Computational Finance - The Silent Killer - npk
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npk
I recently had a personalized information session with quantitative analysts
at a "top three" investment bank. They have a group of 300-400 PhDs, all
working extremely hard to produce money-making mathematical models quickly.
Their compensation is unreal. Probably, better than viaweb's. (Assume a 10%
success rate, and that a viaweb founder's comp of $2.5mil/year, in funny
numbers, that is $250K/year.) Ok, working for a big company sucks. There are
small hedge funds like Renaissance
(<http://en.wikipedia.org/wiki/Renaissance_Technologies> ).

The technical problems in finance are more difficult that most in the average
startup and the pay better. If you are one of the few people in the world who
have the technical skills that these companies look for, then why would start
at a startup rather than go into finance?

I've been thinking about this for a few days, and the best answer I can come
up with has something to do with culture. In finance, you're extremely
secretive. Secrecy is downright unhackerish. Working for 10 years, amassing a
fortune, and no one knows who you are or what you've done. Which is why I call
finance the silent killer. You disappear into this pile of money. Anyone else
want to share their feelings on this?

~~~
nostrademons
I'm currently working at a financial software startup, and thinking of leaving
for the far less lucrative world of consumer webapps. Here's why:

At the end of the day, the financial industry is _all_ about making money. If
you do a good job, it means you and your customers get rich, and some other
shmuck out there gets poor. Unfortunately, it's a zero-sum game. If you do
well in the market, it has to be because someone else is doing poorly. Either
that, or the market is bubbling upwards ahead of a crash.

I kinda want my life to be meaningful in addition to lucrative. I'd like to
think that I've produced something that makes other people's lives nicer and
doesn't just transfer wealth from them to me. Finance doesn't give you that -
you can go home with a fat paycheck, but that paycheck is your _only_ legacy.

If you're into money, though, a hedge fund is definitely the place to be. The
hours are reasonable, the work is challenging, and the compensation is out of
this world. I just can't shake the feeling that my industry is somehow
"dirty". (And I don't even work directly for the big funds...I work for a
small software shop that supplies some of the smaller funds.)

~~~
byrneseyeview
"If you do well in the market, it has to be because someone else is doing
poorly."

Have you read Hayek? I think it's hard to discount the importance of
information. The market is able to do some pretty amazing stuff -- like tell
you whether we, as consumers, would prefer more online stores or in-person
stores or search engines or ranches. It's not as if the balance between those
demands is intuitively obvious, and it's hard to believe that knowing the
answer isn't worth making a few snotty New Yorkers pretty crazily rich.

Not that this is why anyone does it. We're all out there to get rich, but for
the most part it's hard to make money without somehow making the market more
informative. If you're right, you make the transactions that say so -- and you
can't make those transactions without pushing prices in the direction they
need to go.

~~~
weel
It might be a friendly gesture to suggest a specific paper by Hayek that is to
be read. I imagine you must have this one in mind:

<http://www.econlib.org/Library/Essays/hykKnw1.html>

~~~
byrneseyeview
That was what I had in mind, yes.

------
Alex3917
There's a lot of ways to get rich. Some of the Aramark vendors selling beer at
Shea stadium are pulling over 100k a year working only 80 home games a season.
According to John Taylor Gatto's back-of-the-envelope analysis, some of the
hot dog vendors on the sidewalks are pulling over 100k a year as well.

Taking into account accelerating change, you're going to have more toys than
you could ever possibly dream of in 20 years anyway.

I think, therefore, that the social status is more important than the money.

Plus, like Hollywood celebrities, people doing interesting stuff tend to hang
out with other people doing interesting stuff. So if you want to have
interesting conversations with interesting people, doing something interesting
yourself goes a long way.

