Physics I'm told that theoretical physicist can go into investment banking

[The_shadow]

Hi guys so I'm told that theoretical physicist can go into investment banking. How true is this still? I have an offer to do the Quantum fields and fundamental forces (QFFF) Msc course at imperial its suppose to be very good - however it contains no computational modules. I do have the option to do a numerical dissertation however (numerical GR). I'd love to do this course and continue to Phd level (maybe part time). I also have an interest in finance and the markets so it would be great if I could become a quant. I'm also trying to line up a summer (2012) placement - we have over three months to do the project and I was hoping to do a few days in an investment bank (free of charge of course).

My computer skills are average and I work on them in my spare time - but will that be enough? I also hold an offer for the applied math Msc - however as my background is (astro)physics and I'm told that my optional modules would be limited due to prerequisites. This however seems a better route career wise.

Ideally if I could complete the QFFF Msc and go straight into investment banking (the quantitative side), once I've done a placement or two, and year or two into it I would take a part-time Phd over several years, is this possible? or would I need the Phd before hand - I've seen a lot of these investment grad schemes - but it seems the more interesting stuff goes to the computer literate mathematicians (i.e optimization, numerical analysis) and physicists - not the Quantum field theorists. So how realistic is this dream. How hard would it be to teach myself the programming skills I need - after all I know basic programming.

Alternatively I could do the applied math Msc instead go into investment banking and later on do a Phd in a less theoretical area (chaos or something like that). Any thoughts guys?

 

[twofish-quant]

Hi guys so I'm told that theoretical physicist can go into investment banking. How true is this still?

The market has gotten bad in since June, but right now it looks like a temporary up and down thing.

I have an offer to do the Quantum fields and fundamental forces (QFFF) Msc course at imperial its suppose to be very good - however it contains no computational modules. I do have the option to do a numerical dissertation however (numerical GR). I'd love to do this course and continue to Phd level (maybe part time).

If you want to do the Ph.D. get that done first. Numerical GR is a good skill to have for financial markets.

Ideally if I could complete the QFFF Msc and go straight into investment banking (the quantitative side), once I've done a placement or two, and year or two into it I would take a part-time Phd over several years, is this possible?

Not really. IB's are time sinks and you'll be too busy with your job to do a part-time Ph.D. If you want a Ph.D., it's better to get that done first.

I've seen a lot of these investment grad schemes - but it seems the more interesting stuff goes to the computer literate mathematicians (i.e optimization, numerical analysis) and physicists - not the Quantum field theorists. So how realistic is this dream. How hard would it be to teach myself the programming skills I need - after all I know basic programming.

If you do hard core numerical GR for a Ph.D. dissertation, you will get the necessary programming skills. There are a few "pencil and paper" quants, but those are rather rare.

The other track in are people that do heavy duty time series analysis. If you aren't an expert at C++, you can get in by being an expert at either R or Matlab.

Alternatively I could do the applied math Msc instead go into investment banking and later on do a Phd in a less theoretical area (chaos or something like that). Any thoughts guys?

If just want a job and you don't want to get a Ph.D. ever then getting a masters and a job is reasonable. Also, hireability is very strongly correlated with computer experience, and you'll get more hard core numerical programming with numerical GR than you will with chaos theory. Another field that will get you a ton of useful skills is anything involving radiation hydrodynamics or computational fluid dynamics.

 

[mayonaise]

Another field that will get you a ton of useful skills is anything involving radiation hydrodynamics or computational fluid dynamics.

For CFD, which is more useful for IB, Lagrangian or Eulerian methods (particles vs grids)?

 

[twofish-quant]

For CFD, which is more useful for IB, Lagrangian or Eulerian methods (particles vs grids)?

Doesn't matter. As long as you can do either well, you'll be fine.

In low interest rate/high volatility situations, finance PDE's are only weakly convective which means that Langrangian and Eulerian methods are close to equivalent, and no one cares since the diffusion term kills the convective terms. Now if the world changes so that we have high interest rates/low volatility then the computational methods will also change.

 

[The_shadow]

Thanks Twofish I really appreciate the advice! Numerical relativity is something that I’ve always wanted to go into but didn’t know that you could use your skills in IB. How important is the Brand name of the school? I noted that neither Imperial or oxford do not do much in the way of numerical relativity (at least imperial doesn’t in there applied math department, only in the theoretical physics group), but Southampton and Cardiff do! So would the school name put me at much of a disadvantage? Finally I’ve only just been informed that with the applied math I cannot take the optimisation or applied stochastic processes modules – will this put me at much of a disadvantage? It’s a shame as I was really looking forward to optimisation! Thanks again.

 

[twofish-quant]

Thanks Twofish I really appreciate the advice! Numerical relativity is something that I’ve always wanted to go into but didn’t know that you could use your skills in IB. How important is the Brand name of the school? I noted that neither Imperial or oxford do not do much in the way of numerical relativity (at least imperial doesn’t in there applied math department, only in the theoretical physics group), but Southampton and Cardiff do! So would the school name put me at much of a disadvantage?

That's a UK question, so I don't know the situation there. I can say that for US schools with most US employers with Ph.D.'s, what school you got your degree from is pretty much irrelevant. Note that this is very different from masters degrees in which brand name makes a huge difference.

Also the important thing is to come up with a quality dissertation. The person that is interviewing may have a Ph.D. in numerical relativity so they will grill you to death on the topic.

Finally I’ve only just been informed that with the applied math I cannot take the optimisation or applied stochastic processes modules – will this put me at much of a disadvantage? It’s a shame as I was really looking forward to optimisation! Thanks again.

Google and Amazon books are your friends.

Also at this moment, optimization is important because there is a lot of work in fund baskets. Stochastic processes are nowhere near as important as they were three years ago because no one trusts complex derivatives.

As with everything else, things could be different next year (or even next month), so the important thing is not how much you know, but how quickly you can learn if you need to.

One other thing that you can think about as a research topic is how to use new computational power in the form of GPU/multcore CPU/cloud computing to work on optimization problems.

 

[twofish-quant]

I should point out here is the fact that the equations change so quickly is why IB's need physics Ph.D.'s. The thing about general relativity is that the rules don't change.

The thing about finance is that the basic equations change from year to year or in some cases month to month, and the mathematical techniques that are needed to solve the current set of problems also change from year to year or even month to month as the economy changes and as we have new technology in the form of new computing technology.

What this means is that banks are not looking so much for people that can crunch one type of equation well, but rather someone that has the skill and interest to learn new math and new computer technology on the fly and use that to model whatever the market dishes out.

 

[twofish-quant]

One other thing that I like about investment banking is that it is research. Research is cool because you don't know what is useful or not. For example, suppose you do your Ph.D. on the nuclear physics of potassium nuclei. What does that have to do with finance? I haven't got a clue, but *you* are the expert on potassium ions, you know a thousand times more nuclear physics than I do, so I'm all ears if you can come up with some application that I don't know because I don't have the knowledge.

What's cool about this is that not only do I not know, in a lot of situations *no one* knows. Maybe the "next big thing" comes out of mixing nuclear physics and finance, or not, I don't know. No one knows. What I can say is that there is value in doing something that no one else is doing. If you are the only one in the world that is doing research on the nuclear properties of potassium and you come up with something, then you are the world's number one expert on it.

Also as for as the long term viability of finance for physicist refugees. I do not know. Don't go into physics expecting a job in investment banking, since it might not happen. I could be looking for work next year or even next month or even next week. Or maybe things will boom and I'll be working here for the next two decades. I do not know. No one knows, but making decisions in uncertain situations without going nuts is a skill. One thing that helped me a lot is to read a lot about history. I spend a lot of time reading history about things that happened 50 or a 100 years ago, because I know some one 50 or 100 years from now is going to be reading about what happened before.

However I can't say much about the next three years, but I can say something about the last three years. One thing that I find fun about investment banking is that you get into sales and marketing. Something that you hear a lot is "this is useless knowledge" but the mindset of sales and marketing is all about turning something that seems useless and turning it into something economically useful.

 

[Shaun_W]

Don't hinge your hopes on getting into investment banking because it's bar far the most competitive career to get into as a graduate. From what I've seen the degree itself isn't important, it's more about where the degree is from, your ECs and how middle class you are.

 

[twofish-quant]

Don't hinge your hopes on getting into investment banking because it's bar far the most competitive career to get into as a graduate.

This is true for MBA's and Finance masters. It's not true for physics Ph.D.'s. Every physics Ph.D. that I know of who has wanted to work for a Wall Street firm has gotten a position. If you need a job in five years, who knows what is going to happen. If you need a job next year, there is a good chance that you will get one.

The issue here is that in finance there are 20x as many jobs for MBA's than there are for physics Ph.D.'s, but there are 100x as many MBA's (literally). The total number of physics Ph.D.'s that were issued last year was about 1000 which is roughly the size of the Harvard MBA program.

One other factor is that MBA's *want* to work at an investment bank. Pretty much every physics Ph.D. I've met (including myself) would rather be working somewhere else. If some university offered me a professorship I'd be gone in ten seconds.

Because finance is a second or third or fourth choice for physics Ph.D.'s there is a lot less competition.

From what I've seen the degree itself isn't important, it's more about where the degree is from, your ECs and how middle class you are.

True for masters positions. Not true for physics Ph.D. positions. One problem with career advising for physics Ph.D.'s is that a lot of the information about finance is geared toward MBA's and finance masters (since there are 100x as many of those), and that's a different market.

 

[DrummingAtom]

Going back to the poll question, what advantage, if any, would a physics PhD have over an applied math PhD for quant type positions?

 

[Shaun_W]

This is true for MBA's and Finance masters. It's not true for physics Ph.D.'s. Every physics Ph.D. that I know of who has wanted to work for a Wall Street firm has gotten a position. If you need a job in five years, who knows what is going to happen. If you need a job next year, there is a good chance that you will get one.

The issue here is that in finance there are 20x as many jobs for MBA's than there are for physics Ph.D.'s, but there are 100x as many MBA's (literally). The total number of physics Ph.D.'s that were issued last year was about 1000 which is roughly the size of the Harvard MBA program.

One other factor is that MBA's *want* to work at an investment bank. Pretty much every physics Ph.D. I've met (including myself) would rather be working somewhere else. If some university offered me a professorship I'd be gone in ten seconds.

Because finance is a second or third or fourth choice for physics Ph.D.'s there is a lot less competition.


True for masters positions. Not true for physics Ph.D. positions. One problem with career advising for physics Ph.D.'s is that a lot of the information about finance is geared toward MBA's and finance masters (since there are 100x as many of those), and that's a different market.

Okay, but I'm not necessarily sure that we are talking about a PhD.

The thread seems to firstly be about whether a theoretical physicist can go into banking. The answer is yes - anyone from any degree background can get into investment banking as the degree itself is irrelevant; what is important is the university at which the degree was obtained from, and how well they manage to sell themselves at the interview.

Now I'm not going to comment on how to get into an investment bank with a physics PhD since do not and will not ever have one, but I did research entry from a bachelors and masters degree and came to the conclusions above.

I also think you vastly underestimate the amount of physics people interested in investment banking this side of the pond.

 

[The_shadow]

making decisions in uncertain situations without ging nuts is a skill

This is very very true and a skill I need to work on :)

Okay, but I'm not necessarily sure that we are talking about a PhD.

Sorry I didn't explain myself very well :). As Twofish said most physicist don't aim to go into investment banking and that's certainly try of me. I would like to complete a PhD in something like numerical GR, dark matter gravity/standard model, astro-particle physics (my first degree was in astrophysics) or mathematical physics (just becasue there's nothing else I would like to be doing right now) and become a professor or the next Proff Brian Cox (h'es a UK TV presenter teaching the public complex science). However I'm not going to kid myself here :), I know getting into academia is a long shot at best so I need a plan B - hence I wonder whether my plan B could be going into IB as there seems to be few other decent jobs out there for PhD theorists (but please correct me here if I'm wrong i.e whether there's another industry that likes them?).

So I guess I would need to maximise my skills and if it means tweaking my PhD area then I'm completely up for that :). I love research and want to do a PhD but I keep reading this horror story's about how many PhDs can get a job! or are working as bar men/maids (I'm not trying to insult anyone here a bar jobs is still a job - but 10 years of school is not worth it to get a bar job!). I don't want to over-qualify myself for most jobs and find I don't have the right skill set required fore PhD level jobs.

So what I'm trying to work out is weather I could study theoretical physics get my PhD and at the end of it if I could go into a well respected decent paying IB job (that could support a family) then I would die a happy man (I would not be happy if I can out and struggled to find work and support a family as the 3-4 years of blissful research has actually just destroyed the rest of my life!) and if not could I still get a decent job?.

If the answer is still no to both then would an applied math open up more opportunity's? (not just in IB but at getting any decent job). like I've said I have heard that PhD's can *destroy* lives as your overqualified and its research I would like to do and that's what IB looks attractive as it is research :).

Thanks for your advice so far guys I really appropriate it and just to define a decent job what I mean is a job that will be intellectually challenging, pays well enough to raise a family and eventually own my own home, put enough money away for a pension and pay off my university debt :). Thanks again guys!

 

[BruceW]

I'm in a similar place right now

 

[Mépris]

I keep reading this horror story's about how many PhDs can get a job! or are working as bar men/maids (I'm not trying to insult anyone here a bar jobs is still a job - but 10 years of school is not worth it to get a bar job!). I don't want to over-qualify myself for most jobs and find I don't have the right skill set required fore PhD level jobs.

From what I can tell, only one PhD 'round these parts is doing that job. And that person also teaches in a few community colleges. I'm not certain if it was that one person or another, but they're also in that particular situation because they would rather *not move*.

Out of curiosity, how much debt do UK students typically get into for their undergrad? I'm guessing around ~15k pounds? Great idea for a thread by the way - I'll be in that situation in ~3 years' time. It's also something I've been thinking a lot about.

 

[Mépris]

then you are the world's number one expert on it.

This reminded me of something I read about N. El Karoui. About how she had just started seeing various links between her maths research and finance. She also openly said that she just knew the maths. (I'm paraphrasing here) It was also mentioned that there are lots of people who've done her master's course were all over wall street - in your experience, is that true?

 

[The_shadow]

Hi Mépris!

From what I can tell, only one PhD 'round these parts is doing that job. And that person also teaches in a few community colleges. I'm not certain if it was that one person or another, but they're also in that particular situation because they would rather *not move*.

I was using the bar job as an general example and not referring to anyone person specifically. As an undergrad I had the opportunity to do a year long placement in the states and met a several of PhD's who were struggling to find work after their PhD several of them we considering taking bar work, supermarket jobs ect just to pay the bills. And that's the position I don't want to be in. I want to research, do a Phd but make sure along the way that I get the skills necessary so that if academia does not work out I'm still an attractive candidate for investment banks and industry's.

Twofish has already said computer programming skills and

I should point out here is the fact that the equations change so quickly is why IB's need physics Ph.D.'s. The thing about general relativity is that the rules don't change.

Though I'm not sure as to which areas of physics change that quickly? unless your working on some very front-line quantum physics? Maths skills are also important, but either will get me that.

time series analysis

is also something that does interest me but I have a physics background not stats.

Mépris I'm glad you too are thing about your future. I came from a very good UK university and I'm top of my cohort and yet my professors and others in my year going on to do PhD's can't understand why I'm "Questioning the academic system that's older than you [me] or I [my professor]". I sometimes feel like I'm the only one that can see its broken - we are training to many Phd's for too few academic jobs and if you question professors about what skills and placements throughout your Phd should you be developing in order to make sure that if you can get into academia you still have a fallback plan B option you get nothing but blank stares and accusations of "not being dedicated enough to your field and with that attitude not cut out to be an academic" [source my professor] :/. Why is it that I'm expected to blindly follow the system and if I can't get an academic position "just re-train in another area such as accuracy or law". People must have plan B surely? and my plan B is finance as I live quite close to London (1 hour by train) and have the potential to further develop the skills they appear to need, I just want to make sure I develop them :). Thanks again for your advice guys!

 

[BruceW]

Mépris I'm glad you too are thing about your future. I came from a very good UK university and I'm top of my cohort and yet my professors and others in my year going on to do PhD's can't understand why I'm "Questioning the academic system that's older than you [me] or I [my professor]". I sometimes feel like I'm the only one that can see its broken - we are training to many Phd's for too few academic jobs and if you question professors about what skills and placements throughout your Phd should you be developing in order to make sure that if you can get into academia you still have a fallback plan B option you get nothing but blank stares and accusations of "not being dedicated enough to your field and with that attitude not cut out to be an academic" [source my professor] :/. Why is it that I'm expected to blindly follow the system and if I can't get an academic position "just re-train in another area such as accuracy or law". People must have plan B surely? and my plan B is finance as I live quite close to London (1 hour by train) and have the potential to further develop the skills they appear to need, I just want to make sure I develop them :). Thanks again for your advice guys!

I would assume most phd's don't go on into pure academia. I would have guessed research and development or business, etc. I'm sure your professor must be aware that not all phd's will stay in academia. Maybe he's trying to motivate you?

Also, about "too many phd's for too few academic jobs". That may be true. But what can they do about it? refuse to let people do phd's because there won't be a professorship or associate position at the end of it? As long as you get funded for it and enjoy it, the phd isn't a waste of time, right? (At least that's my thinking at the moment)..

 

[The_shadow]

Maybe he's trying to motivate you?

Possibly - not sure it had the desired effect though :).

Also, about "too many phd's for too few academic jobs". That may be true. But what can they do about it? refuse to let people do phd's because there won't be a professorship or associate position at the end of it?

No, I agree they should not refuse people - but the fact remains there are not enough jobs and its is an overcrowded market, that said it falls to the Phd student themselves to make sure that they devolve the skills they need to get a decent position and to make themselves a "can't get into academia plan" if you will.

If you can't get into academia and you don't have the skills for industry or IB then what's left? Your over qualified for most job and dare I say it screwed. It's so important to make the best use of education and a Phd is no job training itself education.

As long as you get funded for it and enjoy it, the phd isn't a waste of time, right? (At least that's my thinking at the moment)..

Yes and no. Its worth it in the scene that its what I want to do, what I enjoy. But in terms of future employment is it worth it? that's a harder question to answer - but given the chances of getting the academic job it trains you for no, given the fact you'll over qualify your self most *normal* jobs no, and given the fact that if you don't develop the right skill set need by industry's or IB's jobs no. I am trying to be *selfish* in some respect trying to do what I love and yet get the skills I require so that if academics jobs don't work out i can still get into IB. I completely sympathise with your point "As long as you get funded for it and enjoy it, the Phd isn't a waste of time, right?" was me all the way through undergrad. The old "I don't need money to be happy - give me a black board and some chalk and I'll be happy for the rest of my life" line was my motto.

Well like I said I spent a year of my under grad on placement in amongst the Phd student I did what they did, went to their classes, researched, published and loved it! but I realize that the path I was lead down was full of potential pitfalls as once the Phd "fun" was over you have to integrate with the *non-academic world* (if you fail to get into academia -which is likely - and even the post doc life is not great (and not something and want to do), but I won't get into that here) - and out there they don't care about your research (unless it makes money) and all they want to know is do you have skills x, y and z and will those skill make the company money.
Its a sad reality - soul destroying in fact to *wake up* and realize that my dream of becoming a proff is no less of a dream than someone wanting too be a professional footballer. So I realized that I need to develop useful skills for the *non-academic world* and the reason I like IB is that it is like a Phd - but for the rest of your career! :)

So this is where I am torn between my passion and my career prospects - its not a nice place to be :/. Hence I created this post to see if I could be *selfish* and follow my passion (theoretical physics) and still get a IB career afterwards - and what I would need to do to maximise my chances. Sorry for the rant :) its just so hard and think this is something that most physicists must face at one point or another - but I get the fealing that most realize this after their Phd - when its too late :/. I don't want to be one of those people.

Thanks for your advice again - it is much appreciated and I do see where your coming from :) And like I said I'm happy to go into applied math - its not much different! I still get to use maths and research some fascinating stuff While retaining my employability! Win, Win :)

 

[mayonaise]

... I completely sympathise with your point "As long as you get funded for it and enjoy it, the Phd isn't a waste of time, right?" was me all the way through undergrad. The old "I don't need money to be happy - give me a black board and some chalk and I'll be happy for the rest of my life" line was my motto.

Same same! Those were my ideas, too, at some point. And then I figured out I'd like some nice woman to be with, to have a few kids with. It turns out the women I want don't want men that don't have money. And I can't have sex on the blackboard and feed chalk to the babies.

It is actually quite silly how, back at the ripe old age of 20, I was so sure the "blackboard and chalk" would make me happy "for the rest of my life (TM)".

 

[twofish-quant]

Twofish has already said computer programming skills and Though I'm not sure as to which areas of physics change that quickly? unless your working on some very front-line quantum physics?

The basic equations of physics change nowhere as quickly as the basic equations of finance. I don't know of any field of physics in which the rules of physics change on a month to month basis, whereas this is typical for finance.

Just to give a practice example, right after the finance crisis, you had a situation in which US treasury interest rates went negative. At that point any interest rate model that assumes anything like log-normality just blows up, so you have to come up with new equations to deal with that situation and come up with it quickly.

This is why investment banks eat up tons of string theorists. Once you've figured out the theory of everything, you are done. Once you've figured out about convertible bonds work, you have a year before the world changes and what you've figured out is wrong or irrelevant, and you have to start over again.

I sometimes feel like I'm the only one that can see its broken - we are training to many Phd's for too few academic jobs and if you question professors about what skills and placements throughout your Phd should you be developing in order to make sure that if you can get into academia you still have a fallback plan B option you get nothing but blank stares and accusations of "not being dedicated enough to your field and with that attitude not cut out to be an academic" [source my professor] :/.

The problem has been there since 1970. One of the reasons why I admire both my professor and my department is that both of them had the "right attitude." They've both been incredibly supportive about me (and everyone else) looking for non-academic positions, and they've been quite honest from the beginning about what they knew and didn't know.

Why is it that I'm expected to blindly follow the system and if I can't get an academic position "just re-train in another area such as accuracy or law".

It's ironic here because one of the jobs of an academic is to question the system.

People must have plan B surely? and my plan B is finance as I live quite close to London (1 hour by train) and have the potential to further develop the skills they appear to need, I just want to make sure I develop them :). Thanks again for your advice guys!

If you look at the supply-demand mismatch, then planning for a job outside of academia should be plan A.

 

[twofish-quant]

Also, about "too many phd's for too few academic jobs". That may be true. But what can they do about it?

Be honest and supportive, and not get in the way. For example, if you want a summer off so that you can do an internship in a industrial company, your dissertation adviser can either be helpful or a major obstacle.

The attitude of my department was "there is a massive oversupply of Ph.D.'s for academic positions. We have no clue what to do about it, but here is data, here are the names of alumni, you figure out what to do, and let us know what you've figured out."

 

[twofish-quant]

As long as you get funded for it and enjoy it, the phd isn't a waste of time, right? (At least that's my thinking at the moment)..

The problem is that your funding runs out once you get your Ph.D. One other thing is that Ph.D.'s get insulated from the world of funding. If you talk to post-docs and professors they spend an enormous amount of time worrying about money.

Also lack of money causes lots of problems that interfere with academics.

The issue for me is that I happen to enjoy physics, and so the challenge is to figure out a way of my doing something as close as I can get to what I want to do. By some random chance, that happen to get me into the world of investment banking. What I'm doing is more or less the same work that I did in graduate school, and I make enough surplus so that I will be able to retire and work full time on computational astrophysics in a few years.

If someone were willing to offer me an academic position at one-third my salary, I'd take it, but people aren't knocking on my door for that.

You have to remember that, because the thing about investment banking is that it turned out that I *didn't* have to change myself too much to be attractive. If I had to do something radically different to get a job in investment banking, then I would have given up on finance and looked for something elsewhere.

The one thing that will help you more than anything else is to get a summer internship in a financial firm. This looks good on a resume and it gives you some insight into what you are in for.

 

[twofish-quant]

It is actually quite silly how, back at the ripe old age of 20, I was so sure the "blackboard and chalk" would make me happy "for the rest of my life (TM)".

It actually would make me happy. However figuring out how to do the blackboard and chalk thing is quite non-trivial. It *seems* easy when you are in graduate school because someone has figured out the money stuff for you. Once you have to figure out how to do the money stuff on your own, it turns into a pain.

Also kids make a big difference. I'll skimp on myself, but as far as education goes, I'm not going to skimp on my kids.

 

[The_shadow]

Thanks two-fish, you explain it a lot better than I do. One question when you say:

This is why investment banks eat up tons of string theorists

What is it about string theorist? Presumable they don't have the computational skills required? and dose that mean there is hope for theorists to get into IB say with a summer placement or two? Otherwise like I said I'll go down the applied maths route - but I would prefer theoretical physics. Thanks again

 

[twofish-quant]

What is it about string theorist? Presumable they don't have the computational skills required?

It depends on the level of computational skills. If you are totally allergic to computers, it's going to be very, very hard to get a job. If you can do basic C++, but aren't a guru, then it becomes much easier.

Also there are some fields of particle physics where people end up with guru level C++ skills. Lattice gauge theories, for example.

Does that mean there is hope for theorists to get into IB say with a summer placement or two?

One of the reasons I got hooked into investment banking was that it was obvious that people wanted me for who I was. After spending your life begging for work, it's refreshing to be somewhere that you have to beg less hard, and which you can get a job with reasonable effort.

One reason that getting a summer internship is useful is that you may come in and figure out that you hate investment banking.

Otherwise like I said I'll go down the applied maths route - but I would prefer theoretical physics. Thanks again

Just to step back a bit so that you know where I am coming from.

My entire life is centered around astrophysics. I'm one of the people that got hooked early on. At one point, I decided that I would do whatever it took to study astrophysics. Then it became obvious that going the standard academic route was a dead end, so that I started to think about what I needed to do in order to keep studying astrophysics, and it turns out that investment banking is the closest thing that I can find. Not only do I do something similar to computational astrophysics, but I'm making enough money so that I'll be able to at some point quit and be a graduate student for the rest of my life.

Now different people have different goals, which is a good thing, but for good or bad, physics is something of an obsession for me which is how I got into investment banking. If it turned out that investment banking *didn't* find people that can do quantum field theory useful, then I would have done something else.

This matters because if your primary goal is go work for an investment bank, then getting a physics Ph.D. is a rather crazy thing to do.

 

[twofish-quant]

The other thing is that you have to really understand what the trade-offs are. There is this idea that the choice is between "starving astrophysicist" and "rich investment banker" when in fact that is not the choice. If it would be possible for me to leave the rest of my life as a poor astrophysics graduate student, then I think I would have done that, but I realized that this was not possible, and that to get to my ambition of being a graduate student, I'd have to take a detour through Wall Street.

One of the things about academia is that it's ruthlessly "up or out." Even if you love the life of a post-doc, you get two, maybe three, and if you don't get a permanent position then you are finished as a research. There aren't enough permanent positions to go around, and it was pretty obvious to me that I wasn't going to get one since I'm not that smart.

The other thing is that I'd very strongly urge you to take hard math courses on quantum field theory rather than applied math courses. The math is harder so if you take the hardest math courses that you can, then you can teach yourself optimization theory by using google and wikipedia.

Just to give you an idea of how that can be used

See

Quantum finance: path integrals and Hamiltonians for options and interest rates by Baaquie

Path integrals in quantum mechanics, statistics, polymer physics, and financial markets by Kleinert

Physics of finance: gauge modelling in non-equilibrium pricing by Illinski

Also Illinski's book is worth getting even if you aren't going finance, because the first few chapters have the most readable explanations of fiber bundles that I've ever seen.

 

[The_shadow]

My entire life is centered around astrophysics. I'm one of the people that got hooked early on. At one point, I decided that I would do whatever it took to study astrophysics. Then it became obvious that going the standard academic route was a dead end, so that I started to think about what I needed to do in order to keep studying astrophysics, and it turns out that investment banking is the closest thing that I can find. Not only do I do something similar to computational astrophysics, but I'm making enough money so that I'll be able to at some point quit and be a graduate student for the rest of my life.

I think you hit the nail on the head! My life is physics (quantum and astro) but I've realized very early on that academia is a dead end. I didn't want that passion to later on hurt my career so I wanted to make sure that I can chose a field that allows me to both study my passion and have a decent career, like you said I also like the look of investment banking because it looks like grads school and you would make enough money to retire early to continue with what I love. And like you said I can always teach my self optimization theory later on. Thanks for all your help.

 

[ColonialBoy]

I'm in a similar situation. I'd like to be an academic but get paid working contract computer consulting. There are are too few academic jobs and if you jump off the academic boat its very hard to jump back on.

I'm in Australia & I see lots of people wanting to get into investment banking. The acceptance rate is very low.

 

[ode_to_joy]

Hi

I am also interested in this career. And I am really glad to hear that physics phd s land on this job without much struggle.

How about pure math phd s? Apparently some models used in physics are directly related to finance but pure mathematics is rather abstract right? Do they also qualify for quantitative finance jobs?

Also, do they have enough spare time to pursue academics while having the career? I heard that those who have finance jobs do not have homework and their weekends are free.

 

[The_shadow]

The other thing is that I'd very strongly urge you to take hard math courses on quantum field theory rather than applied math courses. The math is harder so if you take the hardest math courses that you can, then you can teach yourself optimization theory by using google and wikipedia.

So is it always advisable to take the harder quantum stuff than the applied math stuff? And are there any good quant grad schemes it there if I choice not to do a Phd?

 

[DrummingAtom]

How accurate is this article?

http://www.markjoshi.com/downloads/advice.pdf

 

[snipez90]

There doesn't seem to be anything particularly wrong about Joshi's advice, though twofish can probably say more about that.

Perhaps one of the most important things to keep in mind is Joshi's note about the uncertainty of today's economy. Depending on the state of the economy when you apply, you may only get one or two interviews from different firms. Therefore it's crucial that you prepare well, as you may not get the opportunity to use the first few interviews you get as mere "practice".

 

[twofish-quant]

How about pure math phd s? Apparently some models used in physics are directly related to finance but pure mathematics is rather abstract right? Do they also qualify for quantitative finance jobs?

It's much easier if you have computational experience, but I know of a few people in the field that don't have much computer skill.

Also a lot depend on attitude. If you have pure math skills, but you are willing to do applied stuff, that works. If you insist on working on certain problems regardless of whether or not they are useful, then it's going to hurt you.

Also, do they have enough spare time to pursue academics while having the career?

I haven't been able to do it, and I don't know of anyone else that has been able to do it. You are free to try to be the first, but it will help if you look at the barriers, to figure out ways of working around them.

I might be able to get away with it, if I didn't have a family, but I do.

Also, one big problem is that the academic system is not set up to deal with part timers. For example, if I edit an article on a wiki or post a forum article, I spend one hour, and I'm done. Most things in academia require a block of time, and if you can't commit to working on something for six months, it doesn't work out.

It's a problem that you don't have access to resources. Not physically being in a university makes these a lot harder. Not having easy access to a research library also makes things harder. Access to computer facilities is a problem. The biggest problem is that you find it difficult to be connected into a human research network.

I heard that those who have finance jobs do not have homework and their weekends are free.

Yes, but you are usually dead tired after work.

 

[twofish-quant]

So is it always advisable to take the harder quantum stuff than the applied math stuff?

Yes. You should try to learn the applied math stuff on your own.

And are there any good quant grad schemes it there if I choice not to do a Phd?

There are a number of MFE programs, but if I'd advise against them. The trouble is that if you get something like an MBA, Masters of Finance, Masters of applied math, Masters of statistics, Masters of computer science, then you aren't tied to quantitative finance.

I know of very few MFE's personally. They do get jobs, just not in my neck of the woods. Most of the people I know of with masters degrees have CS masters and worked in something non-financial before making the jump to financial programming.

 

[twofish-quant]

Depending on the state of the economy when you apply, you may only get one or two interviews from different firms.

That's not usually the situation. Most large firms are confederations of different groups, and it's not uncommon in some firms to be interviewed by two different groups at the same time. Also, if you blow one interview, there is usually a six months waiting period before you get another shot.

There are about ten or so large investment banks, but they each have dozens of groups internally. There are *thousands* of hedge funds.

It happens that with my current employer, I got my job after my third try (with a gap of one or two years between interviews).

Therefore it's crucial that you prepare well, as you may not get the opportunity to use the first few interviews you get as mere "practice".

The problem is that your first few interviews are going to be practice anyway. No matter how hard or how much you prepare, there is a big difference between reading about riding a bicycle and doing it, and you should expect your first two or three interviews to go badly. It's part of your education.

Also for Ph.D.'s, the reason what finance is attractive is that the jobs exist. If you have to go through insane hoops to get a job in finance, than you are better off looking elsewhere.

 

[atyy]

Quantum finance: path integrals and Hamiltonians for options and interest rates by Baaquie

Path integrals in quantum mechanics, statistics, polymer physics, and financial markets by Kleinert

Physics of finance: gauge modelling in non-equilibrium pricing by Illinski

Also Illinski's book is worth getting even if you aren't going finance, because the first few chapters have the most readable explanations of fiber bundles that I've ever seen.

How interesting to see these recommended by someone who works in finance! I came across the first two when trying to learn stochastic processes for biology, and wondered if real finance people use this. Illinski's title sounds interesting, I'll definitely take a look.

 

[twofish-quant]

I came across the first two when trying to learn stochastic processes for biology, and wondered if real finance people use this.

It's complicated, because what types of math gets used changes from year to year. One thing that is educational is to compare Baaquie's 2004 book with his 2009 book. The math techniques that were used in 2009 are somewhat different than in 2004. One suggestion that I have is to read these sorts of things as "history books." Reading a text from 2004 will give you an idea of the math techniques that were used in 2002, which may or may not be related to anything anyone is doing in 2011.

One reason that finance books have surprisingly readable explanations of math is that traders will not use (nor should they use) math that they do not understand, so there is a lot of pressure to try to explain what you are trying to do.

In the last few years, monte carlo has been really popular, because

1) computers are a lot faster in 2009 than they were in 2002
2) people are much more suspicious of complex equations in 2009 than they were in 2002. One good thing about monte carlo is that it's easy to explain.

 

[atyy]

It's complicated, because what types of math gets used changes from year to year. One thing that is educational is to compare Baaquie's 2004 book with his 2009 book. The math techniques that were used in 2009 are somewhat different than in 2004. One suggestion that I have is to read these sorts of things as "history books." Reading a text from 2004 will give you an idea of the math techniques that were used in 2002, which may or may not be related to anything anyone is doing in 2011.

One reason that finance books have surprisingly readable explanations of math is that traders will not use (nor should they use) math that they do not understand, so there is a lot of pressure to try to explain what you are trying to do.

In the last few years, monte carlo has been really popular, because

1) computers are a lot faster in 2009 than they were in 2002
2) people are much more suspicious of complex equations in 2009 than they were in 2002. One good thing about monte carlo is that it's easy to explain.

In science, there are also experimentalists and phenomenologists - the books you recommend seem more theory based? Are there books for finance "experimentalists" or "phenomenologists". Also, is there any kind of "industry standard" process by which data is gathered and a theory is verified in finance?

 

[twofish-quant]

In science, there are also experimentalists and phenomenologists - the books you recommend seem more theory based?

That's because I'm a theorist. There are people with experimental backgrounds in finance.

Are there books for finance "experimentalists" or "phenomenologists".

It's quite a bit harder to find those books for cultural reasons. Basically, theorists tend to work on complex derivative valuation, and in that area there is pressure to be more open about what you are working on, because you are making money selling derivatives and if you have a model that everyone knows, you are more likely to be able to make the sale. There's another marketing reason in that there are people in the industry who are "stars" (i.e. everyone knows who they are) and as with academia, one way of be a star is to write a book.

Another game is algorithmic trading. What you do is data mining and time series analysis, and this is one area that is strong for people with statistical and experimental backgrounds. It's also a lot more secretive. If you figure out that X, Y, and Z are buy and sell signals, then the last thing you want to do is to write a book on it. The good terms "market microstructure" and "quantitative trading" will get you some books on the topic.

There are also some regulatory issues. It's easier to talk about derivative pricing because in the United States, most people cannot buy derivatives. If I start talking about what stocks to buy or not to buy, then SEC is going to get very, very annoyed.

Also, is there any kind of "industry standard" process by which data is gathered and a theory is verified in finance?

You look at your bonus check at the end of the year.

One thing that I do like about Wall Street is how everything is focused on profit. This does have some bad effects, but it also has some good things, in that you tend not to get into endless random discussions that go nowhere.

There are some interesting philosophical issues here. One problem is that the rules change. For example, if you did a medical study in 2005 or did some physics experiments, the one thing that you know is that the laws of physics and biology didn't change much if at all between 2005 and 2011. However, one thing that we do know is that the rules of finance changed a lot between August 2007 and December 2007.

The other thing is that there is something I call "physics-truth" (The speed of light is constant). There is also something I call "marketing-truth" (Coke tastes great). The weird thing about finance and economics which I find fascinating is it doesn't fit into these two categories.

 

[DrummingAtom]

Also, is there any kind of "industry standard" process by which data is gathered and a theory is verified in finance?

You look at your bonus check at the end of the year.

I don't know why but this is one of the funniest things I've ever read on here even though I know you're being serious.

 

[ode_to_joy]

Twofish-Quant, would you advise undergraduate students to take few economic/financial electives if they are serious about this path? I mean, is it really necessary to take these courses if you want to get a job in finance?

 

[jetwaterluffy]

You look at your bonus check at the end of the year.

One thing that I do like about Wall Street is how everything is focused on profit. This does have some bad effects, but it also has some good things, in that you tend not to get into endless random discussions that go nowhere.

If finance was scientific, they wouldn't have bonuses, as they stress people out so much it actually lowers their productivity.

 

[twofish-quant]

Twofish-Quant, would you advise undergraduate students to take few economic/financial electives if they are serious about this path?

You can save yourself some money, and buy some books on Amazon. It's important to get a strong undergraduate liberal arts education, so you might be better off taking a course on 19th century French literature and buying economics books on Amazon, or taking a course on economics and buying 19th century French literature. Or learn sculpture, or philosophy.

One thing to keep in mind with economics and finance is that when you read a book on Newtonian mechanics or algebraic topology, you can be pretty sure that what you are reading is not false. This isn't true with economics and finance. Much of what you read in an economics and finance text are flat out wrong. The hard part is that no one (including myself or the professor) are sure which parts are wrong.

One thing that I like about finance is that *everything* is relevant. I know someone that had to teach himself about the industrial uses of soda ash because he had to figure out how much to loan to soda ash companies. There are people I know in finance that come from art backgrounds, because when someone wants to use a painting as collateral, you have to know how much it is worth.

So for undergraduate it's less important to learn special topics, than to "learn how to learn."

I mean, is it really necessary to take these courses if you want to get a job in finance?

It's not essential. I've never taken a formal course in finance or economics. I have a ton of finance and economics books on my bookshelf. One reason this works is that I happen to find the topic interesting.

 

[ode_to_joy]

I want to get a job in quantitative finance right after my phD. I want to earn $200k+ per year and I want to get away from publish or perish pressure. You have mentioned that the subfield of mathematics (ie number theory or topology) does not really matter. How about abstract algebra? I believe groups, fields and that kind of stuff or logic hardly cover quantitative method in their curricula, but is it still possible to get a quant job with phd in set theory, logic, or abstract algebra? I hope this relativelt metamathematical field somehow provide a different perspective on finance but I am not sure if this is the way it works

 

[Vanadium 50]

8 days ago you were dhttps://www.physicsforums.com/showthread.php?p=3560353#post3560353" The post-PhD time scale is 350 or 400 times longer than this. So it's important not to get ahead of yourself - doing well in high school is your next step.

 

[Raioneru]

One of the paradoxes is that if you want to get a finance related job through the Ph.D. physics route (and this is a bad idea unless you are interested in physics), you are better off focusing on doing research on something in physics than in something financial. The typical research topics that theoretical physicists work on turn out to be more relevant to certain financial jobs than the stuff that people in finance work on (which is why banks hire physicists).

It's also extremely difficult to do research on financial topics part time, because in most situations, you are not going to have access to the raw data. One of the differences between finance and physics is that if you discover some deep secret about how black holes work, you want everyone to know, whereas if you discover some deep secret about how the stock market works, then you want no one else to know.

Basically I have 2 plans of equal importance (I guess I'll just go with what opportunity I'm given). I would like if possible a diverse career with options. I'm pretty interested by the application of physicist skills to the financial market but I would also like to have the possibility to work as a university professor, I really want to at least teach physics at some point in my life, its a big deal to me. It also explains why I don't want to get a MSFE after all: It would limit my option and inevitably make me regret deviating from my physicist path.
(comparatively Medical Physics would give me the same options: R&D/teaching/clinical practice/administration etc. . .)

Seriously twofish-quant, I would like to thank you for sharing your thoughts and knowledge about the subject. you are extremely helpful :)

 

[twofish-quant]

Basically I have 2 plans of equal importance (I guess I'll just go with what opportunity I'm given).

First you have to decide what you really want to do with your life.

In my case, my primary goal is do "do physics" and if some major research university offered me a tenured faculty positions paying one third of what I make right now, I'd be gone in an instant.

As it is, I haven't gotten any job offers, so I'm going to have to make do with what I'm doing.

The reason that this matters is that if you have any intrinsic interest in finance, then getting a physics Ph.D. makes no sense at all. Getting a physics Ph.D. is probably the worst way of doing finance if that's your main interest. However, my main interest is doing physics, and what I'm doing is as close as I can get.

This also matters. Right now about 50% of my job involves administrivia, and only about 25% involves anything like "research." That's bearable, but if my boss comes in and I figure out that my job has been changed so that I'm not doing anything geeky at all, I'm also leaving for something else.

I would like if possible a diverse career with options. I'm pretty interested by the application of physicist skills to the financial market

One problem is that if you are starting your physics Ph.D. now, then the world is going to be a very different place in a decade.

but I would also like to have the possibility to work as a university professor, I really want to at least teach physics at some point in my life, its a big deal to me.

Be careful what you wish for.

If you want to teach physics, that's easy. Community colleges are looking for adjunct physics instructors, and you'll be working as a TA as a graduate student. Now, if one thing that you'll learn about teaching is that it's hard and sometimes rather annoying.

Seriously twofish-quant, I would like to thank you for sharing your thoughts and knowledge about the subject. you are extremely helpful :)

First figure out what it is that you really want to do. Then figure out what you can get given that you can't get what you want.

 

[icomeinpeace]

twofish-quant,

What would be your advice for a high-school student who wants to become a quant? I thought a sequence like the following was perfect for that goal:

Undergraduate:
http://ugradcalendar.uwaterloo.ca/page/MATH-Actuarial-Science-Mathematical-Finance

and then any of the well recognized MFEs on the market. But then I read this thread and your opinions against MFEs, and going into something like Physics if the ultimate goal is to become a quant. I agree with the latter, but if MFEs are not a good start for quant jobs either, how else can anyone get into the field?

Thanks a lot...

 

[twofish-quant]

What would be your advice for a high-school student who wants to become a quant?

Get a well rounded liberal arts education in college, try different things, and don't be too quick to decide on what you want to do.

Realize that by the time you are 30, quants may not exist, and the hot job may be something in repairing solar panels or in agriculture.

Also, since you are in Toronto, it could be useful to take part in the protests that people are setting up. Lots of useful experience and you get to meet people.

I thought a sequence like the following was perfect for that goal

Don't think so. I don't see any art, history, philosophy, or literature in that program. Also it's important in undergraduate years to be different. If you take the exactly same courses and do the exact some coursework as everyone else, then there is nothing that makes you different when employers look for people, and you are going to be one of a ton of people after the same set of jobs.

If you study goat-herding in Tajikistan, then there is something different about you which can be useful if there is a job that involves Tajik goat herding. (It turns out that one of the major financial writers started studying Tajik goat herders. It was useful because when the Soviet Union fell, they needed a Russian speaking reporter.)

But then I read this thread and your opinions against MFEs, and going into something like Physics if the ultimate goal is to become a quant.

My ultimate goal is and also has been to study astrophysics. It turns out that being a quant is the closest thing that will get me to that goal.

If your ultimate goal is to be a quant, the first thing that you should ask yourself is "why do you want to be a quant?" In my case, it's because it's the closest thing to computational astrophysics that I can find, and if I can find anything closer, I'll quit.

I agree with the latter, but if MFEs are not a good start for quant jobs either, how else can anyone get into the field?

No clue at all. You are asking me what the world will be like in ten years, and I really have no clue what the job market will be like in ten years. I very strongly suspect that I won't be doing what I'm doing now. It could blow up in which case I'll be looking for whatever work I can (been there done that), or it could be spectacularly successful, in which case I'll get bored/cash out and the spend the rest of my life studying physics.