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

Which course?

Poll closed Sep 24, 2011.
  1. Quantum fields and fundamental forces.

    1 vote(s)
    9.1%
  2. Applied math.

    10 vote(s)
    90.9%
  1. Sep 20, 2011 #1
    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?
     
    Last edited by a moderator: Oct 3, 2011
  2. jcsd
  3. Sep 20, 2011 #2
    Re: Investment banking..

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

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

    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.


    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.

    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.
     
    Last edited: Sep 21, 2011
  4. Sep 21, 2011 #3
    Re: Investment banking..

    For CFD, which is more useful for IB, Lagrangian or Eulerian methods (particles vs grids)?
     
  5. Sep 22, 2011 #4
    Re: Investment banking..

    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.
     
  6. Sep 22, 2011 #5
    Re: Investment banking..

    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.
     
  7. Sep 22, 2011 #6
    Re: Investment banking..

    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.

    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.
     
  8. Sep 22, 2011 #7
    Re: Investment banking..

    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.
     
  9. Sep 22, 2011 #8
    Re: Investment banking..

    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.
     
  10. Sep 23, 2011 #9
    Re: Investment banking..

    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.
     
  11. Sep 23, 2011 #10
    Re: Investment banking..

    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.
     
  12. Sep 23, 2011 #11
    Re: Investment banking..

    Going back to the poll question, what advantage, if any, would a physics PhD have over an applied math PhD for quant type positions?
     
  13. Sep 24, 2011 #12
    Re: Investment banking..

    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.
     
  14. Sep 24, 2011 #13
    Re: Investment banking..

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

    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 physic (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 gonna 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!
     
    Last edited: Sep 24, 2011
  15. Sep 24, 2011 #14

    BruceW

    User Avatar
    Homework Helper

    Re: Investment banking..

    I'm in a similar place right now
     
  16. Sep 24, 2011 #15
    Re: Investment banking..

    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.
     
  17. Sep 24, 2011 #16
    Re: Investment banking..

    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?
     
  18. Sep 24, 2011 #17
    Re: Investment banking..

    Hi Mépris!

    I was using the bar job as an general example and not referring to any one 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
    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.
    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!
     
  19. Sep 24, 2011 #18

    BruceW

    User Avatar
    Homework Helper

    Re: Investment banking..

    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)..
     
  20. Sep 24, 2011 #19
    Re: Investment banking..

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

    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 its self education.

    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 realise 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 wont 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 realise that my dream of becoming a proff is no less of a dream than someone wanting too be a professional footballer. So I realised 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 realise 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 :)
     
    Last edited: Sep 24, 2011
  21. Sep 24, 2011 #20
    Re: Investment banking..

    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)".
     
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