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This is actually generally how finance works though. The whole industry is built on the illusion of superior competence. "Prestige" is a determining factor in

This is actually generally how finance works though. The whole industry is built on the illusion of superior competence. "Prestige" is a determining factor in someones ability get a job running a hedge fund/financial asset management. Generally they need to have gone to the right school, worked at the right bank, then at the right hedge fund. Each should show a good amount of tenure ( > 3-5 years ). A major asset manager that I won't mention hires PhDs from Harvard as a way to get people to invest in their fund. Behind the scenes, away from all the quant marketing nonsense, is some guy you've never heard of making gut based trades on the market.

pmoriarty 4y ago
"This is actually generally how finance works though. The whole industry is built on the illusion of superior competence. "Prestige" is a determining factor in someones ability get a job running a hedge fund/financial asset management" It's not just finance, people everywhere are impressed by a prestigious background, and assume if you can drop certain names on your resume you must be great. Such names will open all sorts of doors for you that are firmly shut against the riffraff. Of course, conmen have used such patinas of prestige to their advantage since the dawn of time.
- whimsicalism 4y ago
  It's bigger in fields where you need to get rich people to hire you: ie. consulting & finance. Fields like tech are nominally more meritocratic.
- jasonwatkinspdx 4y ago
  There's also the irony of the fancy office. If you're a customer of a professional and walk into a very luxurious office, you know ultimately you're the one paying for that. If it were a separate surcharge to meet in the fancy office vs something basic would you chose to pay it? Yet psychologically we all feel more confident in the fancy office.
ljlolel 4y ago
I saw this at Bridgewater. Hired only ivy league, smart people actually. But their total discretionary control was a tiny % of fund. Hedge funds are mostly marketing. When 2008 financial crisis happened, Dalio was making the big trades in the control room himself on gut feel.
- whimsicalism 4y ago
  Bridgewater is an even worse example of this than normal. Very cult-ish
- dig1 4y ago
  > Hedge funds are mostly marketing This. Someone from Bridgewater mentioned that Dalio's "radical transparency" and all that we-record-everything nonsense is just a marketing bluff. Actual decisions are made behind closed doors by a few people.
  - nunez 4y ago
    I've heard the opposite. Recruiters working with them told me that they drink their own kool-aid harder than Amazon does!
PheonixPharts 4y ago
To see this all you have to do is interview at a few "prestigious" financial companies. A while back I interviewed with one of the top trading firms. It was for a lower level position that I normally wouldn't take but I was excited about the prospect of working with some truly brilliant quants. Wow was I disappointed. The discussion with the quants quickly relieved that they had absolutely zero interest in their field, and not a particularly deep understanding of the fundamentals of the mathematics they were using. It became clear that their entire course of study was focused on getting in to high paying financial company, and all the things they had to learn on the way there were just boring prereqs. I've met a lot of really talented and smart applied math people over my career, and this quant team was not in that groups of people. That said all the engineers I chatted with were great. My takeaway was that these companies do need talented engineers to run these systems but the "brilliant quants" is more or less just, as you say, the illusion of superior competence.
- whimsicalism 4y ago
  I think it really depends to be honest. I don't think what you are saying is generally true of people at prop trading firms, the ones that I know were generally very into math/physics and got lured by the high pay. With prop firms, there is little need to schmooze the rich with fancy degrees
  - ldjkfkdsjnv 4y ago
    This point is invalidated by looking at the schools their employees went to.
    - whimsicalism 4y ago
      In what way is that true? Short pithy comments are unconvincing. The presence of people with fancy degrees might be expected for the more mundane reason that those people do tend to be more competent on average.
whimsicalism 4y ago
I do feel like SBF path was obviously distinct from this hedge fund/IB pathway you are describing. For one, he got hired for a prop trading firms - in which these effects are not very large because they have little-to-no interest in clients and managing assets.

pmoriarty 4y ago

"This is actually generally how finance works though. The whole industry is built on the illusion of superior competence. "Prestige" is a determining factor in someones ability get a job running a hedge fund/financial asset management" It's not just finance, people everywhere are impressed by a prestigious background, and assume if you can drop certain names on your resume you must be great. Such names will open all sorts of doors for you that are firmly shut against the riffraff. Of course, conmen have used such patinas of prestige to their advantage since the dawn of time.

whimsicalism 4y ago
It's bigger in fields where you need to get rich people to hire you: ie. consulting & finance. Fields like tech are nominally more meritocratic.
jasonwatkinspdx 4y ago
There's also the irony of the fancy office. If you're a customer of a professional and walk into a very luxurious office, you know ultimately you're the one paying for that. If it were a separate surcharge to meet in the fancy office vs something basic would you chose to pay it? Yet psychologically we all feel more confident in the fancy office.

ljlolel 4y ago

I saw this at Bridgewater. Hired only ivy league, smart people actually. But their total discretionary control was a tiny % of fund. Hedge funds are mostly marketing. When 2008 financial crisis happened, Dalio was making the big trades in the control room himself on gut feel.

whimsicalism 4y ago
Bridgewater is an even worse example of this than normal. Very cult-ish
dig1 4y ago
> Hedge funds are mostly marketing This. Someone from Bridgewater mentioned that Dalio's "radical transparency" and all that we-record-everything nonsense is just a marketing bluff. Actual decisions are made behind closed doors by a few people.
- nunez 4y ago
  I've heard the opposite. Recruiters working with them told me that they drink their own kool-aid harder than Amazon does!

PheonixPharts 4y ago

To see this all you have to do is interview at a few "prestigious" financial companies. A while back I interviewed with one of the top trading firms. It was for a lower level position that I normally wouldn't take but I was excited about the prospect of working with some truly brilliant quants. Wow was I disappointed. The discussion with the quants quickly relieved that they had absolutely zero interest in their field, and not a particularly deep understanding of the fundamentals of the mathematics they were using. It became clear that their entire course of study was focused on getting in to high paying financial company, and all the things they had to learn on the way there were just boring prereqs. I've met a lot of really talented and smart applied math people over my career, and this quant team was not in that groups of people. That said all the engineers I chatted with were great. My takeaway was that these companies do need talented engineers to run these systems but the "brilliant quants" is more or less just, as you say, the illusion of superior competence.

whimsicalism 4y ago
I think it really depends to be honest. I don't think what you are saying is generally true of people at prop trading firms, the ones that I know were generally very into math/physics and got lured by the high pay. With prop firms, there is little need to schmooze the rich with fancy degrees
- ldjkfkdsjnv 4y ago
  This point is invalidated by looking at the schools their employees went to.
  - whimsicalism 4y ago
    In what way is that true? Short pithy comments are unconvincing. The presence of people with fancy degrees might be expected for the more mundane reason that those people do tend to be more competent on average.

whimsicalism 4y ago

I do feel like SBF path was obviously distinct from this hedge fund/IB pathway you are describing. For one, he got hired for a prop trading firms - in which these effects are not very large because they have little-to-no interest in clients and managing assets.