Quant demand

[nasos]

I have followed the forum for a short period of time and it looks like that MFE(and similar degrees) are becoming very popular. It seems that there are more and more universities starting such programs.

Roughly speaking the top 20 programs have graduating classes of about 50 students or so for each year, which makes me wonder when will we reach equilibrium in terms of demand of quants in the industry? How long will it be before people with such degrees will not be able to find a job?

Any opinions on this?

 

[bigbadwolf]

It seems that there are more and more universities starting such programs.

Because universities see they can make a fast buck flogging garbage programs to gullible students.

Roughly speaking the top 20 programs have graduating classes of about 50 students or so for each year, which makes me wonder when will we reach equilibrium in terms of demand of quants in the industry? How long will it be before people with such degrees will not be able to find a job?

*Shrug* -- that point was passed years ago. There are now more people on the market than exist vacancies. So if you go in for this line of work, make sure you graduate from a reputable and tested program, which releases its stats on placement and salary (like Baruch). Make sure the program has an energetic placement office. That it's close to a financial hub. That the program administrators know what they're doing. That the courses teach what is in demand in the world of work.

 

[Andy Nguyen]

I kind of expected bbw to be the first person to respond to this.

How long will it be before people with such degrees will not be able to find a job?

It is irrelevant. The question is "how will I find a job with such a degree".
Do you really care how the other 1000 people get their job? Are you counting on the law of large number?

The market doesn't care about the mediocre/average ones that will increase in number in the future. They will take care of themselves by going back home, getting some other jobs, so on and so forth.

What will be your plan B be? Or plan C? I hope you didn't bet the farm on your plan A.

 

[nasos]

I kind of expected bbw to be the first person to respond to this.

It is irrelevant. The question is "how will I find a job with such a degree".
Do you really care how the other 1000 people get their job? Are you counting on the law of large number?

The market doesn't care about the mediocre/average ones that will increase in number in the future. They will take care of themselves by going back home, getting some other jobs, so on and so forth.

What will be your plan B be? Or plan C? I hope you didn't bet the farm on your plan A.

Actually I am going for a PhD in Finance and just created this thread only out of curiosity.

Of course from each student's point of you, you don't care how the rest will get a job as long as you get one/the one. And of course once you have the job you don't care if the other quants get fired or not as long as you keep your job. That does not say anything about the overall picture. there are definitely going to be people fired or that quit and then new guys will replace them.

I am just interested in understanding the demand of quant jobs, because with 1000 students graduating each year from top 20 programs it seems that supply has probably exceeded demand already. That would mean that new students would have to start thinking about plan B and C because the cost to go to these programs is really high and they are not guaranteed the big salaries anymore. Especially international students these days.

And if it is indeed the case that supply is greater than demand than what's the new thing to look at, what is the future?

 

[bigbadwolf]

I am just interested in understanding the demand of quant jobs, because with 1000 students graduating each year from top 20 programs it seems that supply has probably exceeded demand already. That would mean that new students would have to start thinking about plan B and C because the cost to go to these programs is really high and they are not guaranteed the big salaries anymore. Especially international students these days.

And if it is indeed the case that supply is greater than demand than what's the new thing to look at, what is the future?

I agree with your thinking. To use Andy's words, one should use the "law of large numbers." It's tempting to think that the aggregates of total supply and total demand will not affect one -- but it is unrealistic. We know the expected value of a lottery ticket is less than what the ticket costs -- so we don't buy the ticket. Why not use the same kind of calculation to the expense of a quant education? It's flattering to think one is the exception -- maybe one is, but it is unlikely. It is like the young Adolf Hitler, who was shocked when his lottery ticket did not win.

 

[tobias elbert]

I agree with the general tenor in this thread, but I do also think that more and more fields will become more quant-ish. Any business where real option valuation for instances is relevant might at some stage consider modelling their optionality. Energy is a good example of this which is quite "young" relative to finance/ banking quant analytics and has its own very interesting modelling problems.

Quite a few treasuries of big corporations hire quants, in particular when it comes to their business exposures in currency. I also believe that earnings at risk for instances will become more relevant. Thus far it's mainly used in energy, but its (business) areas of application are much wider than that IMHO. It's an easy to understand concept for non-quants and a good tool for budgeting. So I do see potential demand coming from main street at some stage.

So yes, the demand from the finance sector may be getting tight. On another note though, as of this year a lot of quants I know have no problems getting interviews and (admittedly) fewer end up getting offers.

 

[bigbadwolf]

I agree with the general tenor in this thread, but I do also think that more and more fields will become more quant-ish....

A pertinent observation.

 

[DominiConnor]

I agree about supply and demand, indeed have said so here and on Wilmott.com

However the demand is much greater than the 20*50 from whatever list of Top schools you happen to believe.

Also one has to separate demand for people with the job title "Quantitative Analyst" from demand for quant skills. Financial maths have applications in trading, risk management, mid office, corporate finance, settlements, asset/liability management, pensions, structuring, etc.

To the question of " How long will it be before people with such degrees will not be able to find a job?"

There are two answers
1: It has already happened.

2: The question 'hpw long before you can't get a decent job *without* quant skills ?"

When I first came to financial markets in London, the single most common qualification for traders was having graduated from Sandhurst, the British military academy.

Now it's tough to get a trader job without a masters, a growing % have PhDs.