I am pretty much required to blog about this piece in the New York Times entitled “They Tried to Outsmart Wall Street”: “they” being physicists who left science for Wall Street. And the not-so-subtle implication of the title is that we failed to outsmart Wall Street (and possibly wrecked the economy in the process). To that I say, in the words of Bart Simpson: it was like that when I got here.
More seriously, while I have no doubt that there were crappy quant models out there that contributed to the current crisis by maximizing short-term gain over long-term risk, this was true all the way up and down the chain and the quants don’t deserve any more of the blame than anyone else. Quants respond to incentives the same way everyone else does, and the compensation structure on Wall Street can incentivize immediate profit and deferred risk. (My employer is trying to curb this effect by instituting a clawback provision on bonuses; I don’t know how widespread this is, but it seems like a good idea to me.)
The Times article is curiously focused on ex-physicists, as if quants don’t come from any other fields. In my ten months on the Street I’ve met quants from a broad range of science and engineering fields, and physicists aren’t a majority. That might be a peculiarity of my department’s hiring practices, with physicists being much more common elsewhere, but I’d be surprised. Anyway, Kevin Drum noticed this too and wonders why physicists are so suited to quant roles. He has a theory that it’s the culture:
Even among the number crunching set, physics has a reputation as the most aggressive, male dominated branch of geekdom: only 14% of physics PhDs are women, the lowest of any of the sciences. (Math is pretty male dominated too, but pales compared to physics: 29% of math PhDs are women.) If the first thing that “aggressive and male dominated” reminds you of is the big swinging dick world of high finance, give yourself a gold star. Call this the testosterone theory: physicists are attracted to Wall Street because they like the atmosphere.
I don’t think this is right: the atmosphere in a typical physics department is nothing like the stereotypical Liar’s Poker trading floor that Drum is alluding to. To the extent that the environment I work in is like academia, it’s because I’m lucky enough to work with a group run by ex-academics rather than people with a typical trader’s background. Instead, what Drum calls the “affinity theory” really is the right one. The work I do now is a lot like the problems I worked on as a physicist. It’s not just (as Drum suggests) about math; it’s about the ability to work with huge data sets and make sense of them, and to find signals in a noisy system. This is a much bigger factor than testosterone levels.
I haven’t been blogging much lately, due to a combination of travel, job interviews, visitors, generally being away from the internet, and the release of Super Smash Bros. Brawl. However, now that my job search has reached a conclusion, I felt an announcement was in order. I’ve just accepted an offer from Morgan Stanley, where I’ll be working in the Process Driven Trading group as a Quantitative Research Associate.
This is obviously a major career change for me. Those who have followed my posts related to career issues and academia know that I have been dissatisfied with the usual academic physicist career track for a while now, but I only started to seriously consider finance as an alternative about a year ago. There’s a commonly-held belief in the physics community that finance is where you end up if you don’t make the cut in physics, and that the work in that field, while lucrative, is just not very interesting; this led me to rule out the option for a long time without really looking into it. However, in talking to people who work in finance I came to realize that there are intellectual rewards to be found there, and that it was a worthwhile option to investigate. And finance contains the type of problems I enjoy working on in experimental physics—mainly related to working with data and optimizing experimental parameters—without involving hardware-related issues that I won’t miss (such as soldering and handling cryogens), and bringing in some (mainly game-theoretic) topics I’ve long been interested in but haven’t had a chance to pursue seriously.
Over the course of my job search I did find many positions that were ultimately unappealing, either because of the role or the personalities of the people I met. PDT on the other hand combined an intellectually interesting position with an attractive work environment and a group of people I will enjoy working with. Throughout my job search I have considered those factors to be more important than which field I end up in, and it’s the main reason I ended up accepting their offer. An additional advantage is the location; while I’ll very much miss California, I’m excited to have the opportunity to live in New York City. (The photo at the top of this post is misleading, as I’ll be working at Morgan Stanley’s headquarters in Times Square rather than downtown—Wall Street in the metonymic sense, not the literal one.)
One thing I will miss in leaving physics is the sense of working on something fundamental, of learning something profound about how the universe works. This does have real value, and while markets are interesting systems, studying them won’t be quite the same from that perspective. On the other hand, they say that to find your ideal job, you should look at what you like to do in your spare time. And as many of you know, what I do outside the lab is play games, on the tabletop or the TV screen. I love planning strategies and the distinct pleasures of a successful play. The finance industry is the biggest game in the world, and I’m excited to be joining in.
Ezra Klein has a post on how people undervalue a short commute when deciding where to live. According to an article he links to,
A commuter who travels one hour, one way, would have to make 40% more than his current salary to be as fully satisfied with his life as a noncommuter, say economists Bruno S. Frey and Alois Stutzer of the University of Zurich’s Institute for Empirical Research in Economics.
That number doesn’t surprise me at all, but my personal optimization function places a high value on the amount of time I have outside work to pursue my other interests. Two hours a day sitting in my car would be a huge chunk taken out of that, and it would require a substantial compensation in quality of life for that tradeoff to be worthwhile. I’m always baffled by people who are willing to undertake even longer commutes when they don’t have to.
This will of course be an extremely relevant issue for me soon, once it’s time to relocate. Depending on where I end up working, it could be in competition with some of my other criteria, such as living in a walkable neighborhood. If I take a job in, say, Manhattan, short commute and neighborhood walkability pretty much coincide, but if it’s in an exurban office park somewhere I have to trade off one for the other. This in turn feeds back somewhat into my job decisions. In some ways I have it easy, though: being single, I only have one commute to worry about. The minimization problem for two-income households is certainly more complicated…
The career fair mentioned in the previous post began today with recruiters from business and public service; most of these were somewhat removed from what I was looking for but I dropped in to see if any of the finance people were looking for physicists. Observations:
- My ability to fend off shyness is highly context-dependent, and my social skills were unable to adapt to the new environment, and deserted me—I feel like I promptly regressed to the stereotypical socially inept science nerd. Unfortunately, the only cure is to keep trying until approaching a recruiter no longer causes me to blush.
- I debated whether to even bother approaching companies that hadn’t indicated in their listing that they were seeking PhDs. I did, and this turned out to be a good idea, since several of the finance firms were looking for people with my background even if they weren’t necessarily advertising the fact here. Usually in these cases the directive was “apply on the website,” but I was able to gauge who was looking and what their level of interest was.
- One company had a listing and a table assignment but was not to be found. However, when I returned to my e-mail afterwards, I promptly received a recruiting message from them. This is due either to coincidence or the existence of remote SQUID-based brain scanners, in which case I should find the company that makes those and apply there.
- The swag today was pretty terrible—almost everybody gave away pens. I also generally forgot to take stuff, since all my mental resources were directed at the suddenly difficult task of assembling words into sentences. Microsoft had some nifty looking keychains with some kind of LCD game on them, but I felt a strange, almost supernatural reluctance to approach their table. (And I’ve only been a Mac user for a couple months!)
- The tables drawing the least interest from the crowd were the United States Marine Corps, and Philip Morris—apparently Berkeley produces relatively few Nick Naylors. Goldman Sachs got more traffic than these two combined during a period when their table was unmanned, and even the oil companies were doing better.
Tomorrow: Tech companies! Defense contractors! Better swag! More blushing!
Webcomics continue to be too accurate with the latest sequence at PhD Comics. Of course, Jorge Cham’s humor has always ranged from “funny because close to home” to “not funny because too close to home”. This year the strips in the latter category have been especially well-timed: the series linked above, for example, comes not just when I’m in the same situation, but the week of Cal’s major Career Fair. (Identifying other examples is left as an exercise for the reader.)
Anyway, the career fair starts tomorrow; the fraction of recruiters looking for physics PhDs is indeed pretty low (as would be expected for a general campus career fair) but nonzero. (There’s an event specifically targeted at masters and PhDs next month.) I’ll be attending with copies of my resume in hand, hoping to get someone’s attention or, failing that, pick up some good swag. Any advice for this sort of thing?
As I start to see the light at the end of the grad school tunnel, I’ve been contemplating more and more my various options after I finish. The most obvious one is to go on to an academic postdoc, with the aim of eventually getting a tenure-track professorship somewhere. (Other alternatives are various industries or finance.) At the moment I’m leaning strongly against an academic career, which has lately seemed unappealing for a variety of reasons.
A major such reason is the fact that there are many more applicants for tenure-track positions than there are positions available, so that after slaving away for several years as a postdoc (generally considered to be an awful job) I’d be lucky to be offered a position anywhere. It’s a job market that’s extremely unfavorable to applicants, and having seen the stress and unhappiness it produces in the postdocs I’ve met, I am thinking I should look at other options.
One corollary to the scarcity of academic jobs is that I would have to take whatever I can get, meaning that I will have basically no choice over where I live—the institution that offers me a job could be anywhere in the country, urban or rural, coast or inland. And I’ve realized that where I live really is important to me. I like living near enough to a major city that I can take advantage of the cultural and economic diversity. Furthermore, I want to live in a walkable neighborhood where essential goods and services are close by—not just for conservation reasons, although this is certainly part of it, but because I’ve found firsthand that it brings a definite improvement in quality of life. (This, of course, is also only possible in or near a major city, and only in certain cities that are planned this way.)
And on an emotional level, I’ve found that I don’t want to leave the Bay Area. This surprised me, because (possibly due to my migratory upbringing), I generally feel like I need to move on every few years and explore a new place. I’ve tried to ascertain why I might have a special attachment to my current location: certainly I don’t want to leave my friends, and I like my current neighborhood, but I feel like there’s something more than that. There’s a sense I have of being settled here, that where I’m living now is woven into the fabric of my life. I haven’t felt that way about anywhere else, but I’ve lived in Berkeley longer than I have any other single place (for a continuous span).
I’m not convinced that this is a good reason to want to stay here—I know that living in different places is an enriching experience for me, and there’s some attraction to going and exploring someplace new. But it will probably influence my thinking on career options.