Bad time to get into financials?

[hskk]

I agree the financial markets are down and out now and quant jobs are very few and perhaps will remain so forever. But I think people are underestimating an MFE/MFM program and are overlooking the core skills (a combination of mathematics + computer science + finance). How can that combination be so wrong?

Mathematics is the foundation of any science; Computer science is the tool used in every field and industry; Finance exists in every business. The point I am trying to get at is that there will always be jobs for people with such good skills, but may not necessarily be in a high paying quant job. People who get into the MFE program for the love of the subject and skills will always fare well and find a good job; but those getting into an MFE purely aiming at a quant job may be disappointed. I, however, remain optimistic with this program because it is a great combination of skills.

 

[bigbadwolf]

Even the handful of good MFEs are crash courses (and most of them are just scams designed to part people from their $40,000+). As DC pointed out a while back, they're analogous to the M.Sc. courses in computing at British universities: designed to give some technical exposure to graduates of disparate disciplines so that they can enter the job market. When the job market goes the way of the cheshire cat, these degrees promptly lose their raison d'etre.

To the (limited) extent that serious quant skills are needed, the jobs will probably go to Ph.D.s with serious backgrounds in statistics, numerical analysis, and PDEs. MFE RIP.

 

[Stefan Zota]

Unfortunately you are correct. Many MFE programs will not have substance. This is different than masters in C.S. where the focus is academic so the background is not so volatile. Any computer science masters will have a part of design patterns/networking/OS which are stable knowledge base. They need to be covered by anyone working in the field.

MFE might focus on a very restrictive framework in order to prepare students to find jobs at start of program. However, the market shift quickly, so in 2 years, you may realize that only a small percentage from MFE is relevant. This is a big challenge.

I also agree with more focus on core skills: statistics, numerical methods, OOP, PDE rather than doing just MBS because the market may need that at one moment.

 

[Weidong]

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?

Exactly my same question in mind.

 

[bigbadwolf]

Many MFE programs will not have substance.

As someone pointed out a few months back (on this forum), Columbia alone is offering four different quant programs. A plethora of hastily cobbled together programs have been launched in the last few years by several second- and third-tier universities, almost invariably of very dubious quality. And they were launched by the universities for mercenary considerations: easy lucre. As long as there were jobs, students perhaps weren't too particular about parting with $40,000+ for a meretricious piece of paper that possibly allowed them to get their foot in the door -- but this will change now. Those jobs are gone. The few remaining ones will go to Emmanuel Derman - types, not to MFEs from Crudwater University.

People may get upset reading this -- but they shouldn't allow their personal situation or involvement in a program to cloud their objectivity.

And I reiterate for the nth time: if you have to do an MFE, try to get into Baruch; for both the program and the director, I have unqualified admiration. Dan Stefanica knows how to do things right.

 

[Andy Nguyen]

Bigbadwolf: "if you have to do an MFE, try to get into Baruch; for both the program and the director, I have unqualified admiration. Dan Stefanica knows how to do things right."
I'm Andy Nguyen and I approve this message.

 

[hskk]

I do appreciate the sense of realism that the forum members bring here (in contrast to the MFE programs who sugar coat everything). However, I still believe that a person who has completed a highly quantitative MFE program stands a good chance. From my quant friends, I understand that you dont use most of what you learn in an MFE anyway. An MFE is an endorsement that you can solve tough problems and learn complex things quickly.

The situation at present is like a forest fire. There will be a fresh beginning; when the new seeds are sowed, there will be a need for people. No doubt PhDs have the best chance, but the companies will need many more people with the right skills and background.

 

[bigbadwolf]

One of my favorite authors, John Gray ("False Dawn" and "The Two Faces of Liberalism"), has written a piece for the Guardian:

Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.

With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.

There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism - the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded.While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm.

A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.

This is more or less what I've been saying in several posts over the last several weeks. We're in terra incognita now. More pertinently, finance as a sector of the economy will be drastically curtailed, and likewise for all employment related to the sector.

 

[Ilya W]

I think it also depends on what are you looking for, even a year or two ago when market was not that bad to become a quant with only MFE and no PHD in any other hard since was almost impossible. But if you look for close to quant/research or traders positions like for example model implementation (not model development) or may be data analysis (some PCA and portfolio risks analysis) the MFE could be a very good fit even nowadays. And I agree with Andy that if you are here not for the money you will like it anyway otherwise I would say there are good chances you will find a entry level job (also depends on school you will choose) but be realistic about your expectations and salary

 

[Andy Nguyen]

An article from NYT for some perspective
http://www.nytimes.com/2008/10/12/education/12student.html

 

[Sanket Patel]

An article in defense of quants by none other than Steven Shreve:

Don't Blame the Quants

 

[daleholborow]

heh heh... this would be even funnier, if it weren't so depressingly relevant!

PHD Comics: Enrollment vs. Unemployment Rate

 

[bigbadwolf]

In the FT:

According to Morgan McKinley, a recruitment firm, vacancies in the City of London are down 40 per cent on last year while the number of people looking for work in the financial services sector has jumped 42 per cent.

With such an uncertain outlook ahead, job security is a real concern for those who have work, while finding suitable employment is an uphill struggle for those who do not.


Will job losses in the financial services sector continue to accelerate? Does taking a business degree make sense in the current climate? Should job seekers look abroad for work? Is there any good news on the employment front?

 

[heck]

As it becomes quite obvious by now, quants really didn't add much productivity to the society. Unlike doctors, engineers, teachers, etc, increasing market efficiency by arbitraging prices could only raise the well being of the society by that tiny little bit. Therefore, it is questionable whether it is worthwhile to put so much efforts in quants anymore

 

[doug reich]

Unlike doctors, engineers, teachers, etc, increasing market efficiency by arbitraging prices could only raise the well being of the society by that tiny little bit.

I have to ask the question: what are you talking about? Are you referring to the bear market? Are you referring to the financial crisis? Are you referring to poor quant hedge fund performance?

Certainly the first two have little to do with the quants. The financial crisis, if you haven't noticed, was a result of a combination of macro and micro decisions to ease monetary policy through easy credit and poor regulatory oversight. Securitization, the agent, is quite old and its abuse predates quants.

As for hedge fund performance, it's a mixed bag. You would need to show some numbers if that's what we mean.

Therefore, it is questionable whether it is worthwhile to put so much efforts in quants anymore

You say this like we have a command economy and there is a person "putting so much efforts in quants". However, our much maligned free market actually lets individuals and institutions allocate resources themselves. If the incentives go away -- the pay becomes poor or the practice is somehow banned -- then the profession will be reduced. I don't think either of those two things will happen over the long term unless Wall Street itself vanishes off the face of the earth. (Or perhaps you consider that desireable or likely).

 

[alain]

As it becomes quite obvious by now, quants really didn't add much productivity to the society. Unlike doctors, engineers, teachers, etc, increasing market efficiency by arbitraging prices could only raise the well being of the society by that tiny little bit. Therefore, it is questionable whether it is worthwhile to put so much efforts in quants anymore

I think you might be right... at least it will help to end up all those posts about "what are my chances? Should I get into fin eng?", etc... people will shift their interest on the next new thing and leave the quants to make money for themselves using their creative ways.

 

[Stefan Zota]

As it becomes quite obvious by now, quants really didn't add much productivity to the society. Unlike doctors, engineers, teachers, etc, increasing market efficiency by arbitraging prices could only raise the well being of the society by that tiny little bit. Therefore, it is questionable whether it is worthwhile to put so much efforts in quants anymore

Nobody is "putting effort" in quants.
Quants have a set of skills for which they are remunerated. As long as an employee will provide a return significant larger than investment, he/she will be a valuable asset.
So instead of proletary frustration, you would have to step back and think maybe these quants are proffessional workers like any other ...