Bad time to get into financials?

[atreides]

Wow..i'm wondering how much longer the wall street onslaught will continue...LB facing failure and ML on the verge of being bought..I would guess with all the fracas going on..getting an entry level job on the street would be really difficult....Do you guys have any idea about hiring stats forecasts at baruch and other major MFE programs..

 

[bigbadwolf]

Even if these forecasts exist, they will exist only for the next year (and I'm not even talking of how reliable they'll be). After that, all bets are off. A golden age is coming to an abrupt end. Quants will fare like lawyers -- take a look at this blog for temp attorneys:

Temporary Attorney: The Sweatshop Edition

 

[sagredo]

I was just wondering the same thing. I am going into the Risk Mgmt & Financial Eng. programme at Imperial. Does anyone have any idea what this may do to my chances of finding work when I get out in a year? Is it worth it to take on a GBP 20k+ loan to finance an education for jobs that may not exist? I'm more nervous than many. I finished my PhD in physics just as the tech bubble burst.

 

[Andy Nguyen]

This is a general feedback to this kind of question, not directly to the poster
This obviously is not the easiest time to seek an entry level quantitative job as you will have to compete with others more experienced. That said, the show must go on.
The best will always find new jobs (sometimes much better jobs). Hedge funds will use this market to pick out the best from competitors.
It's clear that many MFE graduates will be looking for entry level jobs. This brings to focus how hard their programs willing to work for them.
The kind that used to ride the good times would find it extremely hard. The brand alone isn't going to cut it anymore.
The ones that take 90K loan to pay for their MFE tuition will have their first dose of reality.

Then, asking this question is akin to asking your motive in the first place. Why do you want to do quantitative finance?
If you are in it for the love of math, programing, finance combined, then the description of the field has not changed.

It's like if you love academia because you love teaching and research, then a low salary shouldn't be a deterrent.
On the other hand, if you are in it for the big $$$, then seeing there is zero job security and little $ left gives you a second thought, I say it's not right.

Jobs will always be here for the RIGHT people. Getting into the RIGHT program and preparing the RIGHT way are keys.

The question should not be "Is this a RIGHT time to get into finance?". It should be "Am I the RIGHT person for this career?"

 

[Yan He]

As Andy said, it's not an easy time to seek an entry level quantitative job now. But it's good time to pick out the best from competitors.

We just had a Market Review meeting. In the 15 mins briefing, except for assuring that we are in very good shape (sorry to say that, but with our competitors fell one by one, it's time to get bigger market share.), the Head already emphsized that it's time for us to recruit those elites from the falling competitors.... So, it's not the RIGHT time, but for just for the RIGHT person.

 

[echostate]

In the recruiting process, are these experienced quants from the falling banks directly compete with the fresh graduates from schools? Or most companies have clear planing that "we want 3 high-salary experienced guys and 2 cheap fresh graduates" and thus these two groups of candidates will not compete directly?

Thanks.

 

[alain]

In the recruiting process, are these experienced quants from the falling banks directly compete with the fresh graduates from schools?

Yes, they are.

 

[doug reich]

Yes, they are.

Really? They'd rather have someone overqualified who will jump ship as soon as possible to a fresh graduate eager to please?

I can see both sides of the story, but I guess you're saying the huge influx of people into this industry in the last few years means it's basically bottom-heavy.

 

[Andy Nguyen]

This is the mentality of people working in this industry.

All 26,000 of Lehman's employees are likely to eventually lose their jobs, but at least some workers there seemed to be taking that in stride. One Lehman analyst who declined to be named said that he and those around him were in relatively good spirits. "Hanging around," "chatting" and engaging in "gallows humor" seemed to be the order of the day, he said.
"Obviously a company filing for bankruptcy like this is unprecedented, but people understand this is a volatile business and there's a willingness to take that risk among the people who pursue these jobs," he said. "It really just kind of goes with the territory."

Wall Street to See 'Devastating' Job Losses

 

[bigbadwolf]

I was just wondering the same thing. I am going into the Risk Mgmt & Financial Eng. programme at Imperial. Does anyone have any idea what this may do to my chances of finding work when I get out in a year? Is it worth it to take on a GBP 20k+ loan to finance an education for jobs that may not exist? I'm more nervous than many. I finished my PhD in physics just as the tech bubble burst.

I'm trying to talk responsibly: many quant jobs will disappear in both Britain and the USA. An era of unfettered financial markets is coming to an end and -- as the takeover of Freddie and Fannie makes clear -- there's going to be more governmental oversight and regulation than before. Both Britain and the US will regress to the pre-neoliberal days of the 60s and early 70s, not out of choice but out of necessity -- to stave off utter collapse. Extraordinary measures for extraordinary times. In my humble opinion, the present setup cannot endure because of deep-seated contradictions that can no longer be brushed under the carpet. This changed political landscape is going to mean fewer -- probably far fewer -- quant jobs. Many of the new programs busy profitably churning out eager and innocent-eyed MFEs will go to the wall. The grads of the best programs will have to compete with ever-greater intensity.

For those already doing MFEs, they should take a hard look at their transferable skills in case they don't find their dream job in finance. Solving PDEs, linear programming, and scientific computing will remain marketable skills.

Postscript: To lend further credibility to my prognosis, I've just read that AIG has also been nationalised. And from an FT blog by an LSE prof:

The argument that financial intermediation cannot be entrusted to the private sector can now be extended to include the new, transactions-oriented, capital-markets-based forms of financial capitalism. The risk of a sudden vanishing of both market liquidity for systemically important classes of finanial assets and funding liquidity for systemically important firms may well be too serious to allow private enterprises to play. No doubt the socialisation of most financial intermediation would be costly as regards dynamism and innovation, but if the risk of instability is too great and the cost of instability too high, then that may be a cost worth paying.


These are issues that must be pondered not just in Washington but everywhere modern financial intermediation has taken root or is threatening to do so - in the financial heartland (Wall Street, the City of London, Frankfurt, Zurich, Tokyo and Dubai) and in the emerging markets that until recently were having their ears bent on the desirability of precisely the kind of financial institutions and markets that have now turned into trillion dollar collapsing dominos.


From financialisation of the economy to the socialisation of finance. A small step for the lawyers, a huge step for mankind. Who said economics was boring?

One more postscript: Here is Simon Jenkins writing in the Guardian today:

We are seeing what historians of ideas call a paradigm shift. In the last century, the necessities of war and the rise of socialism thrust government intervention to the fore. When that failed in the 60s and 70s, the "Reagan-Thatcher revolution" turned the emphasis back to private enterprise and deregulation. That era has ended with astonishing abruptness. Governments in Britain and the US have been nationalising and spending public money with a will that would have made Attlee or Roosevelt blush.

(The whole article is well-written and worth reading carefully).

To reiterate: quant finance and quant employment has been a monotone increasing function of increasingly unfettered markets. Increase state control and regulation and quant employment will decline.

 

[bigbadwolf]

Really? They'd rather have someone overqualified who will jump ship as soon as possible to a fresh graduate eager to please?

I can see both sides of the story, but I guess you're saying the huge influx of people into this industry in the last few years means it's basically bottom-heavy.

Jump ship to where? The job market isn't going to improve for at least quite a while (in my opinion, probably never).

 

[Wallstyouth]

You would be surprised, Its sad that the media does not focus on the the upside of what's going on the street. Volatility will always bring opportunity to many.

With all the convergence happening in the banking industry many super stars will branch out and start their own funds. In fact I know of two former Lehman MD's who are currently raising capital for a new fund that's solely focusing on buying up all these distressed assets on the cheap.

If you're good and determined you can always find employment some where.

 

[bigbadwolf]

A WSJ piece on Tuesday:

Some thought the financial industry was due for a contraction even before the credit crunch started last year. In 2006, financial services accounted for about 8.3% of the U.S. economy -- higher than at any point in history -- compared with 7.3% a decade ago.


The finance industry, much like the automotive industry, still may have more jobs than the economy can support. "Just how many investment bankers does the economy need?" said Thomas Philippon, a finance professor at New York University.

Hubris can hurt: there was a time when programmers thought they would always have a job. But market conditions can rapidly. So now we see images like this ,which are not really so funny. Or maybe quants will become like attorneys.

 

[doug reich]

bigbadwolf: You're consistently very cynical and particularly negative on quants. The first is understandable, the second is more puzzling.

I wonder why you keep coming here for that sport?

 

[bigbadwolf]

bigbadwolf: You're consistently very cynical and particularly negative on quants. The first is understandable, the second is more puzzling.

Au contraire, mon ami. Mea culpa: Perhaps I have not explained my position clearly. I am not cynical about quants. Quants in general are very clever and very hard-working people working 10, 12, and even 16 hours a day to earn an honest buck. Their sin -- if any -- is in believing that risks can be calculated for complex financial products and for being the camouflage, the veneer of intellectual respectability for shrewd and unscrupulous political and financial operators (most of whom have benefited wildly over the last several years). Nor am I "negative" with regard to quants (in fact, I don't even know what you mean). I have been consistently pessimistic about the future of quant work since I came to this forum -- but during the last several months, everything that has occurred has vindicated my sceptical stance.

It would be naive to the point of folly to think that we will ever return to the old days: a seismic shift is occurring even as I write these lines. There will inevitably be an adverse impact on the demand for quants. Someone has to point this out as many people who come to this forum are prospective quant students. Quant schools will not do this: they have a vested interest in an (unrealistically) upbeat message.

 

[thetrystero]

a related, and currently very active thread on wilmott:

Wilmott Forums - Don't do MFE/MSc Math fin

 

[IlyaKEightSix]

Au contraire, mon ami. Mea culpa: Perhaps I have not explained my position clearly. I am not cynical about quants. Quants in general are very clever and very hard-working people working 10, 12, and even 16 hours a day to earn an honest buck. Their sin -- if any -- is in believing that risks can be calculated for complex financial products and for being the camouflage, the veneer of intellectual respectability for shrewd and unscrupulous political and financial operators (most of whom have benefited wildly over the last several years). Nor am I "negative" with regard to quants (in fact, I don't even know what you mean). I have been consistently pessimistic about the future of quant work since I came to this forum -- but during the last several months, everything that has occurred has vindicated my sceptical stance.

It would be naive to the point of folly to think that we will ever return to the old days: a seismic shift is occurring even as I write these lines. There will inevitably be an adverse impact on the demand for quants. Someone has to point this out as many people who come to this forum are prospective quant students. Quant schools will not do this: they have a vested interest in an (unrealistically) upbeat message.

The question is how is it that people trusted data-based investing so blindly?

You don't drive a car looking out the back windshield, do you?

I think that quantitative finance alone is incomplete. Only when you combine solid understanding of the fundamentals to sanity-check your models and communications skills to make sure the non-quants understand your black box sufficiently that I think you have a complete quant.

 

[myqee]

The question is how is it that people trusted data-based investing so blindly?

I think it is important to have realistic expectations. If you are trying to predict the future, it isn't happening. If you are just trying to improve your odds then it's a no-brainer. As casino operators know very well, it only takes a tiny edge to make money (of course, what kills everyone is not the expected value of that edge but its variance).

 

[doug reich]

The question is how is it that people trusted data-based investing so blindly?

You don't drive a car looking out the back windshield, do you?

I think that quantitative finance alone is incomplete. Only when you combine solid understanding of the fundamentals to sanity-check your models and communications skills to make sure the non-quants understand your black box sufficiently that I think you have a complete quant.

Car crashes happen looking out the front window, too.

It is easy to lampoon people from the peanut gallery, but everything makes some kind of sense in the fray.

 

[bigbadwolf]

a related, and currently very active thread on wilmott:

Wilmott Forums - Don't do MFE/MSc Math fin

Thanks; an instructive and entertaining thread whose existence I was hitherto completely oblivious of (I only go to Wilmott sporadically).