Tangentially relevant post:
Our quant analysts/portfolio managers all have either a Master’s in Financial Engineering or a PhD. We don’t have any just as a CS undergrad. Those with the CS degree are in the IT department and not on the Investment Team. Many are former aerospace or electrical engineers with work experience in their respective industries.
I would encourage you to get the MFE. UC Berkeley, for example, has an excellent program that is 1 year - it’s an intense program, and their jobs placement of their students is very successful. If you can get a couple foundational undergrad finance/ basic accounting electives while doing your engineering degree, your transition to the MFE will easier. This is the same advice I am giving to my son who is a current senior and will be pursuing engineering undergrad as well. He, like you, also has varied interests in engineering/finance. Having been working from home/remote high school during COVID, his seeing me working/listening to my calls on alpha factors/portfolio management really piqued his interest in finance.
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Varies by firm
An M&T student is extremely unlikely to want to do a summer sophomore internship as a “lowly programmer” at FAANG or similar firms. S/he is much more interested in the “M”, rather than the “T” in M&T. Similarly, nearly everyone who majors in op research at an Ivy+ school within driving distance of NYC is looking to do financial engineering, not any of its other subdisciplines.
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The concern expressed was that a tech firm may perceive you as being flaky / not serious if you did a finance or similar internship. I am saying that this is not necessarily the case if you had an earlier good tech internship. And the FAANG “programmer” internship in sophomore year doesn’t preclude absolutely anything for junior year, provided you have other skills on your resume that another employer can see. I am talking about consulting, finance of different kinds etc
Incidentally, I have had people in industry tell me many many times that industry respects people with serious tech skills when they are looking to hire for other areas like product management etc
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What I’m saying is that s/he is likely to want to do an internship in finance rather than in tech. If and when s/he decides to fall back to a tech career, it might be too late.
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You have three summers (really 4) to try different things. Nobody begrudges you for trying different things in different summers.
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Real Street quants are used to be almost exclusively math/physics PhDs (plus a few econ/finance/CS PhDs) working on esoteric derivatives/structured products/data analyses. However, things are changing. The emphasis is now on BIG data (not simply correlations). The most needed skill is machine learning. Street firms would love to hire ML PhDs, but there aren’t enough of them available (due to very limited number of ML professors to advise PhD students, competitions to hire them from tech firms and/or academia). So they have to hire masters, and even some bachelors in ML.
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I am not sure this is entirely true. The bulk of the hiring by at least the quant market makers is undergrad. And I don’t think there is a difference in pay if you have a masters. There may be a small diff in pay for a PhD, or there may not be. Even the quant HFs hire a lot of undergrads
Yes, because they can’t find the PhDs in the hottest disciplines. Tech firms are paying them in excess of $500k (and similarly in academia with outside consulting side jobs) and they often perceive the tech research jobs and/or academia jobs more prestigious, less volatile and sufficiently financially rewarding. BTW, few of the market making banks are even competitive for new hires (even though they’ll pay well into seven figures for established names).
Most tech firms are not starting at 500 for PhDs. Even Google. And the reason the quants prefer undergrads is that those are risk taking roles which require a) youth, and b) risk temperament which is an orthogonal skill set from just being quant
You probably haven’t looked at ML PhDs.
You must be talking about traders in quantitative products. They aren’t quants.
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All these definitions vary firm to firm, as to who is what. The nature of the work varies firm to firm. They are all setup differently. At the end of the day people often want to go to the highest paying roles. You can call them what you want.
Do you work in a quant investment firm?
I don’t
It seems some of your opinions are misguided
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Don’t stop there. Educate me.
Not really. They’re all set up similarly.
Yes and no. Traders tend to have very short careers. You hardly see anyone over 40 on a trading floor. Some of them would make enough money to retire, but others wouldn’t. Also, their risk taking traits may not be as highly valued in the near future, as machines are even less emotional.
Wow…you leave a thread for a few hours…
The idea that anyone here understands where opportunity will lie in a decade-plus is outlandish. AI, ML, and other advanced capabilities will surely be valuable, but at what level of career and compensation is a complete and total guess. Low and no-code solutions continue to explode in data and analytics, and that trend will continue. If AI and ML experts do their job over the next decade, there may be fewer and fewer “valuable” jobs. I doubt that…but who knows.
Like most threads, the OP asks a binary question and ends up with proof that something they never asked is the key to their future success based on the recent experience of a few grads or a new hire at one of their kids’ cutting-edge tech or consulting companies.
@John_Doe12 - if you may want to go into IB or work on Wall Street(whatever that means)…I’d vote you go to Penn.
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I think this thread has run far afield from the OP’s question. So let me give a few examples and stop here.
Differences:
Radix, a market maker, I heard operates in the sub second space, and has strategies that are asset class agnostic. The individuals involved code C++, do their own data science and other stuff. In other words functions are not broken out by specialization. Vertically integrated.
Jane Street, I heard, is trader centric (so is 5 Rings), where traders don’t write infrastructure code. There is significant overlay of human discretion on top of models, and models are not agnostic of asset class. The level of human intervention varies by product — ie equities/etfs vs fixed income. The researcher is often a trader that wants to step back from risk taking. They also hire researchers from PhDs. But these are small numbers.
Citadel — the trader is just considered to be an execution person , and QR is more influential in how the trading happens.
There are other variations in this space.
All these are very different from the likes of risk parity at Bridgewater, which some people might consider to be a quant fund, if they think of risk parity as a quantItative strategy. Certainly Assness’s shop where they do more factor based investing — has done poorly of late.
The factor folks can’t tell you when some factors come into vogue and when they go out of vogue and why. It is not some deeply complicated stuff the way things are done. At a minimum I am very skeptical of their backtesting rigor, and I can’t imagine these are done by some very sophisticated people.
Re your comment about ML/AI obviating human traders, even the market makers I hear acknowledge that that stuff doesn’t work. They use simple data science — mostly linear stuff. I don’t see AI making a big difference in the markets for a long time —- there is not enough data in the markets to avoid overfitting, and the process of taking advantage of a signal effectively makes the signal go away. The half life of signals is a few days to a few weeks.
The structuring type roles are more marketing oriented roles — you embed fat fee in the structure, and sell it to investors that are not knowledgeable or are far away from the markets.
Coming back to OP’s question, engg gives you broad analytical skills. Some parts of a bank values these skills. Not sure if IB roles directly need engg skills — I would guess they need more accounting skills. The dealer side of a bank will be more appreciative of engg skills, especially if you are trading or modeling derivatives etc. To the extent IBs hire hire engineers, I think they may be looking for a) general smarts, b) domain knowledge of some particular industry.
Between Cornell and UPenn — the outcomes within each university will have far higher variation compared to the difference in the medians of the outcomes from the two universities. I am not sure I’d prefer one resume over the other in any meaningful way.
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