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With so much money on the line, hedge funds and other trading firms focus a lot of effort on marketing and building up a perception that they truly are somethin

With so much money on the line, hedge funds and other trading firms focus a lot of effort on marketing and building up a perception that they truly are something special (at least those that take outside client money). Internally, things could be rather mundane, and even downright awful (from a technology perspective). Not commenting on Jane Street in particular, just the industry in general. Source: I've worked at a hedge fund and I've seen how the sausage is truly made. Many friends have told me similar stories about other firms.

codingslave 7y ago
Yeah worked in the industry as well, there's a story an older buddy used to tell when he worked at PIMCO in the 90s. Bit different than a quant fund but still applies. They hired a few Harvard Economics PhDs, who when looking at their macro economics material for institutional investors, claimed it was all wrong/didn't make sense. Bill Gross, the fund manager, told them it was to "get the money in the door from the fucking clients, we make gut bets on the market". Then fired the guy
- fnord123 7y ago
  >Harvard Economics PhDs tbf, academia is its own racket.
  - codingslave 7y ago
    Yeah absolutely, the value of the Harvard PhD in this story is the name and nothing else.
tianyicui 7y ago
FWIW, Jane Street is not a hedge fund nor take outside client money. (Edit: I work at Jane Street.)
- moneywoes 7y ago
  How would you best describe them
  - darawk 7y ago
    It's a prop trading firm. It's pretty important to distinguish between hedge funds that take public money (which are generally probably low quality, as the OP described) and prop trading firms that only or primarily trade their own money (Two Sigma, Renaissance, Jane Street, Jump trading, etc.). The latter deserve their mystique, because you only trade your own money if you are actually beating the market.
    - HereBePandas 7y ago
      Two Sigma and Renaissance (albeit not Medallion) primarily invest outside capital.
      - darawk 7y ago
        Renaissance does take outside capital, but their primary business is Medallion. The outside capital is just a way to make a bit more by trading on their reputation. Two Sigma does generate a bit more revenue from outside capital than Renaissance, but it is my understanding that the heart of their business is still prop trading. But I don't know that for certain.
    - amelius 7y ago
      Can you comment on relevance for society? Do these companies generate a net positive, or do they only extract value? I.e. should I look for a job there only because of the money, or also because I can make a difference somehow in the bigger societal picture?
      - wjnc 7y ago
        Difficult question, at least if you'd try to argue without politicizing too much. I'd say it's a false dichotomy to equate 'making money on the stock market on your own investments' with '(negatively) extracting value'. On the whole of it I'd argue that the existence of a stock market is a public good since it makes capital more liquid, more accessible and more transparent. Going from that to argue that firms that invest purely for themselves deliver a whole lot of positive externalities would be hard for me. I'd call it Lawful-Neutral. It's wholly within the rules of society, doesn't create very clear negatives and clearly delivers positives for those involved (employees, stockholders, etc.). If you have a 'millenial mindset' and want to work where you directly and positively impact society, I'd choose elsewhere. From a Peter Singer-like perspective, if you'd earn top dollar there and spend at least a modest amount giving to the right charities, you might still be making the world a better place, even compared to the other place.
quickthrower2 7y ago
Is the sausage made in VBA?
- downerending 7y ago
  In some shops, yes.
hermitdev 7y ago
Also having worked for a hedge fund, they're generally going to do their best to get you at the lowest salary possible. The overall benefits might be good, but they're going to do their best to low ball on the salary, "you'll make it up at bonus time!" Bullshit, You have to negotiate with hedge funds and be willing to walk away from a shit offer. I started at one a year out of college. Made 3x what I did as an intern. I was happy, at first. You can budget around a salary for rent, utilities, etc. You can't budget hoping for a bonus to make ends meet. Took me about 3 years to realize I was being paid half of my coworkers doing the same to lesser jobs as mine. Took me resigning with an offer in hand for twice what I was making before they upped their offer. I stayed for another 3 years before I got so fed up with the bullshit I actually left for a lower paying job (also less stress).
- zarkov99 7y ago
  There is another, more sinister reason for low base: typically if you have a non compete and are forced into a one year garden leave, they can get way with paying you just the low base.
fnord123 7y ago
>Internally, things could be rather mundane Elite developers often make things mundane. No fires. No explosions. etc.

codingslave 7y ago

Yeah worked in the industry as well, there's a story an older buddy used to tell when he worked at PIMCO in the 90s. Bit different than a quant fund but still applies. They hired a few Harvard Economics PhDs, who when looking at their macro economics material for institutional investors, claimed it was all wrong/didn't make sense. Bill Gross, the fund manager, told them it was to "get the money in the door from the fucking clients, we make gut bets on the market". Then fired the guy

fnord123 7y ago
>Harvard Economics PhDs tbf, academia is its own racket.
- codingslave 7y ago
  Yeah absolutely, the value of the Harvard PhD in this story is the name and nothing else.

tianyicui 7y ago

FWIW, Jane Street is not a hedge fund nor take outside client money. (Edit: I work at Jane Street.)

moneywoes 7y ago
How would you best describe them
- darawk 7y ago
  It's a prop trading firm. It's pretty important to distinguish between hedge funds that take public money (which are generally probably low quality, as the OP described) and prop trading firms that only or primarily trade their own money (Two Sigma, Renaissance, Jane Street, Jump trading, etc.). The latter deserve their mystique, because you only trade your own money if you are actually beating the market.
  - HereBePandas 7y ago
    Two Sigma and Renaissance (albeit not Medallion) primarily invest outside capital.
    - darawk 7y ago
      Renaissance does take outside capital, but their primary business is Medallion. The outside capital is just a way to make a bit more by trading on their reputation. Two Sigma does generate a bit more revenue from outside capital than Renaissance, but it is my understanding that the heart of their business is still prop trading. But I don't know that for certain.
  - amelius 7y ago
    Can you comment on relevance for society? Do these companies generate a net positive, or do they only extract value? I.e. should I look for a job there only because of the money, or also because I can make a difference somehow in the bigger societal picture?
    - wjnc 7y ago
      Difficult question, at least if you'd try to argue without politicizing too much. I'd say it's a false dichotomy to equate 'making money on the stock market on your own investments' with '(negatively) extracting value'. On the whole of it I'd argue that the existence of a stock market is a public good since it makes capital more liquid, more accessible and more transparent. Going from that to argue that firms that invest purely for themselves deliver a whole lot of positive externalities would be hard for me. I'd call it Lawful-Neutral. It's wholly within the rules of society, doesn't create very clear negatives and clearly delivers positives for those involved (employees, stockholders, etc.). If you have a 'millenial mindset' and want to work where you directly and positively impact society, I'd choose elsewhere. From a Peter Singer-like perspective, if you'd earn top dollar there and spend at least a modest amount giving to the right charities, you might still be making the world a better place, even compared to the other place.

quickthrower2 7y ago

Is the sausage made in VBA?

downerending 7y ago
In some shops, yes.

hermitdev 7y ago

Also having worked for a hedge fund, they're generally going to do their best to get you at the lowest salary possible. The overall benefits might be good, but they're going to do their best to low ball on the salary, "you'll make it up at bonus time!" Bullshit, You have to negotiate with hedge funds and be willing to walk away from a shit offer. I started at one a year out of college. Made 3x what I did as an intern. I was happy, at first. You can budget around a salary for rent, utilities, etc. You can't budget hoping for a bonus to make ends meet. Took me about 3 years to realize I was being paid half of my coworkers doing the same to lesser jobs as mine. Took me resigning with an offer in hand for twice what I was making before they upped their offer. I stayed for another 3 years before I got so fed up with the bullshit I actually left for a lower paying job (also less stress).

zarkov99 7y ago
There is another, more sinister reason for low base: typically if you have a non compete and are forced into a one year garden leave, they can get way with paying you just the low base.

fnord123 7y ago

>Internally, things could be rather mundane Elite developers often make things mundane. No fires. No explosions. etc.