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

  1. May 19, 2010 #1
    Hi everyone,
    I have been on this forum since December last year. I have read many interesting threads by twofish-quants and many other members about the possibility of working in Wall Street after obtaining a Physics PhD. Although I understand that a career in Wall Street is really financial rewarding and challenging to intelligent people such as physics PhDs, I don't really know whether people following this track have an ultimate goal in mind when they start their PhDs.

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

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

    Thank you
     
  2. jcsd
  3. May 19, 2010 #2
    I don't know of anyone that has done a Ph.D. in physics or math specifically to work on Wall Street. Personally, I think it's an awful idea. You do the Ph.D. in physics and math because you like physics and math, and then you look for jobs that are useful.

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

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

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

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

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

    Because I like physics.

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

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

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

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

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

    But since I like a challenge, I think that's cool.
     
  4. May 19, 2010 #3
    So would you recommend a Wall Street job for a person with many family responsibilities? (My family is living in a sloppy apartment now. I want to buy my parents a house and send my sister to a good private school on the east coast...)
     
  5. May 28, 2010 #4
    People get PhDs in physics because they like physics, not to make money.
     
  6. May 28, 2010 #5

    mgb_phys

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    Speak for yourself - I did it for the women.
     
  7. May 28, 2010 #6
    Yea. And people who get degrees in management do so to manage. And people who get degrees in accounting do so to work as accountants.

    People who want to make money get degrees in money.

    Everybody knows this.
     
  8. Jun 1, 2010 #7
    You know, I'm compelled to say that I admire the genuine nature of all your posts. I think for a lot of people (on this forum, in our schools etc.) you represent a huge side of our disciplines that is otherwise shunned. Just recently a Professor of mine overheard two of my peers talking about what they could do when they're ready for the working world; of course one of them mentioned working as a "quant" and my Professor immediately scoffed. He then jokingly said "Shh! Don't say that around here! They won't let you in the mathematician's union if they hear you talk like that!" As funny as it was it really describes the sentiment in a lot of universities.

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

    Also, I will back you up about the physical Wall Street being a ghost town. I live in the NYC area and I'm over there very often.. It's a surprisingly quite neighborhood.
     
  9. Jun 1, 2010 #8
    Which is rather self-destructive. The thing about having a decent paying job is that it gives you time and money to do physics. There really isn't any money or time constraints that would keep me from publishing papers in astrophysics. The main constraints are creating the social networks that you need to do research, which is why I end up posting a lot on this topic because the internet is good at creating social networks.

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

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

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

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

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

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

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

    The NYSE and floor traders there is something like colonial Williamsburg. Echos of a by-gone era. I think you could shut down the floor of NYSE and no one would notice. But NYSE-Euronext moved to electronic trading about a decade ago. The other thing that pushed the market into cyberspace was 9/11. Something that happened was that 9/11 showed how a relatively small physical attack could shut down markets for a long time, so after 9/11 all of the major banks started distributing their assets. You could shut down the markets with a tactical nuclear weapon, but you couldn't with anything conventional. Also people talk about cyberattacks but that's more alarmist science fiction than anything else.
     
  10. Jun 1, 2010 #9
    So, in your opinion, will we soon see a change in the way research is conducted and how the findings are published? And out of pure curiosity: do you consider yourself an astrophysicist, amateur physicist or do you not affiliate yourself with the discipline at all?

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

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

    Thanks for your inputs and kind of being that other side of the fence that we might need. The way I see it, anyone that can make a nice living and still enjoy what they do is ahead of the game. I just can't understand why subjects like physics and upper maths, which are always scrutinized for that lack of real world applications, would not be looking for any possible way to put this very real application in the forefront for aspiring students.
     
  11. Jun 1, 2010 #10
    The internet has already massively changed the way research is conducted and findings are published. It's also massive changing the way that education is being done. One other thing is that isn't quite commonly realized is that the cultural aspects of scientific publication are quite different from area to area. I happen to be fortunate that in astrophysics, the referred journal article is already considered obsolete as a mechanism for transmitting current research. It's used for other things.

     
  12. Jun 1, 2010 #11
    Another point of interest on this topic is the comparison of a quant to an actuary. In my experience, actuarial science is a respected and loved applied subject, some universities even have dedicated degree programs for it. I wonder if at some point becoming an actuary was an outsider's job that same as becoming a quant is now. Which leads to the very obvious question of: if so, will the profession become more and more accepted as goes on? I have seen a few universities offering degrees in Quantitative Finance (NYU's Courant Institute is the one that sticks out in my head). Personally, I think I'd much rather work as a quant than an actuary, but that's nothing more than an educated guess.
     
  13. Jun 1, 2010 #12


    I think the question is accepted by whom?

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

    One thing that I would strongly advise physics Ph.D's that want to go into finance is *NOT* to spend too much time studying finance. You are better off studying something that has no obvious connection to finance like numerical relativity and machine vision than to go over the finance textbooks. You need some basic knowledge, but you are going to be more valuable if you have some insights that come because you *haven't* been reading the same textbooks as everyone else.
     
  14. Jun 2, 2010 #13
    By the cognoscenti, I suppose. I just feel like the general concensus is academia (from people inside academia) is that going into finance is a "sell-out" but becoming an actuary is a viable career for a mathematician. I think you hit the nail on the head when you said its a case of things making sense for those on the in and not to those on the out.
     
  15. Jun 2, 2010 #14
    But who is "inside academia". What is academia?

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

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

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

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

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

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

    One thing that fascinates me about the University of Phoenix is that they have gotten around the serfdom dilemma.
     
  16. Jun 2, 2010 #15
    Probably the biggest difference between actuarial work and quantitative finance in this social context is that actuarial work is ultimately regulatory in nature. While there are lots of exceptions, the vast majority of actuaries have jobs because of regulations imposed on financial companies by State or Federal Governments. Actuaries are also part of a profession with barriers to entry, with its own rules and code of conduct. I believe that this creates a significant difference in how the two careers are perceived and how they change over time.

    As a side note though, I don’t think actuarial science is really all that respected, and I’m quite sure it isn’t loved. I think maybe you meant to say it is established.
     
  17. Jun 2, 2010 #16
    Great quote and a very thought provoking post.
     
  18. Jun 2, 2010 #17
    I usually see attitudes like that in my field; not only with "quants", but with anything that is not directly related to particle physics. I agree with twofish in that these attitudes are really self-destroying, since if people were more open to collaborate in other areas, it would probably be good for the field itself. (For example, the Higgs mechanism idea came from condensed matter).

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

    A consequence of this is that many people who finally succeed end up being rather narrow-minded and would never consider working in anything else (at least that's my impression).
     
  19. Jun 2, 2010 #18
    I would say academia is a community built around the exchange of knowledge. Who is inside academia is another story. I'd say the obvious students and scholars, but I know there is a better answer somewhere. I'm intrigued by your remarks thus far because I know the way knowledge is exchanged is changing, and I believe it's a natural evolution in the process. It's clear to me that you share a seemingly similar belief.

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

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



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

    How so?
     
  20. Jun 2, 2010 #19

    In my experiences, actuarial science is a respected avenue of applied mathematics. I know plenty of people that are studying mathematics just to become actuaries and they are intrigued by subject of actuarial science -- which to me makes it a loved subject.
     
  21. Jun 2, 2010 #20
    I don't know if this describes the sentiment in many universities but that's the kind of behavior that would turn me away from a place, field, or person. I dislike individuals that feel superior to me just because they are able to compute Pi or because I chose to use whatever skills I may have in an area not of their approval. Really sad that some people look down upon others just because they were lucky enough to be born in a good socioeconomic tier and got lucky on their random string of genetic code.

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