MBA vs MFE for trading jobs

[Saturnia]

Hi,
I'm new here and the reason that I decided to enter the forum was because I attended the Baruch MFE seminar/presentation of the program last week and I'm deciding how to go about the application.

I see that many people are saying the MFE is better than MBA. I currently hold a dual degree in Mathematics and in Financial Economics with courses in Econometrics and Forecasting, CalcI,II,III, Linear Algebra, Interest Theory, Math Modeling, Stat etc. Finding a job in trading has been pretty much a disaster thus far, although during my internship at a prestigious investment company I found people with history degrees trading million of dollars. Another thing that I have noticed is that if one applies in the east coast for trading jobs the requirements for C++/C# and other languages are very strict, although I know people working as traders that don't know any language at all and are trading ! In the west coast a little different. It seems as if barriers are higher here. Again that is just my modest opinion. It seems that unless you don't know anyone doesn't matter what you have. I really hope it doesn't come down to this, but again experience has shown otherwise.

Another trend that I've noticed is that many people who finish PHD in Math with focus in STAT don't bother to go into their tenure tracks and postdocs which some are very hard to find and lend in Finance. With their knowledge of SAS, MATLAB etc it seems that they are much better placed to find anything in the quant field then a MFE or not ?

Plus there is the eternal recurrence of the same.... of "You don't have experience!!", whatever this experience means. So if I were to finish the MFE program what is the guarantee that someone will say "you still don't have experience ?", or worse "Top-tier school IVY only required", as if the other schools don't matter although they do the same courses and use the same books !!! In the end the individual should prevail ? Hopefully.

In any case I'm still undecided, I feel that an MBA will give me a broader market, and in case I can't manage to get in the securities trading I will be able to apply to other places or even apply for a joint degree with Law School as Baruch offers one too and it seems very appealing as well.

I'm learning C++ now, which I feel is something very easy if you have the time. In three weeks I've managed to read intermediate level books although I will still apply for a few classes to make up the requirement for the MFE. Worse case scenario that I don't apply will still give me the credentials that I need since C++ is worth knowing for sure.

I'm scheduled to take the GRE towards the end of the year for the first time, and then I will decide, although any other indication/advice from people in the industry would be greatly appreciated.

 

[doug reich]

Hi,
although during my internship at a prestigious investment company I found people with history degrees trading million of dollars. Another thing that I have noticed is that if one applies in the east coast for trading jobs the requirements for C++/C# and other languages are very strict, although I know people working as traders that don't know any language at all and are trading !

I have always found this to be an interesting dichotomy. Did you find out these peoples' stories? How did they land the job?

One thing is for sure: Ivy League graduates are very persuasive.

 

[samiam]

This is my first post on this forum. I was intrigued by your statement regarding 35-40 after career. Do you think that an MBA will give you a better future in general?

I doubt that you can make a broad statement. Assuming with an MBA from Wharton you become an MD at 40 in an investment bank by default, does that make you happy or wealthy?
How about if an MFE gives you the chance to work as a trading/risk manager in a hedge fund?

I am just 27, I cannot estimate the chances of success in both cases. I can say that considering number of MBA from top schools (at least 2000 a year), and the number of MD positions opened each year, it is pretty difficult.
The number of MFE plus Physics/Math PhD in one year is relatively low (a few hundred maybe) and the demand will be always be high.

Ignoring the chances of success, in the end is a discussion about what you think you would enjoy.

PS: Maybe at 40 MFE will retire to spend their millions managed by MBA grads

Depend where you get your MBA.

I would still take MBA from H/S/W over any MFE degree even from Haas/CMU/Columbia/Princeton.

I remember reading a survey of 500 or so (good sample size) MBA grads from UCLA ten years out of school and average salary is 250K.

However, if you are getting an MBA from say Darden, NYU, etc, which is still a good school I would take the MFE, but not from a program like Oklahoma state.

To anybody who are in any of these programs who I might have offended, I'm not meaning to do so, I am just going by what I can see are results from people's backgrounds and what they are currently working as and their likely salaries.

IMO, best degree to have for a prop trader on the desk is math or other hard science undergrad degree from Ivy, especially the top three Ivy H/Y/P or MIT and then use the experience to learn the quant stuff if needed.

In the end, I believe trading is more of a matter of emotional skill and instinct.

I really think these MFE's and their math skills are just there to gauge the statistical likelihood of an asset to trade this particular way using back data. Past performance is not an indicator of future success. They can create all the models, but like in the interview with the hedge fund manager on +1, those models can't pick up paradigm shifts or whatever. And they are mostly designed to do the same thing because everyone was trained on stochastic calculus in the same way. Maybe you can somehow model your black box based on previous paradigm shifts. I dunno. I still think trading is an emotion and discipline game not something you can expect to crunch numbers and spit out a decision to buy or sell.

Of course valuing options and structuring is a different thing altogether. But I think a lot of people get into MFE thinking they will be the next John Tudor. Some are quant funds, but most have things like good relationships with brokers and pay high trading commissions to get good tips and "inside as you can get info" to get the trading advantage.

Some of the best traders I've seen working the options markets in commodities, even day traders, barely had high school degrees. I think a lot of people would be in for a shock if they think they can go in and start beating the market (if that was the case) just because they studied so much and had advanced degrees. Street smarts beats book smarts in the trading world, IMO.

Best traders in the world are usually all over 40 although they run funds. By the way HBS graduates 1000 alone every year. All the other programs have like 400. Consider it 19*400+1000 = 8600 top school mba's every year flood market. 1200 MFE's a year given 30 schools and 40 member class.

IMO, MFE isn't gonna do anything for you if you want to be a manager. Matter of specialist degree vs. generalist/leader degree. Yes, leaders get paid more than specialists unless you're the specialist in charge of running a large trading book and you kick ***.

 

[samiam]

mba is the driver. mfe is the mechanic. in the old days, cars were rare and were hand-made. mechanics were in demand. nowadays, cars are mass produced. mechanic's skill set is not as valuable. driver's skills are more common. in the future, due to rising oil prices, mass transport may replace cars. drivers may also lose their jobs

Excellent analogy. Who makes more and get all the credit? Dale Earnhardt Jr or Danica Patrick or Dale Earnhardt Jr. pit crew or Danica Patrick Pit Crew.

No pit crew is going to be able to create an IRobot driver that's gonna take over Dale Earnhardt Jr. to drive the car and win races, not in our lifetime IMO. Maybe when our teeths fall out. At that point, forget about MFE or trading desk, I'll just be happy to keep my pants unsoiled. :dance:

Unless you get MFE from top five, you gonna be pit crew IMO. Still not a bad living, maybe 200K or more at the peak. Very good money.

 

[xoxqun]

Guess Graduates of Which Schools Earn Highest (Wall Street Journal)

Here is a comprehensive interactive dataset from a recent survey posted on Wall Street Journal. It shows data about schools that score highest in terms of students starting pay and mid-career pay.

Guess which school's graduates earned highest as per the survey findings.

Here is a clue, it is the school which is one of the most bashed and criticized by some on the QuantNet forums.

Now click on the following links to see what data speaks.

Starting and Mid-Career Pay, Which University's Graduates Score Highest Paychecks

Interactive Dataset for Starting and Mid-career Compensations from Payscale Inc. Survey

 

[Saturnia]

Tudor Jones and other people are an exception. No one can expect to be like them in my opinion. And school here doesn't matter much. It's about timing, and the fact that most of these guys were in the market when there was no such thing as algorithmic trading in wide scale and all this SF stuff.

As for the Ivy... someone please explain to me this 3 trillion dollar hole we have in the market ? If we have the smartest guys running the show why do we have a 3 trillion dollar, possibly more hole in the market now ?

If perception is the rule of the land I guess the current system is far from being a meritocracy and this is not very encouraging.

 

[samiam]

Here is a comprehensive interactive dataset from a recent survey posted on Wall Street Journal. It shows data about graduate schools that score highest in terms of students starting pay and mid-career pay.

Guess which school's graduates earned highest as per the survey findings.

Here is a clue, it is the school which is one of the most bashed and criticized by some on these forums.

Now click on the following links to see what data speaks.

Starting and Mid-Career Pay, Which University's Graduates Score Highest Paychecks

Interactive Dataset for Starting and Mid-career Compensations from Payscale Inc. Survey

Which article r u referring to in terms of graduate schools?

Both of your links refer to College graduates, not graduate schools.

Did we bash Dartmouth here? Surprising they get the most salary. I attribute to smaller sample size. Their school is small.

 

[pathseeker]

As for the Ivy... someone please explain to me this 3 trillion dollar hole we have in the market ? If we have the smartest guys running the show why do we have a 3 trillion dollar, possibly more hole in the market now ?

If perception is the rule of the land I guess the current system is far from being a meritocracy and this is not very encouraging.

is it possible that, without these ivy kids running the show, we would have had a bigger hole, say 6 trillion USD?

 

[samiam]

Tudor Jones and other people are an exception. No one can expect to be like them in my opinion. And school here doesn't matter much. It's about timing, and the fact that most of these guys were in the market when there was no such thing as algorithmic trading in wide scale and all this SF stuff.

As for the Ivy... someone please explain to me this 3 trillion dollar hole we have in the market ? If we have the smartest guys running the show why do we have a 3 trillion dollar, possibly more hole in the market now ?

If perception is the rule of the land I guess the current system is far from being a meritocracy and this is not very encouraging.

My uneducated guess: because of quants and their trading programs. All trained and designed to buy at the same time, all trained and designed to sell at the same time. Given the same signals. You ever see the market at the end of the day when the program trades start going into effect. They are crazy and take out all bids or offers. The entire wall of bid ask gone because they are moving billions of dollar, causing crashes and bubbles.

Bubble and bust economy as a result. It will get good again.

I said John Tudor, meant Paul Tudor Jones.

 

[samiam]

is it possible that, without these ivy kids running the show, we would have had a bigger hole, say 6 trillion USD?

Well thanks to dumbass Ivy guy named W we have the biggest **** hole in history of US.

 

[Saturnia]

is it possible that, without these ivy kids running the show, we would have had a bigger hole, say 6 trillion USD?

Is it ? I speak with current facts not with hypothetical situations. I can't speculate on that, but I know how things stand now, that is a 3 trillion dollar hole in the market.

 

[Saturnia]

My uneducated guess: because of quants and their trading programs. All trained and designed to buy at the same time, all trained and designed to sell at the same time. Given the same signals. You ever see the market at the end of the day when the program trades start going into effect. They are crazy and take out all bids or offers. The entire wall of bid ask gone because they are moving billions of dollar, causing crashes and bubbles.

Bubble and bust economy as a result. It will get good again.

I said John Tudor, meant Paul Tudor Jones.

The problem is that the CDO market and all the SF market in general is far ahead of the stock market, yet this market is not available to the individual investor. Data that is, is not available. You have stocks like PMI, Radian etc just to make an example trading with huge spreads 1600 bps and so and this puts enormous pressure on the stock. So if spreads get wider there and the avg investors doen't know this influences the stock in the other market. So the people who are left trading now are basically Hedge Funds and big institutions(there's an interesting topic here "Zero Sum Game, who wins?").

And I agree with you, most of the strategies being used are widely correlated and the risks are even higher of course.

Paul Tudor Jones history is the story of a very smart person who started trading at a very young age in the Cotton Exchange with Eli Tullis, a legendary cotton trader. His father who was a laywer introduced him to Tullis. Paul Tudor Jones traded in the exchange floor commodity futures and he learned there what no one will learn in any school program, that is the psychology of the big guys, of the whole market. Plus he traded commodities, something that takes a great ammount of skill and in my opinion the only trading job that cannot be modelled as much as stocks etc. Commodity prices are affected by political decisions, weather, and all sorts of unexpected stuff that one has to be quick to react. Hard to model it that's why the individual as opposed to the maschine can still win there. He happened to be in the Market Crash of 87 and according to a PBS interview which doesn't exist anymore he said he used Elliot Wave theory to predict the crash. Elliot Waves, or forms of elliot waves and other complicated partial DFQs are used by engineers especially hydrotechnical ones that design dams to predict how water will spill down the nearest village, what is the highest wave, how fast will it reach the village etc if a dam were to break/collapse. Most of these guys have one big breakthrough and they're set for the rest because of the psychology factor that ppl like Merton etc who ran the show at LTCM don't have.

 

[kean]

Havard MBA costs $150K. Hey, not everyone has the $$ and balls to invest an Ivy League MBA. It's just too costly compare to MFE so people switch gears.

 

[herron]

Maybe I should point out the 800 lb gorilla in the room. The HBS MBA and the UCB MFE are almost mutually exclusive sets. Top MBA programs like high GPAs, but they really want leaders with strong interpersonal/communication skills. MFE programs want mathematicians/engineers who can code. The MFE programs seem to be trying to focus more on interpersonal/communication skills (e.g., UCB's video resume requirement), but I imagine they're in a tough spot. I get the impression that even the best MFE programs are really looking for candidates with serious leadership potential so that they can hang with the big boys (HBS, Wharton, Chicago). I don't have first hand knowledge of any of this, but I think eventually you need someone to lead the quants and that leader is who every MFE program wants to produce.

My two cents.

 

[IlyaKEightSix]

I work as a trader in a large inv. bank (probably THE bank - guess which...). I would definately say MFE. There are more MBAs at present, but that is only because the MFE is newer. As products become more complex, it is traders responsibility to know and understand the models, which is precisely what you learn in an MFE and what you DON'T learn in an MBA.

Go for the MFE - especially if it is one of the good ones. I'm a Princeton guy, and the fact that I have mathematical skills made it very easy for me to approach the different desks, and I could choose more or less what I wanted!

Are you from Goldman Sachs?!

 

[doug reich]

Are you from Goldman Sachs?!

Everyone is from Goldman Sachs, don't you know? Even my mother and unborn son.

 

[samiam]

How come u think commodities can't be modeled? I think CTA's just use back data. But yeah, that doesn't really tell you anything other than on the average how it's going to trade. The commodities trend much better it seems because well commodity markets are moved not only by speculators but also real companies that actually need to buy contracts to run their business like oil, raw materials etc so I suppose the moves might be more predictable. But yeah weather and politics plays a great role.

The leverage in commodities is also awesome.

Yeah I agree. I used to be prop day trader for tradescape for two years and I learned way more about the markets and how wall street really works than I ever did in school.

A lot of the market is moved by guys named vinny and sal in long island who go watch mets games after the market and talk alot with their hands. LOL

 

[Saturnia]

I said hard to model not impossible . Now there are things such as weather trading being done on hedge funds, and they have meteorologists employed doing this stuff!! On a personal note, what did you do after daytrading ? Just curious as I am undecided myself on how to proceed, but the amt of information one learns in those places is something that I too feel can never be taught in school. Basically you get a PHD in life there .

 

[samiam]

Yeah I learned a lot in daytrading because I happened to be trading in a place in midtown that housed I believe two of the top 10 day traders in the country and also at a time in the market that most likely will never happen again in our lifetimes, 1998 to 2000.

You know it is funny when I hear these kids who are in their 20's nowadays refer to the bull market that was between 2001 and 2007.

LOL, what bull market? These people have obviously not seen a NASDAQ market go from 2800 to 5300 in a matter of months as it did between November of 1999 and May of 2000.

And then crash back down to 3000 by the end of the year. That right there is volatility.

Yeah it was very mind blowing to see a guys making peoples annual incomes on a daily basis and often more than 100K a day.

It was a crazy time, but I learned a lot from sitting next to some of these guys that were obviously geniuses when it came to trading. I am sure without a doubt some of these guys are much better than the prop traders at the real banks because the entire firm gets to see these guys make their transactions since we all have trader id's and the prints go off when there is a time of sales and I have seen some of the MM's get blown out by the good day traders who had large books and were able to bully up stocks in seconds and then dump them just as fast on the little guys who wanted in after the bulk of the move was made.

After trading I went into equity research. Towards the end of 2000, the market was practically untradeable. Volatility dried up and every day it was just selling and selling. I got too used to trading the bull market, I mean that was the only experience I had, and I got continually killed trying to trade with that mentality in a market that was on a daily basis losing capitalization.

Had I realized that markets change or had more experience I would have gotten short. But these are the kinds of lessons no MFE or PhD program will ever teach you about the market and things you can only learn by feeling the pain of taking big losses.

In the market, the only thing that matters is if you make or lose money, doesn't matter how smart you are as long as your P&L is green.

 

[drjmpc]

:sos:

Bottom line:

Choosing wisely considerably eases things. Conversely, put up artificial barriers like the right degree or wrong firm only serve negative outcomes. Two contradictory points right? Yes, but they are the true expression of the problem. That problem, in my estimation, can only be resolved with focus and commitment to execution of the choice.

So what does that mean? Don't be a fraid of just following your dream. We use to call it "riding until the wheels fall off." And every now and again, you have to be willing to do just that. As an aspiring Algorithmic Trader It has occured to me that Chicago and London are where you go if you really want to learn to trade. It is also where you will be given a fair shake on an opportunity at a prop desk with a degree from a decent program. I think that many of us put too much emphasis on brands and not on the actual knowledge and opportunities education affords us. I had to have this talk with myself about 3 months ago and make some harsh choices so that I can make the preparation for that ride.

1) Forget Manhattan. It is for *** kissers, silver spoon kids, and suckers with pipe dreams. If you're in NYC, trading for 4 years or longer, you should be looking for greener pastors in Greenwich, Stamford, or completely out of the area. Anyone else looking to get into trading at a large firms prop desk -- it is going to be a long wait on that line my friend. If you make the cut, compensation is good, but DEALS are moving wall street right now. This is the sovereign domain of the Havard JD and Wharton MBA -- MFE and Joe Blow traders -- stay away! If you didn't have an investment banking/consulting emphasis in a Top 10 B-school, you better have Sr VP cousin at your firm who did! Traders on Wall street get tossed out with the garbage every time there's a major down cycle.

2) I like the idea of always feeling 100% confident that I can stop whatever I am doing and go start a business tomorrow. With an MBA I will have the knowledge of how to build a business; with an MFE, I will know all I need to survive and thrive as and Algorithmic Trader and eventually a Hedge Fund Manager & Commodity Pool Operator. If I do both, I can pretty much do my own thing the way I want any time I get ready.

3) Be realistic. I won't be able to raise Capital for a Fund right away, and an incubator fund [which I will likely do at some point] takes time to build -- during which I will probably need to pay some rent here or there.


So what did I come up with ?

*Stevens Institute of Technology [Financial Engineering] & Creighton University [M.S. Securities Analysis (Full CFA prep) -- all online]

UCLA - MBA & M.S. Financial Engineering

Northwestern U [1 year MBA -- yes they have one but you have to dig to find it on there site] & Illinois Institute of Technology's Financial Engineering program

Indiana University MBA & ?? ( probably still Stevens Institute of Technology [Financial Engineering] but not sure).

*Instituto de Empressa -- DBA [Doctorate of Business Administration] in Strategy


One of those programs and moving to Chicago...

I am going to hate the winters, but it is what is necessary. It is a formula that I can win with.

I invite you to research each program from my list of possibles = each has something very unique about it. Is it what's best for you? I don't know. But the point is it is your life and career. You have to MAKE IT WORK.... No one can do that for you, and options for you may not be the options for me but if you put yourself in places where you're more likely to succeed and work hard, doors will open up for you.

:wall


=D>