Is Phd the only route to becoming a "Real" Quant?

[Jarone Eugene McCorkle]

Nowadays, the more research I do on becoming a Quant, the more my hopes seem to dwindle off to nothingness. To be a Quant means to obtain a Phd, or some approximation thereof...............

My hopes, to becoming a Quant is close to any others ambitions. I learned how to code for fun. I used to loath statistics & mathematics , but when applied to finance, I find myself in a room for hours measuring, collecting, interpreting, and forecasting financial outcomes. Attempting to understand Mr. Market , to measure risk and ultimate profitability has become an esoteric hobby of mine. And so, I am just like every other schmuck on this forum out there to fend for themselves & make a killing. Having said that, although I have entertained the idea of working with the big fishes, wide-eyed, molding financial instruments into shape on Wall Street for hours on end. Is there any hope for someone that wants to skip the Phd. route altogether, and just do the MFE, or MMF, and still have a chance at a front office gig after a couple years experience? Or are you doomed as "Jr. Quant," for life, and be pigeon holed into something far, far , far away from the money and action with no hopes unless you gain a Phd? I ask this becuase although I have done research online, I want to hear it from current students themselves or people working in industry. Of what prospects an MFE brings to those without PHd's. Are the options ( and pay :D) still good at least?

Thanks in Advance.

 

[Andy Nguyen]

@Jarone Eugene McCorkle
Let first establish some framework of agreement on your definition of "real quant". The landscape has changed, that much we need to agree on, so we are not arguing based on what you read from "My life as a quant" or glorified stories about quant career that were published 5 years ago, at the rise of the quant.

 

[Tsotne]

I wrote the answer to one of the similar question before and still repeat. I believe becoming quant is not only available with PhD. I recall the example I provided: Is it necessary to play in Barselona to become a footballer? However for high positions it helps much. PhD is a way to find yourself in more interesting positions but not necessarily. Obtaining such a high academic degree makes your life easier though. For example, you can hardly (if ever) get yourself in research team for "big fishes on Wall Street" unless you hold PhD. Its an interesting and highly compensated job right?!

...is there any hope for someone that wants to skip the Phd. route altogether, and just do the MFE, or MMF, and still have a chance at a front office gig after a couple years experience?

Let's take a look on many CEOs, CFOs on Wall Street. Do they all hold PhDs. NO. They don't. many of them are not doctors but are suited for financial world with the degrees they have. For example, as I remember the J.P. Morgan & Chase CEO, Jamie Dimon holds MBA from Harvard. Nor it is a MUST to hold the PhD degree from the field you are working at. Another example: Goldman Sachs CEO, Lloyd Blankfein holds the JD degree from Harvard.

 

[Jarone Eugene McCorkle]

@Jarone Eugene McCorkle
Let first establish some framework of agreement on your definition of "real quant". The landscape has changed, that much we need to agree on, so we are not arguing based on what you read from "My life as a quant" or glorified stories about quant career that were published 5 years ago, at the rise of the quant.

First of all, big thanks to anyone chiming in and spending their time responding to my post.

@Andy Nguyen

From my very limited understanding of what Quants are, the definition of a Quant is supposedly a person who designs and implements mathematical models for either :

1) Derivatives
2) Assessment of risk
3) Predicting market movements
4) Programming models that deal with a combination of three of the above

From what I am led to understand, it seems to me that the salary that Quants are paid is a function of where they work and what they do at their job. There's the Quants that that are employed in either commercial banking (supposedly low paid because of less risk I guess), Investment banking ( high paid, ) , Hedgefunds ( obviously high paid) , and other software companies ( no idea on compensation, probably a little higher than "normal" programmers ) .

Obviously, there has been some pressure on the derivatives market, so I have no idea to what extent Quants deal with derivatives these days. But I am sure they are working on developing other instruments, or measuring some sort of risk on investment portfolios.

 

[Jarone Eugene McCorkle]

Let's take a look on many CEOs, CFOs on Wall Street. Do they all hold PhDs. NO. They don't. many of them are not doctors but are suited for financial world with the degrees they have. For example, as I remember the J.P. Morgan & Chase CEO, Jamie Dimon holds MBA from Harvard. Nor it is a MUST to hold the PhD degree from the field you are working at. Another example: Goldman Sachs CEO, Lloyd Blankfein holds the JD degree from Harvard.

@Tsotne

Of course, I agree with you completely that one doesnt need a Phd do become an executive on Wall Street, no argument there. I apologize for the misleading statement of "front office gig," woops, my mistake. What I meant to say was a front office gig as a Quant. So what I am specifically talking about here are Financial Engineer's, AKA Quants and how to become one without wasting my life being a professional student.

 

[Tsotne]

Obviously, there has been some pressure on the derivatives market, so I have no idea to what extent Quants deal with derivatives these days. But I am sure they are working on developing other instruments, or measuring some sort of risk on investment portfolios.

The point is that as derivatives markets becomes increasingly difficult and complex to understand, the level of knowledge is required to be reflected in your academic degrees. That's why the employees are requiring PhD from quants. To state it clear, they don't even have trouble finding person with PhD or such experience that could easily replace the need for PhD. There are people graduating from universities or at least moving from previous jobs so more or less that demand is being met. Nor in the Wall Street corporations alone, regulators are having trouble "chasing" the derivatives markets since it's the hardest nightmare for them to manage. Recall what happened since the invention of options. Regulators were under pressure how to tax the options. Same with other new derivatives instruments. They need people with highest knowledge to come up with fair, justifiable and correct method to do that. In the same vein, corporations need smart people to either find holes in regulations or at least manage the role effectively. I'm saying that because you emphasized on derivatives. It is the most challenging industry in the financial world so the technical knowledge or just become professional is not enough, research experience is mandatory.

 

[Andy Nguyen]

Jarone
I don't know if you have read this http://www.quantnet.com/the-coming-glut-of-financial-engineers/
The problem with everything that you read about what quants do is that many of those roles no longer exists in today landscape. MFE programs traditionally train people for roles in derivatives pricing, structured products and there are little hiring in that area at the moment.
Many of the roles you list are done by people whose title does not include "quant" in it. Title inflation is another thing you should be aware of.
There are more roles that an MFE can easily qualify for these days. The old days when only a quantum physics PhD was needed to understand martingale models are over. Such once prized knowledge is now being taught in a FE bachelor degree.
I'm going to repeat the old, tired mantra around here "you don't do a PhD for a career purpose".
I was hired into a desk quant position in 2007 for a prop desk at an IB before I finished my MFE. These days, those positions are long gone as banks getting rid of their prop trading operation. Reading trade journals, you don't have the feeling that new products with 3 letters in them being invented by the quants any more.

Instead, you hear more and more about risk, about high frequency trading. Risk management is an area that MFE graduates should explore as they are getting better compensated.

So if your goal is to do blue sky research, you may want to stick with academia. Finance is mostly and always profit driven and demand is always in what appear trendy or political correct at the moment. Who knows what HFT will be 3 years from now with all the changing policy.

 

[Andy Nguyen]

I also forgot to point out a very popular interview of Wall Street hiring managers on how to get a quant job
http://www.quantnet.com/quant-job-advice-from-wall-street-executives/

 

[Jarone Eugene McCorkle]

Thanks alot for the feed back. Much appreciated, really. I have an off topic question. Do quants need series 7 or other licenses on top of their degrees?

 

[Andy Nguyen]

No. Series 7 is for another line of work
http://en.wikipedia.org/wiki/General_Securities_Representative_Exam

 

[Jarone Eugene McCorkle]

Alright just making sure. Because I have seen jobs such as "Quant Trader, " or etc etc, so I naturally assumed series 7. Not sure if quant trading is related to FE .

 

[AlexandreH]

I had to pass Series 7 few years ago when I was in IB (corporate finance/Advisory). Not that I needed it at all, but it was a reg requirement. Same applies for Series 63.

 

[JasonHunt]

Hi, this is my first post and it seems this thread applies to me as well. I'm nearly finished my undergraduate degree and feeling torn about whether to head into a MFE and head into the work world or to pursue a PhD. I am extremely interested in algorithmic trading for a variety of reasons. First of all, I have been practicing my analytical skills since I was inspired by a finance course and have done quite well. Using a long/short strategy, I was able to predict growth over ~700% with a subsequent fall bringing the 9 month total over 2100%. I must state that I was following a uranium company and the situation in Japan brought the short position even lower than it would have, otherwise 9 months would have yields around 1200%. Regardless, I feel the model I used could easily be reproduced algorithmically.

Secondly, I have been following the development of HFT and feel the added liquidity which market makers are bringing is creating the opportunity to bring new financial services to the market.

Essentially I want to become an algorithmic strategist and also work with a team to introduce these services to the world. It may sound bold, but this is a passion of mine.

Furthermore, as this is my first post. I used to work in the oilfield in Alberta, so I have a good understanding of the oil/gas industry and mining in general. I think it gives me a lot of insight into the risks that involved in these industries.

So, what I'm asking is for some suggestions on how I can best improve my career prospects. Would I be limiting my credibility if I don't pursue a PhD? My concern with taking this path is that timing is critical and I don't want to be caught in academia while all the excitement is taking place.

In addition, I am in Germany and looking at graduate schools in Europe. I'm fairly new over here, so some insights into the environment here would be useful as well.

Thank you.

 

[Joy Pathak]

Hi, this is my first post and it seems this thread applies to me as well. I'm nearly finished my undergraduate degree and feeling torn about whether to head into a MFE and head into the work world or to pursue a PhD. I am extremely interested in algorithmic trading for a variety of reasons. First of all, I have been practicing my analytical skills since I was inspired by a finance course and have done quite well. Using a long/short strategy, I was able to predict growth over ~700% with a subsequent fall bringing the 9 month total over 2100%. I must state that I was following a uranium company and the situation in Japan brought the short position even lower than it would have, otherwise 9 months would have yields around 1200%. Regardless, I feel the model I used could easily be reproduced algorithmically.

Secondly, I have been following the development of HFT and feel the added liquidity which market makers are bringing is creating the opportunity to bring new financial services to the market.

Essentially I want to become an algorithmic strategist and also work with a team to introduce these services to the world. It may sound bold, but this is a passion of mine.

Furthermore, as this is my first post. I used to work in the oilfield in Alberta, so I have a good understanding of the oil/gas industry and mining in general. I think it gives me a lot of insight into the risks that involved in these industries.

So, what I'm asking is for some suggestions on how I can best improve my career prospects. Would I be limiting my credibility if I don't pursue a PhD? My concern with taking this path is that timing is critical and I don't want to be caught in academia while all the excitement is taking place.

In addition, I am in Germany and looking at graduate schools in Europe. I'm fairly new over here, so some insights into the environment here would be useful as well.

Thank you.

For what company?

 

[JasonHunt]

For what company?

Patterson UTI, it's a drilling company. I wasn't involved in the financial side of the business, but I saw a lot of what happens on the ground and gained insights into the risks involved, how the weather affects productivity, how a changing economic climate affects the ability to acquire assets at a bargain price, etc.

 

[Joy Pathak]

Patterson UTI, it's a drilling company. I wasn't involved in the financial side of the business, but I saw a lot of what happens on the ground and gained insights into the risks involved, how the weather affects productivity, how a changing economic climate affects the ability to acquire assets at a bargain price, etc.

Yup. I can empathize. I worked for Syncrude R&D in Edmonton.

 

[JasonHunt]

Yup. I can empathize. I worked for Syncrude R&D in Edmonton.

Wow, small world. I'm originally from Edmonton. How long have you been away? Did you leave because of work/school?

 

[Joy Pathak]

Wow, small world. I'm originally from Edmonton. How long have you been away? Did you leave because of work/school?

I worked in 2008. I lived in Edmonton for a year. Mill"h00ds" represent! haha. Loved my time there. Went snowboarding almost every weekend to Banff or Jasper

 

[JasonHunt]

I worked in 2008. I lived in Edmonton for a year. Mill"h00ds" represent! haha. Loved my time there. Went snowboarding almost every weekend to Banff or Jasper

Haha, I was pretty fond of biking in the rivervalley. I lived in Holyrood, so I was about 5 minutes from the valley on my bike. What are you doing now?

 

[Joy Pathak]

Haha, I was pretty fond of biking in the rivervalley. I lived in Holyrood, so I was about 5 minutes from the valley on my bike. What are you doing now?

Send me a private message. I don't want to put too much information out in the public.

I am in the Baruch MFE program.