Where do quants go after they peak?
This is not a question for the cocky new grad in the famous prop shop, but for the few seasoned quants that still reply out here.
Where do quants go after they peak?
By peaking I mean arriving at a quant researcher or quant trader position at the top 10-15 prop shops and hedge funds (you can do your own ranking here).
Nobody has the true statistics but I will use the assumption that 75% (debatable) of those who peak, will get laid off within 2 years from their ‘peak role’. The remaining will be able to progress into senior analysts and PMs in the same top shop or another in the top 15.
Where do they go then?
I am pretty positive, from experience, that they don’t become sell side quants in the top 3.
Do they go down the ladder of hedge fund quality ending up in the worst ones after being laid off 4-5 times? Do they quit all together?
Do they open a farm?
Do they pivot to FAANG?
Comments and thoughts folks!
It seems like the question might have missed the mark. I've never really seen quants hitting a 'peak' in the traditional sense, because success in this field isn't about luck. My friends who are discretionary portfolio managers might experience huge years if they catch a break with market events on significant trades.
Our team is stacked with incredibly smart people. Sure, everyone has years where their ideas or models really shine, but you don't see those dramatic falls off unless something major happens. The quant industry feels more stable in terms of movement between 'tiers,' likely because the hiring process and academic credentials are more reliable indicators of someone's long-term success compared to other fields. If someone's done standout work for their PhD and wants to work with us, I'm pretty confident they'll continue to produce great work here. Let's be real: we're all here for the money, but the work we do isn't too far removed from academic research in maths or physics.
The most significant shifts within the 'tiers' of firms usually come down to what the lower-tier companies are willing to offer or personal reasons, like seeking a less stressful environment.
Over the years, there have only been a couple of hires I realized weren't a good fit for the industry. After about six months, I had a frank conversation with them, not to fire them, but to suggest they start looking elsewhere. Both found opportunities in academia eventually and let me know when they were leaving.
And then there are those who retire early, having hit their financial goals, ready to do whatever they please...
I appreciate the perspective but would disagree on the point on luck.
Surely a layoff can be caused by events not in the full control of the laid off person.
Then job market environment plays an important part in finding the next role.
Then maybe you’re on a visa and you don’t find a job in time and have to go back home from where it is much more difficult to get one job in the same tier. Plus having to explain the stigma of layoff (even if not necessarily your fault).
This can lead to people not voluntarily missing the opportunity to get back into the same tier (where seats are filled by top graduates every year).
I mean you can disagree with it all you like but I've worked at the best quant funds in the world for the last 15 years.
Its my job to predict how the market is going to be in the future and what weightings I want on each of the strategies to produce the best return, not my researchers. If we were to blow up its my fault, I have hired researchers from other teams after they have been let go because the previous PM blew up, not a single one of them was a bad researcher.
Would I hire a PM that had a significant blow up probably not, but quant PMs arnt proper quants at that point. I might have a technical background but im much more of a manager that predicts markets and manages people then building out our models so I wouldn't say that's relevant to this discussion.
All my strategies are backtested and analysed to an insane amount of detail before they are put into production. If they make money its not through luck, its because we have spent hours and hours finding inefficiencies and crafting strategies to benefit off it. There has been very very few times in my career when I expected to make 5% on a position and actually made 40%, where I know a lot of discretionary PMs that happens too.
In all honesty I also just dont think the perspective of people just getting laid off really holds up, the whole reason why the entire hf industry is heading in the quant direction is that its 'proper alpha'. In discretionary trading an investor is investing in the prediction that a fund/PM will continue to have an edge which is pretty hard to justify. If my fund wants me to go meet with an investor and they ask me why they should put their money into the fund, its pretty easy for a me to say 'well I have a strategy that has made 25% with a sharpe of 5 so a two sigma deviation of 8% over the last 7 years irrelevant of market conditions, would you like to see the historical data on that'. Yes strategies come and go and they dont last forever but I have 9 Phds working for me... we will come up with new ones.
This feels the quant trading/research challenges people on a day to day basis.
... what are u actually asking
Prop trading has a lot more cyclical variation in profits due to market conditions. 2017 was tough for almost everyone in prop trading and with the exception of one or two firms that blew up in March 2020 almost everyone else had a great year in 2020. The past few years have seen pretty rapid headcount growth at top prop trading firms so most people have managed to stay at similar tier firms or less frequently go to a worse firm but I don't think that was the case in 2017 when a number of weaker shops went under or got acquired at low valuations and most better firms slowed hiring and cut more underperforming groups/individuals. At one point Getco was one of the best prop trading firms but many employees were laid after the acquisition by Virtu (although by that time after the merger with KCG it was probably no longer a top firm). Of those who lost their jobs during that time I think most eventually found something else in the industry but I think a significant minority would have left the industry permanently then as well.
I also think the 75% figure is pessimistic especially if you include experienced hires at top firms as campus hires are much more likely to be a poor fit for the industry.
What computer/coding/software languages are the bare minimum to get recruited into quant?
If your question is- what happens after you get laid off as an experienced quant from a reputable buyside shop?
From my personal observation, if you play your cards well, you can lateral to an equally good seat on the buyside.
If not, you take a downgrade in the seat quality also on the buyside, to a worse firm, or worse position (or both).
Maybe I don't have enough data points to say where people go if they leave the industry. But I've never seen someone go to sellside.
I see quants who don't move into a PM/subPM or senior management seat stagnate in one role for many years. If they get fired or laid off at some point, they exit the industry for tech (most common), sellside or academia. I know one case where a guy got a CIO role after 20 years of quant, then the firm was sold right after and he got demoted by the new management, got angry and went to a no name startup. I don't think anyone really retires as such, or if they do they get bored after a year and go back to some job.
Unlike tech it's extremely difficult to change firms as a regular quant, due to the mix of long noncompetes, deferred bonus, brainteaser grinding for interviews, and strong preference for fresh grads over experienced hires. I actually don't know a single non-PM person in my circles who did it successfully, everyone just left the industry at some point. But for PMs or subPMs there are always openings.
Maybe this is a dumb question, but how come sub-pms are employable at almost any age, but non sub pm's are not?
Is it mainly an issue of having demonstratable PNL? How can this even be verified?
Cancun.
What does that mean?
They go to Abu Dhabi
What do you mean by this lol
ADIA quant team.. the creme de la creme
they go back to India
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