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I have been always curious why hedge funds required a Phd in maths or comp sci. I would love to learn what algos and patterns in quantitative finance need a phd

I have been always curious why hedge funds required a Phd in maths or comp sci. I would love to learn what algos and patterns in quantitative finance need a phd level of research ?

lintiness 10y ago
it's insanely competitive due to low barriers of entry and availability of leverage / capital. the phd part is incidental in the same way an mba is to a lot of the banking world: it's a hoop that demonstrates rational competence (they were accepted to such and such great program), and it's a base to begin selecting for personnel.
digler999 10y ago
I would guess because its a cheap (in terms of time) way to search for really bright people. Obviously not the only way, and not fool-proof, but if you find someone who loves math and science enough to devote ~10 years of their life to it, chances are they're pretty sharp - at least in certain ways. I wouldn't say their patterns and algos "need" that level of research. But what a hedge fund doesn't have is a lot of time to waste interviewing junior programmers/undergrads hoping to find nuggets of wheat in the chaff.
hendzen 10y ago
Try your hand at stochastic partial differential equations
cinquemb 10y ago
From my experience (for a sub 100mil aum firm, 1 day or grater in a any given position), the stuff people use is mathematically simple: moving average crossovers and correlations between assets. All it requires is usually enough init funds to for it to be worth your time vs crud apping it up an taking it easy. I have no degree nor any desire to seek one out.
ocschwar 10y ago
It's not the altos themselves. The better hedge funds are full of PhDs because it takes that level of education to avoid the Dunning Krueger effect, and in this market niche, DK can bankrupt you fast.
- dilemma 10y ago
  You made this up.
vbs_redlof 10y ago
Reputation and credibility is important in attracting fund flows. Wouldn't you rather put your money with the guy with a team of PhDs?
closeparen 10y ago
I've heard from a some friends on that career track that Wall Street hires physics PhDs not because the background is relevant (what they're doing isn't published in any curriculum - that's the point), but because it exercises the right set of cognitive skills, and they need the kind of people who graduate from top-tier physics PhD programs, even if they don't care about the physics.
user5994461 10y ago
> what algos and patterns in quantitative finance need a phd level of research ? Require a PhD? I'd say about none of them. If we turn around the question to: "What algos and patterns in quantitative finance can be done by a 18 yo out of high school?" I'd say about none of them too. The average to-be-programmer can't fizzbuzz. The average to-be-quant can't do basic statistics. I don't know about the US but the universities I've attended in EU are extremely selective with Maths. Requesting a master or PhD is a good filter for anything math related.

I have been always curious why hedge funds required a Phd in maths or comp sci. I would love to learn what algos and patterns in quantitative finance need a phd level of research ?

lintiness 10y ago

it's insanely competitive due to low barriers of entry and availability of leverage / capital. the phd part is incidental in the same way an mba is to a lot of the banking world: it's a hoop that demonstrates rational competence (they were accepted to such and such great program), and it's a base to begin selecting for personnel.

digler999 10y ago

I would guess because its a cheap (in terms of time) way to search for really bright people. Obviously not the only way, and not fool-proof, but if you find someone who loves math and science enough to devote ~10 years of their life to it, chances are they're pretty sharp - at least in certain ways. I wouldn't say their patterns and algos "need" that level of research. But what a hedge fund doesn't have is a lot of time to waste interviewing junior programmers/undergrads hoping to find nuggets of wheat in the chaff.

hendzen 10y ago

Try your hand at stochastic partial differential equations

cinquemb 10y ago

From my experience (for a sub 100mil aum firm, 1 day or grater in a any given position), the stuff people use is mathematically simple: moving average crossovers and correlations between assets. All it requires is usually enough init funds to for it to be worth your time vs crud apping it up an taking it easy. I have no degree nor any desire to seek one out.

ocschwar 10y ago

It's not the altos themselves. The better hedge funds are full of PhDs because it takes that level of education to avoid the Dunning Krueger effect, and in this market niche, DK can bankrupt you fast.

dilemma 10y ago
You made this up.

vbs_redlof 10y ago

Reputation and credibility is important in attracting fund flows. Wouldn't you rather put your money with the guy with a team of PhDs?

closeparen 10y ago

I've heard from a some friends on that career track that Wall Street hires physics PhDs not because the background is relevant (what they're doing isn't published in any curriculum - that's the point), but because it exercises the right set of cognitive skills, and they need the kind of people who graduate from top-tier physics PhD programs, even if they don't care about the physics.

user5994461 10y ago

> what algos and patterns in quantitative finance need a phd level of research ? Require a PhD? I'd say about none of them. If we turn around the question to: "What algos and patterns in quantitative finance can be done by a 18 yo out of high school?" I'd say about none of them too. The average to-be-programmer can't fizzbuzz. The average to-be-quant can't do basic statistics. I don't know about the US but the universities I've attended in EU are extremely selective with Maths. Requesting a master or PhD is a good filter for anything math related.