Financial Engineering and Buy-Side firms

[Christian]

As I understand, much of the skills gained in this financial engineering are geared towards working at hedge funds specializing instruments such as derivatives, or developing trading methods, but I'm wondering what other areas of finance could these skills apply?

Would other buy-side firms, such as private equity for example, benefit from the structuring and other skills taught in this program? If so, how so? I'd appreciate if anyone could enlighten me. Thank you.

 

[Andy Nguyen]

Our graduates get jobs raging from S&T, structurer, risk managers, quant developers, etc. Both buy-side and sell-side firms. Here is the list http://www.baruch.cuny.edu/math/masters_employment_stats_new.html

I'm interested in buy-side jobs myself, either in structuring or algo trading. I've talked to some people and they all told me that the shift is going to buy-side. The reason is because of the advantages technology provides. The technology makes the market a more even landscape for buy-side firms. Price comparing is more efficient than ever.

If you see how all the big exchanges go electronic, you will see that outcry trading is not the future. Instead, algo trading will be where it's headed. It's just simply more efficient operation-wise and profit-wise. Also, the thinning bid-ask spread contributes to the trend. If you can squeeze a fraction of a cent out of every trade, and doing millions of trades, it adds to the bottom line.

That's where I think trading is going.

If Fortress is any indication of what the future is like, then hedge funds or "private investment funds" as they prefer to be called, will dominate the market in term of the volumn they move in and out everyday. I think Citadel and other hedge funds will be the big players in the future (if they are not already).

So they will need skills that are highly technical and specific. We learn to structure and dissect deals. We learn to manage risk. We learn to build models. These skills even though are fundamental, can be highly appreciated at most places.

You are right in asking about buy-side specifics. That's where the future is. There is little growth in sell-side. I read an article comparing the growth of buy-side and sell-side during the last few year and the difference is very impressive.

I'm not sure if I address your question at all. These are my own opinions that I form based on the info I have. I maybe totally wrong because I don't have experience working in the industry. I would love to hear from others with more firsthand experience, specially alumni of our program.

 

[Christian]

Andy, that's a very good analysis of what I've been thinking.

I've been wondering this because I landed an internship at a private equity firm this semester. I'd never thought about PE before (I was pretty set on derivatives or strictly trading), but applied for it anyway. Now that I'm working in this industry, and find it interesting, I'm trying to find out if I could still apply my interests in mathematics to this sort of business.

If it doesn't exist yet, don't tell anyone about it

 

[Andy Nguyen]

Equity immediately reminds me of "Equity in Dallas"
Yeah, it's kind of tricky. You don't know if it's for you until you do it. So just keep your options open. It's good that we know where the future is. It probably takes a couple of jobs to get to where we want to be

If it doesn't exist yet, don't tell anyone about it

And make a ton of money while nobody knows !

 

[Christian]

Equity immediately reminds me of "Equity in Dallas"

How about "Venture Capital in Dallas?" Because we do some of that too

 

[Andy Nguyen]

How about "Venture Capital in Dallas?" Because we do some of that too

What sector is your firm investing in Dallas ? Energy ?

 

[Christian]

What sector is your firm investing in Dallas ? Energy ?

Touche. Hahaha =D>

I saw an article on CNBC a couple of weeks ago about hedge funds investing in movies, and applying a monte carlo simulation to allocate their funds. Instead of factoring in inflation, they used parameters such as the probability of a movie's success based on the lead actor, release date, etc.

Here's an article about that.

http://www.hollywoodreporter.com/hr.../features/e3ia86f2344390974368b98e28c21288ea7

 

[wtt]

Andy, very informative.

Are you working for the program right now?

 

[Andy Nguyen]

Andy, very informative.
Are you working for the program right now?

Yes, I'm a full-time student in the Baruch MFE program and set to join the rat race this December.

 

[wtt]

What do you mean "rat race"? You started attending this program this semester?

 

[Andy Nguyen]

What do you mean "rat race"? You started attending this program this semester?

Started last semester, set to graduate next semester. Rat race means getting a job and joining thousands of others on the Street trying to make an honest living

 

[Andy Nguyen]

Thanks for the article, Christian.
Haven't got a chance to read the article until now. I found it very interesting.

I find this paragraph sums up the whole article very well

"There are only so many studios you can do your deal with," Burke says. "And Wall Street, by participating in studio slate transactions, has gained a much deeper understanding of the way the film business overall operates. They have been introduced to the independent world through this educational process and are exploring it as a possible opportunity to deploy more capital."

It's all about raising capital, getting paid fee and get a cut of the action.

Touche. Hahaha

I saw an article on CNBC a couple of weeks ago about hedge funds investing in movies, and applying a monte carlo simulation to allocate their funds. Instead of factoring in inflation, they used parameters such as the probability of a movie's success based on the lead actor, release date, etc.

Here's an article about that.

http://www.hollywoodreporter.com/hr.../features/e3ia86f2344390974368b98e28c21288ea7

 

[wtt]

OK.

How is the job hunting then? I looked at the placement of your graduate and that is pretty impressive...

 

[Lloyd]

I saw an article on CNBC a couple of weeks ago about hedge funds investing in movies, and applying a monte carlo simulation to allocate their funds. Instead of factoring in inflation, they used parameters such as the probability of a movie's success based on the lead actor, release date, etc.

I read about a hedge fund specializing in horse betting...