Econometrics

Discussion in 'Economics' started by JSSPMK, May 28, 2008.

  1. A relative of mine wants to go to uni & study econometrics, he's been invited to Oxford & Cambridge (yes, invited), but he's chosen to go to the uni that offers econometrics course. Basically, his parents are concerned whether he is making the right decision here. Nobody knows what scope for employment does BA Hons in econometrics offer. I think it has something to do with quantative finance :confused: He is adament that he only wants to study econometrics. Help us understand what's all this about, TY!
     
  2. sjfan

    sjfan

    A BA in econometrics from oxford or cambridge is one of the very very few undergrad degrees that can realistically expect to make around 80-100k (all in, including bonus) in the first year out of college. Virtually no options are shut and plenty of opportunities not avaliable to graduates at large are avaliable to them. Encourage him to stay the course.
     
  3. TY! He's just doing his entry exams, uni is in Bristol, Oxford & Cambs unis do not offer this course. From what we hear it is extremely difficult to be accepted on this course
     
  4. rosy2

    rosy2

    LSE has an econometrics course but it accepts less than 10 people a year. He can always look at statistics ... stanford and berkeley are tops
     
  5. can't opine on uni in Bristol but I can opine on econometrics and it's usefulness and in a word: very

    Econometrics grew out of the quantitative area of Economics and has been adopted by the quant finance discipline in the last 15 years or so.

    but it's not enough on its own. Quantitative finance is a discipline that encompasses economtrics but covers much more, especially the tools and techniques for analysing non-standardized and standardized derivitives. Think advanced calculus and PDE's.

    One area of econometrics that's used extensively is co-integration. Its used as a measure to find association in non-linear time series, which is what asset prices are. It is used by the real stat arb people esp pairs trading. See Vidyamurphy's book on pairs trading for an intro. See Carol Alexander's "Market Models" for a more in-depth discussion.

    If your friend has the goods he should consider NYU's (New York) Courante Institute. It's le creme de la creme of Financial Engineering. But also U of Chicago, Berkely and MIT. In the UK I believe Cass Business School is the place to be and I understand the Insead in France is very good for this.
     
  6. all things to one side:

    genius gets his first class degree gets into IBD or trading at a top tier IB.

    1st year starting 45k 100% bonus = around 55k (after tax)

    2nd year around 20% more = 60k in his pocket.

    3rd yr by now his running his own book and manages to make some profit, base + bonus = 200k

    4th year - his one of the lucky few (10%) that makes it here successfully promoted etc and profitable again. 250k all in.

    genius hits 30 as MD and hit the jack pot at 500k. (250 after tax)


    so Mr genius after 8 years of 60 hours a day IB life hits 30 with around 800k cash. minus his banking life style costs over the years (rent, bills) his got 500k left.

    what does 500k get in London? a small Flat outside of W1, W11, W14, et al.

    this what some of the cleverest minds in the country follow. and thats why the billionaire is the ice cream seller.

    so to direction B.

    Genius does a MSc/Phd in astrophysics hits a Hedge fund stat arb group straight out of college. first year 60k base 100% bonus.

    lets assume the HF stays in business year two lol. total cap around 150k.

    after 3 years hot shit gets to trade his own book running a reasnable 100m AUM. he happens to be in the 10% lucky crowd to make a shitty 10% in his first year. 10% of 100m = 10m. he takes 15% of this = 1.5m. after tax 750k. not bad.

    given his success his managing 500m next year. lucky hits 12%. takes home around 5m after tax.

    he repeats the same success over the next 3 yrs. his worth around 15m net his life style costs.

    he hits 35 without blowing up. his among the 2% out there. yet his bank balance still shy of moving into a nice mansion in west london.


    so anyways, to cut the shit short, standard of living is relative and comparative. this industry invites some of the brightest and gifted kids which further pollutes it. only few can make the big killings at any one time.

    if it's a question of money, you are FAR FAR FAR more likely to be successful elsewhere - starting your own business etc. given the poll of robots attracted to banking you're left competing with goats in other areas. so chances of success is far higher.

    and only certain areas make you a billionaire by age of 30 if not 24 u know who and where.

    the only people in finance who can even dream or imagine being worth over 500m are prop trading houses, private equity deal makers etc. the successful group is <0.00000001% of the total of people who jump into this area thinking they can do the same.

    for some strange reason, everyone thinks a Physics BSc from oxbridge is the door to 100k bonuses etc and so on. well guess wot, proportionally, the highest rejected students are oxbridge PHDs. cus non-oxbridge don't even apply. and out of every 20 that do, 1 is offered a place..
     
  7. TY for replies, much appreciated. I think what his parents are most concerned with are employment opportunities after graduation. He's at a top London school at the moment & the kid is obsessed with numbers, but not on a truly genius level. His parents do not know anybody that studied econometrics, hence they are concerned that he is turning down invitations from both Oxford & Cambs unis.
     
  8. Probably he should do economics at Ox or Cam and then study econometrics there (or any graduate school) as much as possible.

    Much better and more opportunities this way,imo!