create decent standards of living for the proletariat.

 

[G037H3]

Yes really. I'm quite a devoted fan of Karl Marx.

Socrates, Aristotle, Plato, Cicero, Augustus, Ptolemy, Goethe, Schopenhauer, Nietzsche, and Heidegger would like a word or few with you...

 

[twofish-quant]

Socrates, Aristotle, Plato, Cicero, Augustus, Ptolemy, Goethe, Schopenhauer, Nietzsche, and Heidegger would like a word or few with you...

We've already spoken to each other...