I usually just visit this site for entertainment, there are definitely some characters on here. Anyway, stumbled on this thread and thought I'd clear a few things up. I work in FI Options at a major firm as at the analyst level. Saw this: Ironically, you are the one who doesn't know what you are talking about. In essence, Financial Engineering gives you the mathematical background to price options and other exotic derivatives (stochastic calculus, ito calculus, etc.) It would be absolutely useless to an Investment Banker, they don't use any of that shit, they just muck around in excel and powerpoint... the most math they do is four functions... maybe some basic bootstrapping of the curve if they are really advanced. Anyway, is FinEng useful? Helps out a bit with the learning curve and understanding what drives the greeks if you are on an options desk I guess, but it is not essential obviously. It is more to show that you are intelligent enough to handle complex material than anything else. The Quants (PHD's in Math, Engineering, Physics, etc) are the ones who actually build the models for pricing and vol, so it's not like you ever need to know how to do ito integrals on the desk. On another note, its important to differentiate between prop trading and market making. Most of the prop groups at major banks either were shut down or were reigned in. Most traders at banks work the sell-side, as market makers. That's not to say that the desk doesn't take positions or put on prop trades, but a lot of the positions are the result of flows (though it depends on the desk and the firm). The world in Fixed Income is pretty different than what most of the people here are trading, even if they are trading rates or something they are mostly dealing with eurodollar contracts which for the most part are pretty liquid (Whites and Reds). Liquidity can be a big concern, particularly in the more complex derivatives, and since almost everything is OTC, you don't have an exchange telling you the last price. Price discovery can sometimes come at a cost and you might not know until you are hit or lifted. A lot of the risk with the derivatives is being prepared to make a market (name a bid/ask) to take any side of a position as a counterparty to a client. Particularly if you are not exactly sure where the market level is. That's all I've got right now, feel free to respond if you have any Qs or disagree with what I've said. (Oh and btw, I'd say most people don't really care a hell of a lot about prestige. If you are trading out of your home and making millions of dollars then why not? For most people, working at a dealer provides *more* stability while still being lucrative, giving you the chance to work with lots of very intelligent people, and working on less liquid products.)
I'm having trouble understanding why it's hard to understand why it's so unattractive. If someone is doing well on their own with a 6 or 7 figure account, why turn it into an accounting, marketing, legal, customer service nightmare? Leverage is out there for anyone who wants it. But if you have a huge account with good returns... well I guess I still don't get it unless you're after attention and prestige. You think Soros isn't after attention?
and still you do the same with the retail traders... it seems to me that intellectual integrity of institutional traders (sjfan) disappeared since i moved elsewhere. merry christmas
No...I think he's after money. I agree with you though. You have to have huge amounts of money to trade your own money though (not 6 or 7 figures). That's what John Arnold does. He returned most of his investor's money and now trades his own money (3.5 billion) His fund has 5 billion in it. A hedge fund can only trade a certain amount....most can only hold a couple billion tops
You must be kidding me. Do you know the slightest thing about what the IB figureheads do? Hint, they don't mess around with excel and powerpoint, that's what associates and analysts are for. I have friends from high school who were promoted to London via the IB division to do financial engineering on CDO and MBS. When we were in college, financial engineering was specifically focused on Investment Banking, not FI or exotics. Looks like things were shuffled around a bit. Maybe, being an analyst (excuses the LOL!), you're not exactly as knowledgeable as you think.
"a billion here and a billion there and before u know it we talking about real money" 6 figures is not enough for u? incredible unless u are giving off a secret message that the $US is about to become the$ zimbawae. your suggestion may be right on target.
Making millions while never risking one penny of your own money is for sure attractive... But is it normal? NO. That's where trading has gone nuts IMO. In about every other sector, people making loads of money handle the associated risks.
Thanks for posting, Chelsea FC. Interesting and insightful. That would seem to explain a lot of what's gone on in the "ex-bulge-bracket" over the past year or two.