If you were 19: PE or Quant?

If you were a 19 year old at a target at the top of their class, would you choose to go down the quant route and trade at Citadel, DE Shaw, etc or would you go down the MF PE route out of undergrad?

One thing I have been thinking about is the increasing efficiency in public markets. With AI getting even better, I’m wondering if it’s gonna be harder for these quant firms to make money since the markets could get more efficient. I think HFs have already felt the impact of increasing efficiency, but are quant firms next?

Alternatively, I could go for a data science role in big tech, but not really sure how good of a career that would turn out to be.

Interested in both data science and finance but I’ve think it’s hard to go from a data science role —> PE and vice versa.

Not trying to come across as cocky, really just looking for advice. Thoughts?

 

I was 19 at a top target school and had the opportunity to do both, and I chose PE. Was fortunate to have a great HF internship in college and get a lot of exposure to quant finance through school/clubs and whereas I thought it was interesting and loved the math/programming/challenge of it all, I didn’t find it meaningful and wanted to be closer to the operations of companies/be more direclty involved in a specific industry that I was passionate about. Almost think of HFs as a really fun and complex game that was too far removed from what companies actually do for me personally. Have friends in both, and no one I know really regrets what they chose because they really are such different paths for very different people.

 
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For the same reasons the above poster didn't like it, is the reason myself and many others do like it. Thinking of work as an enjoyable and complex game that doesn't have to concern itself with the operations and intricacies of needing to understand a business and instead replacing those tasks with the opportunity to solve challenging problems with some of the top 1% of 1% of quantitative/competitive thinkers is excellent.

My team members are PhDs, Chess Pros, Math Olympiad winners, etc. I am none of these and instead spend time partying with friends on the weekends in NYC because the WLB here is significantly better than IB/PE, IMO. I work 40-45 hours a week. New Grad TC was around 475K, and TC this year was 500K. This is the ideal role for someone competitive and comfortable around risk. I have seen even Juniors here fired, but I wanted to know if I have what it takes and I haven't been fired for 2 years, so I must be doing something right for now.

Quant firms will always have demand for traders/market-thinking folks for sure, I believe. Even if you can automate the coding process, you still need human intuition and an understanding of the markets to start constructing factors and thinking about extracting alpha from the markets. I think even the long/short stuff is starting to become "Quantamental" where they combine quantitative analysis/signals with fundamental investing.

 

the quantamental angle for L/S is very overblown as far as I'm aware... a lot of the funds pioneering it are basically using data scientists to collect obscure data and analyse trends before giving them to a Long/Short analyst to plug into excel.

 

Do you have a good experience while working even though you have little in common with coworkers? Ever feel like an outcast?

 

I’m neither interested in quant trading nor MF PE so if I were a top student at a top target I doubt I'd go down either path. However, I know a number of people who were able to land jobs at Jane Street/Citadel (Securities)/top market makers or BX/SL/WP/Bain directly out of undergrad. Since you appear ambivalent towards either option, you may find it useful to choose which path to focus on through observing the type of people who gravitate towards each. From my experience, the people who tend to enter quant finance are STEM students with a moderate amount of interest in finance and enjoy probability games. People who enter MF PE are more varied in their backgrounds but the majority are top econ/business students. While some of these students also study STEM subjects, it’s often treated as an intellectual exercise to complement their primary econ/business degree. Also, in MF PE many of the people you’ll report to are ex-bankers. Given your background, I wouldn’t recommend pursuing data science at a big tech firm unless you’re referring to AI/ML research roles.

From what I can surmise from your post, you appear more similar to the types of people I know in MF PE so if you had to choose between the two I’d recommend you go down that path. However, I would encourage you to explore other career paths during your time in college. I know that top students flock towards quant and MF PE because of pay/perceived prestige, but by focusing solely on those options you may overlook other opportunities that you’d potentially enjoy and still pay well.

 

The answers you get will be sweeping generalizations. Bear that in mind and follow your own path. No one knows you better than you do.

'Rejoice, O young man, in thy youth; and let thy heart cheer thee in the days of thy youth, and walk in the ways of thine heart, and in the sight of thine eyes'

 

The fact that you mentioned data science means that you haven't done much research yet, just looked at some prestige firms.

What data science is at one company is different from what data science is at another company. At worst you are a sql monkey and at best you write some python scripts and do some dashboards with insights. What you are probably looking for is applied scientist at amazon or MLE at many companies rather than data scientist. The former two roles are top notch and pay more than swe. The latter is mid office in tech these days, hardly something that "19 year old at a target at the top of their class" would pursue. But if you really want to get into ML to the point where you can hang with the best then you need a phd.

Also, theres nothing stopping you from going PE -> any role in tech that doesn't require a phd. You'll start from square 1 but there are multiple ways in at any age.

 

The day in the life, tasks, and value-add in general of a quant vs someone in PE is quite different. Yes, both people are very smart, but most PE people would be miserable in a quant role and vice versa.

I would do some research and just talk to people in both seats - not to land internships just yet, just understand what motivates them and excites them about their job, and see if it aligns with your goals.

It seems like you're asking which is most prestigious which is generally not a good way to go about your career

 

I started my undergrad in one of the best applied math programs in the world with intentions of doing Quant for the rest of my life. Ended up not being my jam following Sophomore internship, not entirely sure why but I didn't feel actualized. Transferred to a target undergrad B-School and love what I do now, didn't really experience much friction at all on the swap. Here's my advice - learn the  skills for a quant role, and the metacognition for PE investing, and you will be unstoppable. I kept my old Alma Matter on my resume and virtually skip all but the most cookie cutter technicals.

 

That is an interesting path. I have a few questions:

1. Have you found that you are able to use math/quant skills in your PE role?

2. What do you mean when you say "virtually skip all but the cookie cutter technicals"? Do you mean that they won't ask you them because they assume that you will know it?

Thanks for the reply

 

In a pinch - Here are some quick answers.

1) No, not really. Private Equity - especially Growth/Roll-Up strategies are more qualitative than you'd think and don't really focus on minutia. Familiarity with numbers is helpful, but you don't really use any of the "theory" constructing a bid. It's more of a top-down analysis. Then again, I left the math route before I could go down that rabbit hole...

2) I think the main differentiator for me is that interviewers trust that I could learn the material fast "enough". Most if not all technicals I got were related to accounting principles, not mental math or complex reasoning. 

 

Math major here with an upcoming IB role this summer with hopes of being in an investing seat like yourself in the future.

1) What are these "metacognition" skills as it relates to PE investing?

2) What are some "analysis" skills important for PE investing that you would generally assume are lacking by those with quant-level quantitative skills. Is being quantitatively skilled a good sign that you will have the other skills important for PE investing?

I am still an undergrad but trying to get a sense of what skills to work on, so thanks!

 

Ignore my title, I now work in L/S Equities, and honestly it comes down to what do you enjoy more, However, I have to come find the public markets to be much more interesting, and I find my life to be much more fulfilling, if I could go back I would put all my effort into trying to break into a Quant Role, and foregoing the traditional IB/PE route. However, this is just me, and there are many individuals who thrive in Private Equity. However, I do think you should go down the quant road given what you have described to me. 

 

Might get MS for this, but I have to say this. Many of us in PE/IB would jump on the opportunity to do quant right out of college and make $400k a year with far better WLB if we had the intelligence and relevant technical skills. The bar for quant is just higher. 'I like the operational nature of corporate finance' is an excuse some of us use to compensate that lack of intelligence. PE/IB sometimes is the best option but not a choice for most people. Be intellectually honest with yourself. 

 

A concern of mine is just looking at the other people who go into trading out of undergrad, I don't know if I would fit in with them. A lot of them are insanely smart and nerdy kids who have won math competitions, so I think I might fit in with the PE crowd better. I might like the quant work better but I am concerned about fitting in. Is this a dumb thing to think?

 

Feel like this is a little bit of grass is greener syndrome. HF work is far more stressful so painting it as a chill 45 hr a week job isn’t accurate. The pay might be higher earlier on (and potentially later on) but there’s basically no job security and the HF industry has struggled a lot in the last decade until this past year.

On the intellectual point, I would say most people in PE are pretty brilliant with strong scores on all the standardized tests to get into their Ivies. At 18/19, I was making the same choice as the OP. I was a STEM major who could’ve gone either way. You either spend some more time in the library to sharpen up and be a quant or spend more time improving the soft skills and network if you’re more interested in business.

 

What are some hard and soft skills you see in top PE folk that are lacking by that quant-type, quantitatively sound people?

 

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