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Finance jobs for physicists

  1. Aug 10, 2011 #1
    Hi, I've heard of physicists working on the financial sector. Do these physicists only have a bachelor degree, master or PhD? And is it difficult to go to the financial sector as a physicist?
  2. jcsd
  3. Aug 10, 2011 #2
    If I'm not mistaken, the math needed to complete a physics bachelor will leave with a mastery of the math needed in finance, and you will be able to model some insanely complex financial processes. I suspect it's not all that difficult to get into relative to other areas of work, but don't expect much physics. It also helps if you're in a major financial center such as New York City. And yeah, having an MS or PhD seems to always be advantageous, although there are probably majors that are much better aligned with finance.
  4. Aug 10, 2011 #3
    I've always wondered how much academic pedigree plays into getting these finance jobs.

    My degree was from a non-elite school but I spent some of my grad career at a university with quite bit more name recognition. While there I actually took part in a financial mathematics study group and some of the guys in it did go down that road. Ultimately I decided that living in London or New York wasn't something that interested me and found a career at a stodgy old national lab. But I've always wondered if someone with a degree from Podunk State U. can get a job in finance if he or she has good skills.
  5. Aug 10, 2011 #4
    People with physics bachelors tend to go into business consulting. Most jobs that I know about are for Ph.D.'s. As far as difficulty goes, not really. As with other jobs, if the economy stinks, no one is hiring, but you don't run into a lot of the barriers you see in other fields.
  6. Aug 11, 2011 #5
    For bachelors business consulting, it matters a lot. Every year McKinsey does some massive hiring at MIT, and for that the MIT brand matters a lot so that McKinsey can tell their clients that an MIT graduate is doing the work.

    For Ph.D.-level jobs, it doesn't matter at all. Part of it is demand, Harvard MBA puts out 900 students/year whereas there are about 1000 physics Ph.D.'s/year total. One other factor is that finance is invariably a second choice for physicists so if you got your first choice of an academic job you won't be applying.

    Also note that MBA and physics Ph.D. hiring are totally different worlds. MBA hiring is *very* brand sensitive. The reason for this is that the big banks hiring truckloads of MBA's so when they need to, they go to their local B-school with a shovel and pull people across. The big name B-schools have a lot of connections, whereas others don't.

    One way of thinking about it is would you rather buy a stereo set from Best Buy or some random person at the side of the road. MBA hiring is like that.

    Physics Ph.D., yes. MBA and physics bachelor, much harder.
  7. Aug 11, 2011 #6
    I assume similar options are available for people with maths bachelors, as they have similar skills to physics bachelors? What skills do I need in addition to my maths bachelors to increase my chances of getting a job in business consulting?
    Last edited: Aug 11, 2011
  8. Aug 11, 2011 #7
    What about engineers in finance!?

    Is it more hard or easy for a engineer of, lets say, electric engineering or mechanic engineering to land a job in finance comparing it to physics and mathematicians??

    And , are physics and mathematicians more able to work or more searched by companies on finance, wall street kind , than economists or accountants !?
  9. Aug 11, 2011 #8
    Need to ask someone else, but one thing that I've learned about job hunting is to assume nothing.

    Also math and physics have wildly different skill sets.
  10. Aug 11, 2011 #9
    For Ph.D.'s it's about the same.

    Different jobs. Different skills. If you want a crack C++ programmer, the odds are that you won't be looking for an economist or accountant.

    One thing to make clear is that there are rather few jobs in finance for physics majors, but there are even fewer physics majors. Probably 95-98% of the jobs in finance have nothing to do with physics, but finance is big enough and the number of physics Ph.D.'s is small enough that it's not hard to find a job.

    That's one reason I very strongly advice *against* getting a physics Ph.D. if your main interest is finance. The US graduates about 1000-1500 physics Ph.D.'s and adding or removing 200-300 will radically change the job market. If you have an extra 1000 physics Ph.D.s that want finance jobs, then you'll flood the market.

    Now if you love physics but you want a decent job, that's different.
  11. Aug 12, 2011 #10
    Really? I suppose physicists will generally have better programming skills. I can't think of anything else, but then again I don't do physics. Could you please elaborate?
  12. Aug 12, 2011 #11
    Just a thought...have you considered what finance capital has done to our world?
  13. Aug 12, 2011 #12
    In your experience, are their Chemistry PhDs working in finance? Doing maths-y jobs?
  14. Aug 12, 2011 #13
    Oh, pray tell, enlightened one.
  15. Aug 12, 2011 #14

    Unfortunately it has done way more wrong than right things!
  16. Aug 12, 2011 #15
    It did so many things wrong because regulators allowed to. Industrial companies have done many bad things to our world too, and would do even worse if it wasn't for the law to prohibit it.
  17. Aug 12, 2011 #16
    Really? So what wrongs did finance capital commit?
  18. Aug 12, 2011 #17
    Hmm, I don't know where you were in 2008 when finance capital got bailed out for trillions of dollars...and after two years, those profits still have not made it increase the wages of the majority of people in the US.

    You can see this wage discrepancy here:
    (from the The 'Jobless and Wageless' Recovery from the Great Recession of 2007-2009 (pdf). Source: Center for Labor Market Studies, Northeastern University, Boston, Massachusetts; May 2011).

    I realize that those indices are not just from corporations that offer financial services, but let's just look at the rise of finance capital (as a break from industrial capital) and what it has induced.

    Industrial capital accumulates wealth (i.e. attains surplus value/profit) by actually producing things. Say for instance, a pin-making factory. The capital invested in making pins, is (by definition) industrial capital. The value-added is by actually producing something (in this example, pins) and profit is made by the added value attained through the process production (i.e. taking raw materials – steel, etc, and through a process transform those materials into a product – pins.) On the other hand, merchant capital accumulates wealth, not by production, but rather, simply by trading something– as in the times of the mercantilist market. Adam Smith, for instance, writes about the East India Company buying cheaply and “selling dearly” (at a higher cost) – this is the essence of merchant capital. So the surplus value accumulated in productive (industrial) capital, comes by the process of adding value to raw material – by producing products. In merchant capital, it simply comes by manipulating and speculating prices in a trade-focused market and selling for a higher price than what the asset was originally attained (bought) for.

    The rise of finance capital, in a sense, is a return to the paradigm of merchant (mercantilist) capital. Similarly to merchant capital, finance capital accumulates wealth simply by trading. But what is being traded? “Financial instruments” such as collateralized debt obligation (CDO) have increasingly become the “product” to sell for contemporary finance capitalists. Financial instruments such as CDO’s, accumulate capital by the extraction of capital through interest rates on loans (i.e. credit). It is, then, the function of finance capital to create credit. But why would more people need credit? For the majority of the people living in the neoliberal post-Fordist capitalism wages have stagnated (if you haven't yet, look at the report from Northeastern I linked to at the end of my comment); the cost of living, however, has increased, and so people are forced to take on credit to live a comfortable life.

    But why does this matter? Doesn’t the rise of finance capital once again (as Fordism once did) bridge the gap between production and consumption by providing consumers with credit by which they can consume? No. Finance capital merely prolongs the problem of capitalist accumulation. Consumption can be sustained by credit only for so long before the system crashes and the contradiction of capitalism (i.e. the disconnect between dwindling wages and high expected consumption) crystallizes. At some point, the debt (interest and principal) has to be paid. But if wages are still stagnant, where will the majority of the population get enough capital to pay off their debt? They just will not pay. It is then that the economic system (which is overwhelmingly reliant on these debts – about 44% of
    income of the U.S. economy is now in finance capital) collapses.

    Clearly, the rise to prominence of finance capital has once again revived the question of the inherent contradiction in capitalist accumulation –what is to be done about it? It seems like until the state can be strong enough to redistribute the vast wealth generated by finance markets, those at the bottom of the economic chain will be enslaved by their credit histories and low wages, and will continue to suffer the economic crises created by those at the top.

    Below is the full report I mentioned in the beginning of my comment:
    The 'Jobless and Wageless' Recovery from the Great Recession of 2007-2009 (pdf). Source: Center for Labor Market Studies, Northeastern University, Boston, Massachusetts; May 2011
    http://www.employmentpolicy.org/sites/www.employmentpolicy.org/files/field-content-file/pdf/Mike%20Lillich/Revised%20Corporate%20Report%20May%2027th.pdf [Broken]
    Last edited by a moderator: May 5, 2017
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