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11/24/12

Would you take a full-time BB IBD job in a good industry group (Citi/CS/BAML, think Industrials/Energy) or a Rhodes Scholarship to study at Oxford (Economics)? The BB IBD job is probably more relevant to PE/HF, but I feel that a rhodes scholarship could open doors as well

Would the answer change if it were top BB (GS/MS) or elite boutique (Moelis/Lazard/Greenhill) IBD? More justifiable to take that over rhodes? Obviously if its BX restructuring or PE or GS TMT etc. or something ridiculous that's preferable to any scholarship, but otherwise would a rhodes be a smart move over a regular IBD job?

Comments (101)

Best Response
11/24/12

A Rhodes Scholarship is great if you want to go into politics.

But somewhere along the way, I think you lied to yourself with that application. The Rhodes committee genuinely looks for people who are trying to make the world a better place, who show compassion and kindness for others, and to be brutally honest, that's not consistent with the world of New York finance.

Figure out what your values are, and what you want your future to look like. I think you're going to take the BB offer instead. Not because it's more or less prestigious, or better for you, but because it's being honest to yourself. You went through the whole process of bank recruiting without flinching, and that should tell you something about yourself.

Congratulations and good luck to you. Work hard and enjoy a great life.

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11/24/12

haha, tough one you lucky bastard

11/24/12

Interested in knowing this as well. One person I know of did a few SA stints, took the Rhodes, then came back to work at GS and later a HF.

11/24/12

I'd talk to the bank. Goldman offers deferments for Teach For America - somehow I think a Rhodes would also qualify. And, yes, I would take the scholarship - it is a pretty big deal.

11/24/12

I'd take the scholarship as well. I think it will open many more doors down the line and is definitely very impressive on a resume.

11/24/12

not sure if you are serious?

take the scholarship, even over undergrad BX pe or whatever..

talk with the banks, but dont limit yourself, you will have more/better opps after 2 years at Oxford

congratz, kudos, hats off..

11/24/12

I don't think anyone has actually turned down the rhodes. It truly is a once in a lifetime opportunity.

11/24/12

Myron rolle postponed the nfl for the rhodes. Postponing BB IBD for it should be an easy decision

In reply to RESC
11/24/12
notaspammer:

Myron rolle postponed the nfl for the rhodes. Postponing BB IBD for it should be an easy decision

Yes people have postponed it, but i've never heard of anyone who turned it down outright. There are multiple rhodes scholars who leave oxford after just 1 year to work or go back to school.

11/24/12
11/24/12

definitely scholarship, even if you can't defer. I'd imagine you can come out on top to most programs with that under your belt. It's a big fucking deal with a lower acceptance rate and a more rigorous application process than a GS analyst position

11/24/12

... but did you get the Rhodes?

11/24/12

1) Some banks will allow you to defer, and if it's so you can take the Rhodes, they may be even more willing, since it looks great for them to have you work for them after.

2) Rhodes is an extremely rare and prestigious opportunity, more so than working in a mid-tier BB's industry group. You can go back and do finance later - I agree the Rhodes will definitely open doors anyways, more so than a "regular" IBD job.

3) Congrats!

11/24/12

Take the Rhodes, is this thread a joke? The US military postpones service for recipients at the academies, never mind postponing the NFL...

Accepting the Rhodes should be one of the easiest decisions a Rhodes scholar has to make.

Congratulations, but come on you should be able to make this decision on your own without any hesitation.

11/24/12

Takes the Rhodes, open much more doors, and when you enter the workforce you'll start with higher pay.

11/24/12

Illini's second paragraph is absolute gold, especially the last line, and anyone familiar with the Rhodes process should know that.

Which is, among other things, a reason to take the Rhodes. Most importantly, anyone qualified for the Rhodes will end up feeling extremely underutilized in their work in finance. If you're Rhodes caliber, why eat shit in an entry-level finance job? Go change the world, bro...

In reply to IlliniProgrammer
11/24/12
IlliniProgrammer:

A Rhodes Scholarship is great if you want to go into politics.

But somewhere along the way, I think you lied to yourself with that application. The Rhodes committee genuinely looks for people who are trying to make the world a better place, who show compassion and kindness for others, and to be brutally honest, that's not consistent with the world of New York finance.

Figure out what your values are, and what you want your future to look like. I think you're going to take the BB offer instead. Not because it's more or less prestigious, or better for you, but because it's being honest to yourself. You went through the whole process of bank recruiting without flinching, and that should tell you something about yourself.

Congratulations and good luck to you. Work hard and enjoy a great life.

HIS EYES CAN SEE INTO YOUR SOUL

11/24/12

I personally know a few rhodes/marshall scholars. They are obviously smart and talented, but it comes across as hypocritical when these people would spend their college years doing all sorts of non-profit and do-gooder work and then jump into finance/consulting after their rhodes/marshall stint. It sort of makes you wonder whether they were "faking" their passion during college in order to get a prestigious fellowship or whether they had a drastic change of hearts that making a lot of money is their true calling. Having known a few of these guys, they do come across as self-righteous in many ways.

11/24/12

You guys got around to quoting me before I had a chance to edit! That post was a little more harshly worded than I would have liked- "lie" is a very strong word and I don't think that's appropriate here, but I stand by the overall gist.

Wall Street and Rhodes Scholarship are two opposite ethical systems.

There's a continuum, but anyone who buys into deontological ethics enough to survive on Wall Street cannot honestly take a Rhodes Scholarship. You have to choose one side or the other. I, personally, choose deontological ethics. I would like to think that if I had that high quality of a decision- where I was reasonably assured a $100K/year life no matter which way I went, I'd choose being true to myself, and would therefore take a job on Wall Street.

There is a fundamental conflict between "honesty" and "compassion"; between "fair" and "just". You have to figure out which side you're on. Wall Street is uncompassionate and unfair, but it is honest and just. Rhodes' values are the other way around.

Speaking of honesty, and in the Wall Street interest of full disclosure, I don't have the best record at turning down prestige. I believe in a world where the first can be last and the last can be first, and that prestige shouldn't matter, and I hate the fact that it does. And yet when I had to make a decision on grad school, I made a decision based on the quality of the research, the students, the program- and its prestige- rather than on a fundamental alignment of values. I don't think I regret the decision, and my values can work around it, but I hate that I had to make it.

For IBD vs Rhodes Scholars, the marginal utility of prestige is a lot lower up here and the differences in values are way more fundamental. If you're a utilitarian, you'll hate yourself for choosing banking. If you believe in deontological ethics and facing the harsh, painful truths, you'll hate yourself for choosing the Rhodes Scholarship. And I think the values involved in the decision are so fundamental that you'll regret giving up your grounding.

I wish we could have a world that is both utilitarian and deontologically ethical, but anyone who is qualified to work on Wall Street knows that can never happen, and knows that it's impossible for a smart, honest person to look at the historical record and say it's possible. In order for utilitarianism to work, you have to lie, and you have to abridge the fundamenal rights and dignity of the individual. And in order for deontological ethics to work, in order for people to have rights, you have to let life be unfair and be prepared to do nothing in the face of terrible human suffering (because you often can't do anything without being unjust).

This is heavy stuff to drop on a 21 year old, but this is a very important decision and you need to be equipped with the truth to make it.

So choose wisely, and base it on your values.

11/24/12

If you have to choose and can't defer - Rhodes. Easy.

In reply to Macroecon
11/24/12

Macroecon:
I personally know a few rhodes/marshall scholars. They are obviously smart and talented, but it comes across as hypocritical when these people would spend their college years doing all sorts of non-profit and do-gooder work and then jump into finance/consulting after their rhodes/marshall stint. It sort of makes you wonder whether they were "faking" their passion during college in order to get a prestigious fellowship or whether they had a drastic change of hearts that making a lot of money is their true calling. Having known a few of these guys, they do come across as self-righteous in many ways.

Well, I can't condemn them because I now have my own issues with conflicts of values. I believe prestige is bunk, and yet, I choose the East Coast over the University Of Chicago.

But I can say with experience that making decisions that are a little worse than orthogonal to your values doesn't always make you feel like a good person. We're all equally bad at this as fallen people, but I think the Rhodes Scholar who goes into banking will feel it worse.

I'll leave everyone with Obi-Wan Kenobi:

11/24/12

IlliniProgrammer raises some very good philosophical points, but I think he is simply presenting the two ends of the value system spectrum. I'd imagine that the bifurcation is not so clean on the individual level and most people fall somewhere in the middle of the spectrum. You can be successful on Wall Street even though you have a streak of utilitarianism in your mindset; and you can affect great social change even if you sometimes ascribe to deontological ethics.

You certainly have a lot to think about; but again, you are 21 years old and your values and principles will probably change a little, or a lot, between now and thirty years down the line. If you're truly passionate about banking, then go to Wall Street and knock it out of the park. If you plan to commit your life to public service in one form or another, then go with the Rhodes Scholarship and claim your TIME magazine cover in twenty years.

If you don't have any overwhelming callings your in life right now, I agree with the other posters and think you should take the Rhodes. It's a once in a lifetime opportunity where you will meet some incredible people who may even change the way you see the world. It's only two years long, so if you end up deciding that you'd rather make it rain on the Street, you'll only be 24 years old. If you got into banking once, you will definitely be able to do it again armed with one of the prestigious academic degrees in the world. Cheers and congrats my friend.

In reply to Straight Cash Homey
11/24/12
Straight Cash Homey:

IlliniProgrammer raises some very good philosophical points, but I think he is simply presenting the two ends of the value system spectrum. I'd imagine that the bifurcation is not so clean on the individual level and most people fall somewhere in the middle of the spectrum. You can be successful on Wall Street even though you have a streak of utilitarianism in your mindset; and you can affect great social change even if you sometimes ascribe to deontological ethics.

Sure, but my point is that you can't believe in making the world a better place and believe in taking advantage of arbitrage opportunities or merging companies and reducing the demand for labor. There is no overlap on the ethical values front between being a Rhodes Scholar and working on Wall Street. Your values can change, but I don't think you can take the Rhodes scholarship if you want to work on Wall Street.

If you don't have any overwhelming callings your in life right now, I agree with the other posters and think you should take the Rhodes. It's a once in a lifetime opportunity where you will meet some incredible people who may even change the way you see the world. It's only two years long, so if you end up deciding that you'd rather make it rain on the Street, you'll only be 24 years old. If you got into banking once, you will definitely be able to do it again armed with one of the prestigious academic degrees in the world. Cheers and congrats my friend.

This is an ok approach, too. But don't do the Rhodes Scholarship with the intention of going to Wall Street later. And to be honest, if you know you want to do Wall Street, your conscience will be a lot kinder to you if you go straight there.

11/24/12

I take it you lied on the Rhodes application and told them you want to uplift the underpriviledged communities by handing out unicorns and lolipops. Anywho.
I would suggest taking a week or so to think about your real intentions behind either road you take. If you really want to heal the world and go into politics some day, then take the Rhodes scholarship. If you genuinely love the banking world - fast paced, being a tiny part of huge deals like FB or Groupon,, compensation aside, then I would say banking.

11/24/12

rhodes is such a bigger accomplishment

11/24/12

The fact that this guy is even asking this question I think pretty much confirms that he hasn't been offered the scholarship.

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11/24/12

So from reading the comments, this seems like the best approach:

Ask the banks to defer, take the Rhodes, and if you decide to back out from banking sometime later on then so be it, otherwise go to Wall Street. If they won't let you defer, no matter -- you should be able to get offers a second time anyway. Win-win either way. In the meantime, you'll have a chance to figure out where your values are in.

11/24/12

Definitely take the Rhodes (or Gates, if you get a chance) no matter what. You will meet some exceptional people there, and you will be marked out thereafter as leader material. You will have your pick of employers thereafter...

I disagree with IlliniProgrammer. The correct allocation of capital is what enables modern civilisation to continue. On the other hand, most well meaning bureaucrats trained at the likes of the Harvard Kennedy School end up doing far more damage than any Ken Lay or Angelo Mozilo could ever hope to, affecting the lives of millions of people durably and changing the very culture that makes the United States what it is.

In reply to adast027
11/24/12
adast027:

The fact that this guy is even asking this question I think pretty much confirms that he hasn't been offered the scholarship.

Thank you. This post is clearly hypothetical. Nowhere in his original post is it stated that this is an actual decision he's facing.

I seriously thought people were just joking about the congratulations... Maybe I should start my own thread asking: NASA Mars Exploration Program or Citadel Quantitative Strategies?

Talent is hitting a target no one can hit.
Genius is hitting a target no one can see.

11/24/12

So which one are you? http://www.rhodesscholarshiptrust.com/rhodes-schol...

But really, I'm surprised people are taking this guy seriously--though there are definitely some interesting philosophical points being raised to keep this thread going.

In reply to Determined
11/24/12
Determined:
adast027:

The fact that this guy is even asking this question I think pretty much confirms that he hasn't been offered the scholarship.

Thank you. This post is clearly hypothetical. Nowhere in his original post is it stated that this is an actual decision he's facing.

I seriously thought people were just joking about the congratulations... Maybe I should start my own thread asking: NASA Mars Exploration Program or Citadel Quantitative Strategies?

Yeah, no way an actual rhodes scholar would post something like this on wso.

I don't like your hypo, to be fair. Citadel quantitative strategies isn't that prestigious.. rentech, de shaw, two sigma, is the holy trinity of the quants.

In reply to Macroecon
11/24/12
Macroecon:

I don't like your hypo, to be fair. Citadel quantitative strategies isn't that prestigious.. rentech, de shaw, two sigma, is the holy trinity of the quants.

I've got to make it believable haha. You didn't see this kid saying Rhodes Scholar vs. BX PE because no one would take him seriously.

Honestly though, the lack of common sense here is bewildering sometimes.

Talent is hitting a target no one can hit.
Genius is hitting a target no one can see.

In reply to EURCHF parity
11/24/12
EURCHF parity:

I disagree with IlliniProgrammer. The correct allocation of capital is what enables modern civilisation to continue. On the other hand, most well meaning bureaucrats trained at the likes of the Harvard Kennedy School end up doing far more damage than any Ken Lay or Angelo Mozilo could ever hope to, affecting the lives of millions of people durably and changing the very culture that makes the United States what it is.

90% of the people on the trading floor will disagree with you. I think the most common comment on this is "Nobody here is trying to save the whales."

I'd hire a Rhodes Scholar as a consultant. I'd vote for him for elected office (if he were a moderate or a conservative). I would NEVER hire one as a trader.

In reply to IlliniProgrammer
11/24/12
IlliniProgrammer:
EURCHF parity:

I disagree with IlliniProgrammer. The correct allocation of capital is what enables modern civilisation to continue. On the other hand, most well meaning bureaucrats trained at the likes of the Harvard Kennedy School end up doing far more damage than any Ken Lay or Angelo Mozilo could ever hope to, affecting the lives of millions of people durably and changing the very culture that makes the United States what it is.

90% of the people on the trading floor will disagree with you. I think the most common comment on this is "Nobody here is trying to save the whales."

I'd hire a Rhodes Scholar as a consultant. I'd vote for him for elected office (if he were a moderate or a conservative). I would NEVER hire one as a trader.

What % of the trading floor makes decent amounts vs just enough to keep the lifestyle going? And does understanding the value added by your work help you make money? My answer to both based on experience is less than 5%, and no; indeed some of the best traders I have known were convinced communists/socialists (especially those that grew up in France), with their trades directly clashing with their views.

There's a thousand takes on it. I think the easiest is: compare a bubble like the recent housing bubble in a country like the US, to a bubble in a place like the Soviet Union without markets (other than the balance of trade) to keep a check on it, and the costs to either country of both. Even the bubble riders are adding value.

11/24/12

Why would this even be on the main page..? Has the content of of this site degraded that much that we have to resort to bs hypothetical questions?

11/24/12

what's the fucking point of this thread? jesus christ. the fuck is wrong with this site

11/24/12

I'd take the rhodes for exit opps if I was primarily interested in banking for the exit opps, b school etc. I'd take the banking job if I was really interested in PE and wanted to make partner or MD 2 years sooner

In reply to BanditPandit
11/24/12
BanditPandit:

what's the fucking point of this thread? jesus christ. the fuck is wrong with this site

lolol I love these posts.

"An intellectual is a man who takes more words than necessary to tell more than he knows."
- Dwight D. Eisenhower

Check out my blog!

In reply to EURCHF parity
11/24/12
EURCHF parity:

What % of the trading floor makes decent amounts vs just enough to keep the lifestyle going? And does understanding the value added by your work help you make money? My answer to both based on experience is less than 5%, and no; indeed some of the best traders I have known were convinced communists/socialists (especially those that grew up in France), with their trades directly clashing with their views.

There's a thousand takes on it. I think the easiest is: compare a bubble like the recent housing bubble in a country like the US, to a bubble in a place like the Soviet Union without markets (other than the balance of trade) to keep a check on it, and the costs to either country of both. Even the bubble riders are adding value.

Sure. Liquidity may create social value, but people don't go into it for the sake of creating social value, and I'm not sure most traders at banks make money by creating liquidity these days.

Your socialist traders are the perfect case in point. They never claimed their goal was to save the world on a scholarship application. They're pragmatic, like just about every other trader out there.

If someone gives you money to manage, he or she needs to know that he can trust you. I have issues with someone who would lie to someone giving them money. If you tell me that you're going to Oxford to make the world a better place, and then go into trading, how do I know you'll abide by my risk limits when I give you money to manage?

Traders are assholes, but a handshake or a clear agreement is almost always as good as a contract with them. Oxford on your resume might help you land a job, but I don't think a Rhodes scholarship is going to be a selling point.

11/24/12

IP I am baffled by your posts because you seem to be an otherwise sensible fellow. Ambition and Tiger moms are what drive men to do great things, not inner ethical beliefs. I think most people on this site are just trying to get laid.

Are you seriously trying to argue that bankers and traders don't create value? Somehow making pitchbooks is less virtuous than digging ditches in Kenya? Sure you might feel better, and maybe you'll be able to craft a better HBS essay, but at the end of the day, a rational, introspective man like yourself should be able to figure out what really adds more value.

It always baffles me when people look to Warren Buffet as some sort of saint because he is donating $50b to charity or whatever. Sure, that's nice, but really, I have no idea what the social ROI from his charity will be, but I suspect that the social ROI from all of the successful businesses he has overseen over the years will be many multiples of that number.

I'm sorry, but you're not a bad guy, IP. Regardless of how many idiot #Occupy kids or simple country folks admonish you for working on Wall Street, you're not going to care, because you've already thought about everything they've had to say and found their arguments wanting. If you really thought you were doing harm to the world, I'm guessing that you would stop.

11/24/12

I would take the Rhodes scholarship

In reply to BanditPandit
11/24/12
BanditPandit:

what's the fucking point of this thread? jesus christ. the fuck is wrong with this site

hahahaha, I think this thread is trying to ascertain whether working at Citigroup or doing an Econ Masters makes it easier to get an interview at a hedge fund. Other interesting questions include: which is close enough to a vegetable, sticky buns or swiss cheese? Which culture has sane women, the Indians or the Jews? Where should I do my MBA to make Brady jealous, Fuqua or Yale SOM?

Sometimes I go about in pity for myself, and all the while a great wind carries me across the sky
In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

Sure. Liquidity may create social value, but people don't go into it for the sake of creating social value, and I'm not sure most traders at banks make money by creating liquidity these days.

Your socialist traders are the perfect case in point. They never claimed their goal was to save the world on a scholarship application. They're pragmatic, like just about every other trader out there.

If someone gives you money to manage, he or she needs to know that he can trust you. I have issues with someone who would lie to someone giving them money. If you tell me that you're going to Oxford to make the world a better place, and then go into trading, how do I know you'll abide by my risk limits when I give you money to manage?

Traders are assholes, but a handshake or a clear agreement is almost always as good as a contract with them. Oxford on your resume might help you land a job, but I don't think a Rhodes scholarship is going to be a selling point.

To the first point: what I was hinting at (hence reference to 'em ruskies) was that the reason traders add so much value is not because they provide liquidity (not immediately, anyway) but because in aggregate having thousands of smart hungry bastards with psychopathic tendencies (a cliche, which I have not found to hold true, but works for the story) trying to make money by buying and selling chunks of enterprises and government liabilities actually ends up bringing the value of things much closer to their intrinsic value than having said value be determined by highly qualified extremely intelligent number crunching bureaucratics with almost infinite power over said allocation. When something fails in the US it goes down, hard and immediately. This Darwinist process results in fantastic companies, amazing innovation, endless economic growth despite looters' best attempts at halting it...

The socialist traders just have cognitive dissonance, which they resolve by cynically whining about "those ruthless, emotionless, psychopathic American bastards". It is because it is perfectly possible, and done by most people, to dissociate your professional side from your personal side. From experience they will short a government that ends up structuring more benefits than expected (simplistic explanation of course; if only that was the only factor pricing French liabilities... or cf Italy going over then back under 8%), whilst whining out loud at how those damn conservatives are selling the poor under the carpet, then discussing with mates where to put that third pool table or whether their third chalet should be in Verbier or Megeve. A few, especially on the quant side, are a little more consistent but I would argue that cognitive dissonance is the norm in markets, not an exception.

Regarding lying: I would happily entrust my cash with somebody who reasons convincingly that being a HFM means he is making the world a better place. I also think a Kennedy School Masters in International Relations or a Rhodes scholarship with equivalent political studies of sorts (and exposure to the kind of beast that will later man said desks, and create said actions providing trade opportunities) is a much better asset on a macro desk than any MFin or other piece of paper guaranteeing you understand the technical side of trading (which any idiot can learn in a month on a desk + Hull).

11/25/12

You've laid out options A and B, what is option C?

adapt or die:
What would P.T. Barnum say about you?

MY BLOG

In reply to SirTradesaLot
11/25/12
SirTradesaLot:

You've laid out options A and B, what is option C?

getting laid haha

11/25/12

I fucking love the douchbaggery of WSO. Actually though, my love goes out to all of you other prestige whores <3 WSO is like therapy for us, since normal people on the outside world facepalm at subject matter discussed in common WSO thread topics

11/25/12

No Rhodes scholar is posting on WSO and I agree with IP nor will any of them look to chase finance or succed in finance. I am sure you will find a lot of "Rhodes scholar finalist" in the finance world, but that is the cap.

In reply to marcellus_wallace
11/25/12
marcellus_wallace:

No Rhodes scholar is posting on WSO and I agree with IP nor will any of them look to chase finance or succed in finance. I am sure you will find a lot of "Rhodes scholar finalist" in the finance world, but that is the cap.

Not true at all. I know several rhodes scholars who did HBS after oxford and are now in finance. I also know a marshall scholar who did harvard jd/mba and now at a very well-known hedge fund that makes wso posters jizz their pants.

11/25/12

@EURCHFParity, not just making the world a better place but also "compassionate"? Compassionate means telling the idiot pension fund manager the truth. That he should quit his job running the pension fund and go back to working for his uncle Vinny dumping dead bodies somewhere, and avoid screwing a bunch of hardworking teamsters out of their pensions.

Look, if you have a Rhodes scholar who claims arbing pension funds is the way to go and that it's consistent with the values he claimed to ascribe to two years ago to work for you, you deserve whatever results you get. Me personally? That hungry engineer from Purdue is looking like a better choice.

In reply to EURCHF parity
11/25/12
EURCHF parity:
IlliniProgrammer:

Sure. Liquidity may create social value, but people don't go into it for the sake of creating social value, and I'm not sure most traders at banks make money by creating liquidity these days.

Your socialist traders are the perfect case in point. They never claimed their goal was to save the world on a scholarship application. They're pragmatic, like just about every other trader out there.

If someone gives you money to manage, he or she needs to know that he can trust you. I have issues with someone who would lie to someone giving them money. If you tell me that you're going to Oxford to make the world a better place, and then go into trading, how do I know you'll abide by my risk limits when I give you money to manage?

Traders are assholes, but a handshake or a clear agreement is almost always as good as a contract with them. Oxford on your resume might help you land a job, but I don't think a Rhodes scholarship is going to be a selling point.

To the first point: what I was hinting at (hence reference to 'em ruskies) was that the reason traders add so much value is not because they provide liquidity (not immediately, anyway) but because in aggregate having thousands of smart hungry bastards with psychopathic tendencies (a cliche, which I have not found to hold true, but works for the story) trying to make money by buying and selling chunks of enterprises and government liabilities actually ends up bringing the value of things much closer to their intrinsic value than having said value be determined by highly qualified extremely intelligent number crunching bureaucratics with almost infinite power over said allocation. When something fails in the US it goes down, hard and immediately. This Darwinist process results in fantastic companies, amazing innovation, endless economic growth despite looters' best attempts at halting it...

The socialist traders just have cognitive dissonance, which they resolve by cynically whining about "those ruthless, emotionless, psychopathic American bastards". It is because it is perfectly possible, and done by most people, to dissociate your professional side from your personal side. From experience they will short a government that ends up structuring more benefits than expected (simplistic explanation of course; if only that was the only factor pricing French liabilities... or cf Italy going over then back under 8%), whilst whining out loud at how those damn conservatives are selling the poor under the carpet, then discussing with mates where to put that third pool table or whether their third chalet should be in Verbier or Megeve. A few, especially on the quant side, are a little more consistent but I would argue that cognitive dissonance is the norm in markets, not an exception.

Regarding lying: I would happily entrust my cash with somebody who reasons convincingly that being a HFM means he is making the world a better place. I also think a Kennedy School Masters in International Relations or a Rhodes scholarship with equivalent political studies of sorts (and exposure to the kind of beast that will later man said desks, and create said actions providing trade opportunities) is a much better asset on a macro desk than any MFin or other piece of paper guaranteeing you understand the technical side of trading (which any idiot can learn in a month on a desk + Hull).

I really can't tell if you're trolling, but you really think a harvard kennedy grad can do better at a macro hedge fund than a princeton mfin? Lol. I guess you haven't met students/alums from those programs.

11/25/12

Traders bring efficiency to a market in a immediate way, resulting in the outcome coming to hold before it may have without their help. Unlike the mafia, they do not let their victim squirm and keep earning, they take all the profit upfront and force the expected outcome.

Soros a left-wing/social thinker did just that and many could say if he did not force that outcome to come sooner than later the consequences would be much worse. That is just one example.

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

Compassionate means telling the idiot pension fund manager the truth. That he should quit his job running the pension fund and go back to working for his uncle Vinny dumping dead bodies somewhere

LOL!

Sometimes I go about in pity for myself, and all the while a great wind carries me across the sky
In reply to Macroecon
11/25/12
Macroecon:

I really can't tell if you're trolling, but you really think a harvard kennedy grad can do better at a macro hedge fund than a princeton mfin? Lol. I guess you haven't met students/alums from those programs.

I'm saying someone with an existing fairly decent understanding of finance would add more value to his knowledge base with a MIR than an MFin, and would be more useful on my old desk (which happened to trade macro and make quite decent coin).

This does not mean the R squared of Kennedy MIR and hedge fund value add is higher than the R squared of Princeton MFin and hedge fund value add; the sample being naturally biased towards the MFin, regardless of the value actually added by the degree. I agree that many social sciences students hold ideas that equip them poorly for real life, which is a shame.

In reply to Going Concern
11/25/12
Going Concern:
IlliniProgrammer:

Compassionate means telling the idiot pension fund manager the truth. That he should quit his job running the pension fund and go back to working for his uncle Vinny dumping dead bodies somewhere

LOL!

Thanks, but the last part- that hardworking people should not be screwed out of their pensions by a person who claims to be compassionate- is also extremely important here, too. That's what I'm getting at.

In reply to EURCHF parity
11/25/12
EURCHF parity:
Macroecon:

I really can't tell if you're trolling, but you really think a harvard kennedy grad can do better at a macro hedge fund than a princeton mfin? Lol. I guess you haven't met students/alums from those programs.

I'm saying someone with an existing fairly decent understanding of finance would add more value to his knowledge base with a MIR than an MFin, and would be more useful on my old desk (which happened to trade macro and make quite decent coin).

This does not mean the R squared of Kennedy MIR and hedge fund value add is higher than the R squared of Princeton MFin and hedge fund value add; the sample being naturally biased towards the MFin, regardless of the value actually added by the degree. I agree that many social sciences students hold ideas that equip them poorly for real life, which is a shame.

This is a bit off topic, but what was the background like of the guys on your old macro desk?

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

@EURCHFParity, not just making the world a better place but also "compassionate"? Compassionate means telling the idiot pension fund manager the truth. That he should quit his job running the pension fund and go back to working for his uncle Vinny dumping dead bodies somewhere, and avoid screwing a bunch of hardworking teamsters out of their pensions.

Look, if you have a Rhodes scholar who claims arbing pension funds is the way to go and that it's consistent with the values he claimed to ascribe to two years ago to work for you, you deserve whatever results you get. Me personally? That hungry engineer from Purdue is looking like a better choice.

The hungry engineer comes in at a different level and adds value in a different way. This is like comparing hiring fresh grads to MBAs... you need both types in a healthy desk.

If the average pension fund manager is a retard, tough for him and his trustees. Let his capital be reallocated. I do think most of the value destruction in that space is more a consequence of government action (e.g. distortion of market prices via regulation - e.g. insurance - or outright price manipulation - e.g. housing post-Clinton, fiat currencies). In the olden days your PFM would just buy his equities and bond mix, collect his average upper middle class salary, and throw out those young usptarts with crazy ideas. He can't afford to do this today because of volatility in both asset classes, so he's become prime game, but I don't think the fault lies with the predators in that pond, but with those who chucked him in it.

When [big bank] sales guys came to us proposing our CFO this amazing structured FI deal whose main USP was "this amazing index we created, which we don't really know/can't really tell you how it works but should sort of mimic the S&P" we let them pay us a delicious and expensive lunch and smiled and nodded and went back to our business. Warren Buffett, the Swiss banks and PFMs mostly had the same attitude during the late 90s which avoided major capital losses in 1999-2001.

Kinda went off on a tangent, but to your point I would answer that a Rhodes scholar would not waste his time figuring out how to screw clients, and my previous comments would be more oriented towards a capital management position on the buy side. I do think someone with an understanding of politics - beyond having read Friedman and Hayek, or Keynes and Marx - will be better at understanding the world from a macro POV than a fresh MFin/MBA grad whose previous experience was in the US corporate world.

In reply to Macroecon
11/25/12
Macroecon:

This is a bit off topic, but what was the background like of the guys on your old macro desk?

Can't say much without exposing the desk/company I worked for (easy to draw links from previous posts, only a handful of people will know but I don't want them to). Say 15+ years experience on the sell side usually as head of something big (from equity derivs to FI), or internal promotions of commodity types who dabbled successfully in FX and had serious experience of EM (10+ countries worked in, all with their own version of dysfunctional govt).

In reply to EURCHF parity
11/25/12
EURCHF parity:
IlliniProgrammer:

@EURCHFParity, not just making the world a better place but also "compassionate"? Compassionate means telling the idiot pension fund manager the truth. That he should quit his job running the pension fund and go back to working for his uncle Vinny dumping dead bodies somewhere, and avoid screwing a bunch of hardworking teamsters out of their pensions.

Look, if you have a Rhodes scholar who claims arbing pension funds is the way to go and that it's consistent with the values he claimed to ascribe to two years ago to work for you, you deserve whatever results you get. Me personally? That hungry engineer from Purdue is looking like a better choice.

The hungry engineer comes in at a different level and adds value in a different way. This is like comparing hiring fresh grads to MBAs... you need both types in a healthy desk.

If the average pension fund manager is a retard, tough for him and his trustees. Let his capital be reallocated. I do think most of the value destruction in that space is more a consequence of government action (e.g. distortion of market prices via regulation - e.g. insurance - or outright price manipulation - e.g. housing post-Clinton, fiat currencies). In the olden days your PFM would just buy his equities and bond mix, collect his average upper middle class salary, and throw out those young usptarts with crazy ideas. He can't afford to do this today because of volatility in both asset classes, so he's become prime game, but I don't think the fault lies with the predators in that pond, but with those who chucked him in it.

When [big bank] sales guys came to us proposing our CFO this amazing structured FI deal whose main USP was "this amazing index we created, which we don't really know/can't really tell you how it works but should sort of mimic the S&P" we let them pay us a delicious and expensive lunch and smiled and nodded and went back to our business. Warren Buffett, the Swiss banks and PFMs mostly had the same attitude during the late 90s which avoided major capital losses in 1999-2001.

Kinda went off on a tangent, but to your point I would answer that a Rhodes scholar would not waste his time figuring out how to screw clients, and my previous comments would be more oriented towards a capital management position on the buy side. I do think someone with an understanding of politics - beyond having read Friedman and Hayek, or Keynes and Marx - will be better at understanding the world from a macro POV than a fresh MFin/MBA grad whose previous experience was in the US corporate world.

With respect to your last paragraph, aren't a lot of trading jobs even on macro desks becoming more technical? It seems like quants and algorithms are taking over the entire trading universe. A princeton mfin grad would have more technical skill sets at his disposal than a harvard kennedy grad, who may have a more comprehensive knowledge base, but doesn't have the technical know how to add value to most hedge funds and banks.

11/25/12

Define technical. My colleagues outsourced all that stuff. Being able to price an exotic product is not THAT much of an edge. A general understanding of why "stuff" is "overpriced" or "underpriced", together with some awareness of how long "that can go on", is the essence of a successful macro trader in the long term. In the short term, that PhD in finance/econ might land you a job for 2-3 years and then you're outdated, if you haven't bothered learning the essence of the job. Quoting Taleb there, not from his recent popular books but his much, much better Dynamic Hedging (probably one of the best books on the essence of vol trading available).

Regarding technical know-how, there isn't that much. I saw some pretty complex volatility trades and it always boiled down to maybe 1st year undergrad calculus, and understanding the wording. The rest - the reason you would put on such a position - is MUCH harder to "grasp" intuitively and cannot be taught in an MFin.

I also doubt a Princeton MFin would really know how to program (beyond the most basic OO stuff) unless he was a CS undergrad.

I think the best analogy is that it's a "language" that you can learn that gives you access to certain strategies and markets. The stuff in an MFin is like learning Japanese - complete accentless fluency with cultural understanding gives you a small edge in the 1980s (but as many proved, wasn't necessary to making money there anyway), but today is fairly useless unless you really, really love Tokyo to the extent that you want to live there, and are too young to get a lateral promotion into a US banking group's local office as a Director (older folks don't need to know the local speak). On the other hand, a basic knowledge of English opens you the entire world. In the same vein, learning good German as a French or Spanish citizen can be a way out of your rotting country into Zurich or Frankfurt, the pay is not as good as New York but it's easier to dig yourself a cosy spot.

In reply to EURCHF parity
11/25/12
EURCHF parity:

Define technical. My colleagues outsourced all that stuff. Being able to price an exotic product is not THAT much of an edge. A general understanding of why "stuff" is "overpriced" or "underpriced", together with some awareness of how long "that can go on", is the essence of a successful macro trader in the long term. In the short term, that PhD in finance/econ might land you a job for 2-3 years and then you're outdated, if you haven't bothered learning the essence of the job. Quoting Taleb there, not from his recent popular books but his much, much better Dynamic Hedging (probably one of the best books on the essence of vol trading available).

Regarding technical know-how, there isn't that much. I saw some pretty complex volatility trades and it always boiled down to maybe 1st year undergrad calculus, and understanding the wording. The rest - the reason you would put on such a position - is MUCH harder to "grasp" intuitively and cannot be taught in an MFin.

I also doubt a Princeton MFin would really know how to program (beyond the most basic OO stuff) unless he was a CS undergrad.

I think the best analogy is that it's a "language" that you can learn that gives you access to certain strategies and markets. The stuff in an MFin is like learning Japanese - complete accentless fluency with cultural understanding gives you a small edge in the 1980s (but as many proved, wasn't necessary to making money there anyway), but today is fairly useless unless you really, really love Tokyo to the extent that you want to live there, and are too young to get a lateral promotion into a US banking group's local office as a Director (older folks don't need to know the local speak). On the other hand, a basic knowledge of English opens you the entire world. In the same vein, learning good German as a French or Spanish citizen can be a way out of your rotting country into Zurich or Frankfurt, the pay is not as good as New York but it's easier to dig yourself a cosy spot.

I agree with the gist of what you are saying. However, some of the best performing and most consistent hedge funds in the world are quant funds. Macro funds have been getting killed over the last few years. The problem with macro is that in order to generate consistent returns, you have to be both right in terms of your general thesis (the finance, economics, and politics behind it) AND get the timing perfectly right as well. Nearly impossible for anyone to be that accurate consistently. This is why guys like seth klarman think macro is a long-term losing proposition.

Meanwhile, quant funds like rentech are killing it because they can use sophisticated strategies to exploit any inefficiency out there in the markets and be market neutral while doing so. My point is that there's a reason why quants are so highly coveted by banks and hedge funds and why top finance masters programs have gotten so selective lately. They do bring to the table a vey practical skill set that can be used to generate value almost right away. In sharp contrast, a harvard kennedy grad can bring very little value unless he had prior finance experience (and if you worked in finance, why in god's green earth would you do harvard kennedy?)

11/25/12

Put it a simpler way: the option costs 50, your model says it means vol is at 40. What matters is not whether it's really at 45 or 35, but whether it's going to 80, and why it might not. Same as "margin of safety" in value funds. Pick your battles, etc.

11/25/12

I'm not going to waste your time in a long post. Rhodes Scholar over some regular IBD stint. Build a solid intellectual capital before jumping at a chance to make a few hundred thousand.

My Rabbi's son was in a similar position a few years ago, he chose the Rhodes Scholarship and has never regretted it.

Greed is Good.

11/25/12

This is a troll post. No one who gets a Rhodes scholarship could ask such a ridiculous question.

11/25/12

There's no way anyone in their right minds would turn down Rhodes. This thread is a joke.

11/25/12

In case this isn't a joke...take Rhodes, ask for deferred entry to that bank or just get into a better one after you come back from Oxford.

I'm talking about liquid. Rich enough to have your own jet. Rich enough not to waste time. Fifty, a hundred million dollars, buddy. A player. Or nothing.

See my Blog & AMA

In reply to EURCHF parity
11/25/12
EURCHF parity:

Define technical. My colleagues outsourced all that stuff. Being able to price an exotic product is not THAT much of an edge. A general understanding of why "stuff" is "overpriced" or "underpriced", together with some awareness of how long "that can go on", is the essence of a successful macro trader in the long term. In the short term, that PhD in finance/econ might land you a job for 2-3 years and then you're outdated, if you haven't bothered learning the essence of the job. Quoting Taleb there, not from his recent popular books but his much, much better Dynamic Hedging (probably one of the best books on the essence of vol trading available).

Regarding technical know-how, there isn't that much. I saw some pretty complex volatility trades and it always boiled down to maybe 1st year undergrad calculus, and understanding the wording. The rest - the reason you would put on such a position - is MUCH harder to "grasp" intuitively and cannot be taught in an MFin.

I also doubt a Princeton MFin would really know how to program (beyond the most basic OO stuff) unless he was a CS undergrad.

I think the best analogy is that it's a "language" that you can learn that gives you access to certain strategies and markets. The stuff in an MFin is like learning Japanese - complete accentless fluency with cultural understanding gives you a small edge in the 1980s (but as many proved, wasn't necessary to making money there anyway), but today is fairly useless unless you really, really love Tokyo to the extent that you want to live there, and are too young to get a lateral promotion into a US banking group's local office as a Director (older folks don't need to know the local speak). On the other hand, a basic knowledge of English opens you the entire world. In the same vein, learning good German as a French or Spanish citizen can be a way out of your rotting country into Zurich or Frankfurt, the pay is not as good as New York but it's easier to dig yourself a cosy spot.

That's not really what they're teaching in an MFin program these days.

We're working on Kalman filters and MDPs. We just had a competition with 150 grad students in CS and EE at Princeton and two MFinners came in the top five. Princeton is not quite as good as UIUC or Berkeley at CS overall, but we're in a dead heat for #1 in Theory with MIT and Cornell.

So, yes, this stuff is getting automated, and the money is going to folks who know how to automate this stuff well, and who can also talk about kernel regressions and the nuances of Gaussian GPDs and Clayton copulas while they build an MDP.

Gain technical skill. Gain an ability to accept and face the brutal realities of life. A Rhodes Scholarship gets you prestige but it doesn't really get you what it takes to survive in the financial markets.

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

That's not really what they're teaching in an MFin program these days.

We're working on Kalman filters and MDPs. We just had a competition with 150 grad students in CS and EE at Princeton and two MFinners came in the top five. Princeton is not quite as good as UIUC or Berkeley at CS overall, but we're in a dead heat for #1 in Theory with MIT and Cornell.

So, yes, this stuff is getting automated, and the money is going to folks who know how to automate this stuff well, and who can also talk about kernel regressions and the nuances of Gaussian GPDs and Clayton copulas while they build an MDP.

Gain technical skill. Gain an ability to accept and face the brutal realities of life. A Rhodes Scholarship gets you prestige but it doesn't really get you what it takes to survive in the financial markets.

How many of you can program comfortably in any variant of APL?

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

That's not really what they're teaching in an MFin program these days.

We're working on Kalman filters and MDPs. We just had a competition with 150 grad students in CS and EE at Princeton and two MFinners came in the top five. Princeton is not quite as good as UIUC or Berkeley at CS overall, but we're in a dead heat for #1 in Theory with MIT and Cornell.

So, yes, this stuff is getting automated, and the money is going to folks who know how to automate this stuff well, and who can also talk about kernel regressions and the nuances of Gaussian GPDs and Clayton copulas while they build an MDP.

Gain technical skill. Gain an ability to accept and face the brutal realities of life. A Rhodes Scholarship gets you prestige but it doesn't really get you what it takes to survive in the financial markets.

Look, I'm not saying you won't make any money, or that the skillset is useless. Really, my worldview is based on my own experience and joining the faint dots that I witnessed in 10+ countries and 10+ companies and counting, spanning about as many industries.

I will always remember my boss cleaning JP on a product they had invented. They came to us knowing our appetite for crazy exotic stuff, we priced it using a standard industry tool modified by one of our risk guys, who had basic VBA skills. My boss had zero technical knowledge - he probably doesn't know what alt + F11 does and if he was to press it, he'd ask me to "get him back to excel". He did trade equity derivs all his life in 4 cities, though, and ran a large desk for most of that. He took a position at the price offered, and 2 months later JP came back begging us to go back on the price. It was a bitch to get out of of course, no liquidity and the spread seemed to suddenly equal our P, but we waited out their huge spread and took delivery at a massive profit.

Since then, although I acknowledge that some programming skills can definitely be helpful in finance as elsewhere (I have personally saved hundreds if not thousands of man hours with basic scripts and free tools) I realized that what made a great trader was not technical ability or knowledge of the tools, but the usual stuff that's worked for Honma and Livermore - an understanding of what causes price movements encompassing everything from valuation to psychology. An old dude with grey hair and 2 kids, who doesn't know what recursion means, cleaned the floor with some of the best and most aggressive quants in the market (he did it often enough that I did not extrapolate from a single data point, before you start saying the plural of anecdotes isn't data). You can of course make some money temporarily constantly changing your game to arb whatever inefficiencies happen to come up when markets change tools or when market participants do not understand tools. You can even, as Bridgewater and Klarman both do in their own way, combine a value approach with an extreme understanding of tools to make enormous coin. I just know that had I stayed in the game, I'd rather try and understand the various forces that paints politicians in a corner, and the errors made by the biggest players in the most liquid markets. It's just more fun. And in that respect, spending a year or two thinking hard about what goes on in the heads of world leaders, their advisors and their executors, and how they cope with the grinding adjustment of their academic dreams and their electorate's expectations to the reality of financing said dreams, sounds more fun and useful than the same time breeding maths and CS to automate and refine the thinking of others.

In reply to EURCHF parity
11/25/12
EURCHF parity:
IlliniProgrammer:

That's not really what they're teaching in an MFin program these days.

We're working on Kalman filters and MDPs. We just had a competition with 150 grad students in CS and EE at Princeton and two MFinners came in the top five. Princeton is not quite as good as UIUC or Berkeley at CS overall, but we're in a dead heat for #1 in Theory with MIT and Cornell.

So, yes, this stuff is getting automated, and the money is going to folks who know how to automate this stuff well, and who can also talk about kernel regressions and the nuances of Gaussian GPDs and Clayton copulas while they build an MDP.

Gain technical skill. Gain an ability to accept and face the brutal realities of life. A Rhodes Scholarship gets you prestige but it doesn't really get you what it takes to survive in the financial markets.

How many of you can program comfortably in any variant of APL?

Dude, it's a functional scripting language. Those who don't know it know Perl or Ocaml and stats and can pick it up in a week or two.

That's not what makes money here. Coding in Java, C++, even Ocaml is all the same. Like you said, it's a language and a syntax. The question is who can get APL to execute faster, and who can get an MDP to coverge to the right answer faster. And the answer is an MFin.

And you wouldn't do it in APL. You'd do it in C++.

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

Dude, it's a functional scripting language. Those who don't know it know Perl or Ocaml and stats and can pick it up in a week or two.

That's not what makes money here. Coding in Java, C++, even Ocaml is all the same. Like you said, it's a language and a syntax. The question is who can get APL to execute faster, and who can get an MDP to coverge to the right answer faster. And the answer is an MFin.

And you wouldn't do it in APL. You'd do it in C++.

Coding in Java, C++ and OCamL is all the same... :|

If you can pick up Haskell or K from an OO background in a week or two I tip my hat, sir.

11/25/12

Since then, although I acknowledge that some programming skills can definitely be helpful in finance as elsewhere (I have personally saved hundreds if not thousands of man hours with basic scripts and free tools) I realized that what made a great trader was not technical ability or knowledge of the tools, but the usual stuff that's worked for Honma and Livermore - an understanding of what causes price movements encompassing everything from valuation to psychology. An old dude with grey hair and 2 kids, who doesn't know what recursion means, cleaned the floor with some of the best and most aggressive quants in the market (he did it often enough that I did not extrapolate from a single data point, before you start saying the plural of anecdotes isn't data). You can of course make some money temporarily constantly changing your game to arb whatever inefficiencies happen to come up when markets change tools or when market participants do not understand tools. You can even, as Bridgewater and Klarman both do in their own way, combine a value approach with an extreme understanding of tools to make enormous coin. I just know that had I stayed in the game, I'd rather try and understand the various forces that paints politicians in a corner, and the errors made by the biggest players in the most liquid markets. It's just more fun. And in that respect, spending a year or two thinking hard about what goes on in the heads of world leaders, their advisors and their executors, and how they cope with the grinding adjustment of their academic dreams and their electorate's expectations to the reality of financing said dreams, sounds more fun and useful than the same time breeding maths and CS to automate and refine the thinking of others.

Maybe, but that's the MDP's job, isn't it?

Look, political leaders aren't that tough to model; they are fairly predictable- perhaps more predictable than statistical methods in programming. Argentina is the perfect case in point. Greece, Egypt, and Spain aren't that far behind. And when the going gets tough, the world doesn't elect Rhodes scholars. They elect grassroots populists, and the world retrenches back to nationalism, and hopefully that's as far as it needs to retrench.

The world is going to be extremely tough over the next thirty years.

11/25/12

Not sure why you guys are putting the Rhodes on such a pedestal. Sure, it's a great achievement but for someone who is interested in finance and is seeking the preftigious financial career path (2 yrs M&A -> Buyside -> Greatness), I'm not sure what additional value the Rhodes scholarship adds except delaying that path by another two years.

I can see why it would be a dumb question if OP really did care about changing the world and other liberal BS but given that he doesn't, I don't find it a ridiculous question at all. If I were in your shoes OP and it was GS/MS/BX, I'd take the banking offer. But given your offer is at a less preftigious firm, I'd probably do the Rhodes and try to use that to get into a more preftigious firm.

Then again, I'd never apply for the Rhodes even if I could tick all the boxes.

The hypocrisy on this site is quite amusing. People talk down on preftige whores here all the time, yet the choice of "Rhodes" in this dilemma is an affirmation of your true preftige whoring fatihs.

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

Maybe, but that's the MDP's job, isn't it?

Look, political leaders aren't that tough to model; they are fairly predictable- perhaps more predictable than statistical methods in programming. Argentina is the perfect case in point. Greece, Egypt, and Spain aren't that far behind. And when the going gets tough, the world doesn't elect Rhodes scholars. They elect grassroots populists, and the world retrenches back to nationalism, and hopefully that's as far as it needs to retrench.

The world is going to be extremely tough over the next thirty years.

My place was old fashioned. They wanted to grow me, so I sat and took part and they destroyed my poorly formed, simplistic thinking when it arose until I knew better. Quite a good way to learn, I understand it used to be practiced in universities and high schools back in the days before the PC wave destroyed education.

So, you predicted correctly that EURUSD would never break its floor in the last 2 years, that Trichet's spine would break, that EURCHF would be pegged (I will forever bear the shame of that one in the form of my forum name), that Rajoy would get an amazing deal for his Spain bailout, you collected 20k on your bet that Obama would get reelected, and you know in advance how the Chinese's various SWFs are fighting each other's political battles. Not to mention you knew they'd drain the corn market. And you were long argie USD bonds, since Kirchner was so predictable.

All I'm saying is that whilst an MFin is a great place to teach you the tools, they won't teach you to trade. If the professors knew how to trade, they wouldn't be professors. Cf LTCM.

In reply to EURCHF parity
11/25/12
EURCHF parity:
IlliniProgrammer:

Dude, it's a functional scripting language. Those who don't know it know Perl or Ocaml and stats and can pick it up in a week or two.

That's not what makes money here. Coding in Java, C++, even Ocaml is all the same. Like you said, it's a language and a syntax. The question is who can get APL to execute faster, and who can get an MDP to coverge to the right answer faster. And the answer is an MFin.

And you wouldn't do it in APL. You'd do it in C++.

Coding in Java, C++ and OCamL is all the same... :|

If you can pick up Haskell or K from an OO background in a week or two I tip my hat, sir.

It's just language. The imperative programming languages are Romance languages; if you know French you can pick up Spanish in a month, and you can almost immediately be able to translate spanish text. (though you can't necessarily write or speak it). A lot of the idioms and expressions cross languages, anyways.

The functional programming languages are Germanic. Ocaml is German, Scheme is Swedish, etc. etc. You're going to spend a little more time thinking about each sentence, and some sentences run for 500 word paragraph, but once you've learned one, you can read them all and learn a new one fairly easily.

Throwing mathematical operators in there just makes it having a conversation about statistics in Danish. If you know statistics in English and you know German, it's not too tough to have that conversation.

I'm not saying it's easy; I'm just saying it's easier than stats and stochal. And the liberal arts and forming political opinions are pretty easy compared to the STEMs.

In reply to IlliniProgrammer
11/25/12
IlliniProgrammer][quote=EURCHF parity:

It's just language. The imperative programming languages are Romance languages; if you know French you can pick up Spanish in a month, and you can almost immediately be able to translate spanish text. (though you can't necessarily write or speak it). A lot of the idioms and expressions cross languages, anyways.

The functional programming languages are Germanic. Ocaml is German, Scheme is Swedish, etc. etc. You're going to spend a little more time thinking about each sentence, and some sentences run for 500 word paragraph, but once you've learned one, you can read them all and learn a new one fairly easily.

Throwing mathematical operators in there just makes it having a conversation about statistics in Danish. If you know statistics in English and you know German, it's not too tough to have that conversation.

I'm not saying it's easy; I'm just saying it's easier than stats and stochal. And the liberal arts and forming political opinions are pretty easy compared to the STEMs.

I personally - and several of my friends who WERE CS grads - find functional and imperative logic to be completely, thoroughly different - as different as a bike, a car and a plane might be (and again the difference between Scala and Smalltalk/Haskell). I also find it quite hard to become a successful and useful functional programmer. The prize is worth it, though, so I keep going. I do think I will one day be able to build with them, whereas I am unsure to ever be smart enough to second guess politicians, and to ever know if my macro trades in that direction were the right thinking or just a combination of luck and good risk management.

11/25/12

This is rich comedy, well done OP

11/25/12

@Illini

are the MDPs really that powerful?

In reply to cauchymonkey
11/25/12
cauchymonkey:

@Illini

are the MDPs really that powerful?

They'll get there. I think we're 50 years from a computer being able to pass a Turing test successfully; so do most of the academics, at least on the East Coast.

Right now they're good enough to adapt trading strategies to changing market conditions and really mitigate strategy decay.

Here is where we are right now:
http://www.pandorabots.com/pandora/talk?botid=f5d9...

11/25/12

That's what I meant by learning Haskell - being a competent and comfortable builder in that language. You can "learn" lisp in 10 seconds, really, not many primitives at all, but that's like saying knowing the letters of the alphabet and their pronunciation in various syllables means you have learnt English. I know cyrillic, and dobre dien and dasvedania tavaresh, it doesn't mean I can speak Russian.

Considering I have seen people make market competitive code within weeks of being introduced to C++ (in options market making shops) I disagree with your assessment of the skill required as a builder.

More importantly, "you can't trust someone who claims they're trying to make the world a better place and then goes into trading" might have some real life examples. If somebody truly believes in the power of the market and its function as being the most important there is in human civilisation, conceivably with a little twist of personal philosophy this man could work in trading "to make the world a better place". In practice, these men do not exist because a smart rational man rapidly acquires ethical selfishness so such a man would probably become a trader for the upside and the fun rather than the good of undefined "others". Also in practice, it does not matter what a man believes or how he speaks so long as the numbers at the end of the month are sufficiently juicy, and legally so.

If second guessing politicians is so easy, why are the best guys in the game, like Kovner, hanging their coat?

In reply to adast027
11/25/12
11/25/12

Considering I have seen people make market competitive code within weeks of being introduced to C++ (in options market making shops) I disagree with your assessment of the skill required as a builder.

Yeah. Arrays, if-statements, for loops; the pidgen C++ required to put a basic trading "algorithm" together isn't all that interesting.

I'm talking about the full use of the language- OO, subclassing and function overrides, data structures; where hashmap is implemented, threading- where mutex locks and monitors are; wait/notify; the stuff a professional needs to know will take a week or two to learn in a new language. That's all mere syntax.

Kovner is an example of someone from politics who makes it in finance. Manmohan Singh is an example of someone from finance who makes it in politics. Some people are just smart. That doesn't mean they're ethical or that you should trust them with your money.

In reply to EURCHF parity
11/25/12
EURCHF parity:

I personally - and several of my friends who WERE CS grads - find functional and imperative logic to be completely, thoroughly different - as different as a bike, a car and a plane might be (and again the difference between Scala and Smalltalk/Haskell). I also find it quite hard to become a successful and useful functional programmer. The prize is worth it, though, so I keep going. I do think I will one day be able to build with them, whereas I am unsure to ever be smart enough to second guess politicians, and to ever know if my macro trades in that direction were the right thinking or just a combination of luck and good risk management.

I was a CS grad too.

Yes. It's a different family of languages. But learning the language is actually the easy part of CS. Algorithms and AI; having a detailed and statistical understanding of what's going on inside that algorithm; is the art.

Anybody can learn German; even Mandarin and anybody can learn OCAML. Not everyone is good enough to be a German poet or even write articles for Der Spiegel.

In order to write good, competitive code for markets, you have to be the equivalent of maybe not quite Shakespeare but at least a Robert Frost or a Langston Hughes.

Politicians are generally pretty dumb, predictable people. There are occasional exceptions- maybe guys like Reagan, but in general it's pretty easy to figure out what they're going to do. Frankly I find all of that pretty boring. More importantly, though, you can't trust someone who claims they're trying to make the world a better place and then goes into trading. Such a person is a textbook example of a moral and ethical contradiction.

In reply to EURCHF parity
11/25/12
EURCHF parity:

I will always remember my boss cleaning JP on a product they had invented. They came to us knowing our appetite for crazy exotic stuff, we priced it using a standard industry tool modified by one of our risk guys, who had basic VBA skills.

I have basic VBA skills, and I know how to clean.....JACKPOT.

Sometimes I go about in pity for myself, and all the while a great wind carries me across the sky
In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:

You guys got around to quoting me before I had a chance to edit! That post was a little more harshly worded than I would have liked- "lie" is a very strong word and I don't think that's appropriate here, but I stand by the overall gist.

Wall Street and Rhodes Scholarship are two opposite ethical systems.

There's a continuum, but anyone who buys into deontological ethics enough to survive on Wall Street cannot honestly take a Rhodes Scholarship. You have to choose one side or the other. I, personally, choose deontological ethics. I would like to think that if I had that high quality of a decision- where I was reasonably assured a $100K/year life no matter which way I went, I'd choose being true to myself, and would therefore take a job on Wall Street.

There is a fundamental conflict between "honesty" and "compassion"; between "fair" and "just". You have to figure out which side you're on. Wall Street is uncompassionate and unfair, but it is honest and just. Rhodes' values are the other way around.

Speaking of honesty, and in the Wall Street interest of full disclosure, I don't have the best record at turning down prestige. I believe in a world where the first can be last and the last can be first, and that prestige shouldn't matter, and I hate the fact that it does. And yet when I had to make a decision on grad school, I made a decision based on the quality of the research, the students, the program- and its prestige- rather than on a fundamental alignment of values. I don't think I regret the decision, and my values can work around it, but I hate that I had to make it.

For IBD vs Rhodes Scholars, the marginal utility of prestige is a lot lower up here and the differences in values are way more fundamental. If you're a utilitarian, you'll hate yourself for choosing banking. If you believe in deontological ethics and facing the harsh, painful truths, you'll hate yourself for choosing the Rhodes Scholarship. And I think the values involved in the decision are so fundamental that you'll regret giving up your grounding.

I wish we could have a world that is both utilitarian and deontologically ethical, but anyone who is qualified to work on Wall Street knows that can never happen, and knows that it's impossible for a smart, honest person to look at the historical record and say it's possible. In order for utilitarianism to work, you have to lie, and you have to abridge the fundamenal rights and dignity of the individual. And in order for deontological ethics to work, in order for people to have rights, you have to let life be unfair and be prepared to do nothing in the face of terrible human suffering (because you often can't do anything without being unjust).

This is heavy stuff to drop on a 21 year old, but this is a very important decision and you need to be equipped with the truth to make it.

So choose wisely, and base it on your values.

This is all BS fro someone who is far less qualified then the OP. There are Rhodes scholars in every walk of life from banking to professional athletics...they chose you because of your qualifications and you have every right to consider the decision in a utilitarian way. You are not committed to dedicating your life to selfless service when you accept the Rhodes...this isnt like becoming a nun and if you turn it down because of some immature notion of not meeting their standard of selflessness you will regret it big-time down the road. The decision is easy: If you do the Rhodes you can have any banking job you want when your done along with just about any other job including those in more "selfless" fields...if u go become a banking analyst your just another banking analyst. Take the Rhodes and figure out your philosophy of life as you go along like everyone else, but dont make a horrible decision because you dont meet some stupid, self-imposed purity standard.

In reply to Macroecon
11/25/12
Macroecon:
EURCHF parity:

Define technical. My colleagues outsourced all that stuff. Being able to price an exotic product is not THAT much of an edge. A general understanding of why "stuff" is "overpriced" or "underpriced", together with some awareness of how long "that can go on", is the essence of a successful macro trader in the long term. In the short term, that PhD in finance/econ might land you a job for 2-3 years and then you're outdated, if you haven't bothered learning the essence of the job. Quoting Taleb there, not from his recent popular books but his much, much better Dynamic Hedging (probably one of the best books on the essence of vol trading available).

Regarding technical know-how, there isn't that much. I saw some pretty complex volatility trades and it always boiled down to maybe 1st year undergrad calculus, and understanding the wording. The rest - the reason you would put on such a position - is MUCH harder to "grasp" intuitively and cannot be taught in an MFin.

I also doubt a Princeton MFin would really know how to program (beyond the most basic OO stuff) unless he was a CS undergrad.

I think the best analogy is that it's a "language" that you can learn that gives you access to certain strategies and markets. The stuff in an MFin is like learning Japanese - complete accentless fluency with cultural understanding gives you a small edge in the 1980s (but as many proved, wasn't necessary to making money there anyway), but today is fairly useless unless you really, really love Tokyo to the extent that you want to live there, and are too young to get a lateral promotion into a US banking group's local office as a Director (older folks don't need to know the local speak). On the other hand, a basic knowledge of English opens you the entire world. In the same vein, learning good German as a French or Spanish citizen can be a way out of your rotting country into Zurich or Frankfurt, the pay is not as good as New York but it's easier to dig yourself a cosy spot.

I agree with the gist of what you are saying. However, some of the best performing and most consistent hedge funds in the world are quant funds. Macro funds have been getting killed over the last few years. The problem with macro is that in order to generate consistent returns, you have to be both right in terms of your general thesis (the finance, economics, and politics behind it) AND get the timing perfectly right as well. Nearly impossible for anyone to be that accurate consistently. This is why guys like seth klarman think macro is a long-term losing proposition.

Meanwhile, quant funds like rentech are killing it because they can use sophisticated strategies to exploit any inefficiency out there in the markets and be market neutral while doing so. My point is that there's a reason why quants are so highly coveted by banks and hedge funds and why top finance masters programs have gotten so selective lately. They do bring to the table a vey practical skill set that can be used to generate value almost right away. In sharp contrast, a harvard kennedy grad can bring very little value unless he had prior finance experience (and if you worked in finance, why in god's green earth would you do harvard kennedy?)

The same thing was said and written many times in 2006 right before the quant unoverse got destroyed and macro outperformed...strategy performance goes in cycles and in periods of low volatility macro tends to struggle and more short-vol-type strategies which include most of the quant universe tend to outperform. Its no more complicated then that.

In reply to Bondarb
11/25/12
Bondarb:

This is all BS fro someone who is far less qualified then the OP. There are Rhodes scholars in every walk of life from banking to professional athletics...they chose you because of your qualifications and you have every right to consider the decision in a utilitarian way. You are not committed to dedicating your life to selfless service when you accept the Rhodes...this isnt like becoming a nun and if you turn it down because of some immature notion of not meeting their standard of selflessness you will regret it big-time down the road. The decision is easy: If you do the Rhodes you can have any banking job you want when your done along with just about any other job including those in more "selfless" fields...if u go become a banking analyst your just another banking analyst. Take the Rhodes and figure out your philosophy of life as you go along like everyone else, but dont make a horrible decision because you dont meet some stupid, self-imposed purity standard.

LOL, when you get past $100K/year, the most important things in life are something other than career opportunities.

Yes, OP will be more successful because of the Rhodes Scholarship but he will hate himself later for it. At the end of the day, if he has a conscience, taking it will make him less happy, not more happy.

11/25/12

Take the Rhodes. If you ever want to leave finance (which is more likely than not), then it will be more beneficial than a stint as an Analyst at a bank.

(Assuming this isn't just a troll job)

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In reply to IlliniProgrammer
11/25/12
IlliniProgrammer:
Bondarb:

This is all BS fro someone who is far less qualified then the OP. There are Rhodes scholars in every walk of life from banking to professional athletics...they chose you because of your qualifications and you have every right to consider the decision in a utilitarian way. You are not committed to dedicating your life to selfless service when you accept the Rhodes...this isnt like becoming a nun and if you turn it down because of some immature notion of not meeting their standard of selflessness you will regret it big-time down the road. The decision is easy: If you do the Rhodes you can have any banking job you want when your done along with just about any other job including those in more "selfless" fields...if u go become a banking analyst your just another banking analyst. Take the Rhodes and figure out your philosophy of life as you go along like everyone else, but dont make a horrible decision because you dont meet some stupid, self-imposed purity standard.

LOL, when you get past $100K/year, the most important things in life are something other than career opportunities.

Yes, OP will be more successful because of the Rhodes Scholarship but he will hate himself later for it. At the end of the day, if he has a conscience, taking it will make him less happy, not more happy.

At what point will he hate himself exactly, the time where he is studying with the most accomplished group of people he will ever meet or afterward when he has his choice of any vocation he wants?

And as a grad student please dont tell me about how priorities change when you make money since you havent made any.

In reply to Bondarb
11/25/12

At what point will he hate himself exactly, the time where he is studying with the most accomplished group of people he will ever meet or afterward when he has his choice of any vocation he wants?

When he's in trading- because that is what he enjoys- and he wakes up in the middle of the night wondering what he's done to make the world a better place. I get to say "not my problem" and go back to sleep. He doesn't.

Bondarb:

And as a grad student please dont tell me about how priorities change when you make money since you havent made any.

I'm paying cash and still have enough left over to ensure a nice retirement if I work for the next thirty years and never save another dime. And aside from maybe a three month summer after college, I've never been happier. I'm THRILLED to be away from work for two years.

Dude you need to get over whatever vendetta you have.

11/25/12

^^^i have no vendetta i just think you give consistently horrible advice including in this thread. And if all you want is a comfortable retirement you can be a public employee (cop, fireman, sanitiation, whatever), work 20 years in a 9-5 job and have a very solid pension and retirement...i have considered it an attractive option myself at times but if you go into finance with this goal you are wasting time and money on education.

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