OT: Career advice Part II

[Charlie Conway]

How good are you at math? I find that financial engineering/computational finance is grueling and hard to get into. I definitely don't have the math skills for it. If you only go up to algebra and trig you might need to take classes in calculus separately to get into these programs. @CasusBelli is super helpful but I think he underestimates a) how difficult it is for an average person to get in and b) how difficult the program is, because it comes easier to him than other people. I'm good at math by most people's standards and I can't even touch that curriculum. If you're good at math by most people's standards but not a freak an MBA or some MS in finance might be a better bet.

I think I was always in a similar boat in that I might have been good at math by average standards but not a natural. Calc made sense to me, and stats definitely makes sense to me, but it's been about ten years since I've taken calc, so those skills have definitely slipped.

I would be planning on taking a few calc and business classes at least as pre-reqs before even considering applying to any program to make sure I'm where I need to be. Suffice to say, I know this would be a very big undertaking for me to switch fields like this.

I'm also not underestimating Baruch by any stretch. I've seen a lot of my students apply for those programs and not get in, and some of them had phenomenal GPAs in classes like Calc 1-3, Physics, etc.

I really thank both of you immensely for all the thoughts and advice. The field's been something I've been thinking about for a while but don't have a ton of insight into. Googling and research only goes so far. It's really useful to hear thoughts from people established in the field about what it entails. Some of the people I work with are ex-traders and their eyes widen when I ask 'em about it. They say they made good money but burned out very quickly. And I remember I had a car mechanic who was an ex-trader who had zero regrets about getting out of it.

It would be a big shift for me, but I'm not totally happy with where I'm at right now in higher ed, so I'm considering all avenues of interest and am going to go take a few classes to see how I like it beyond what I've enjoyed so far. Might turn out it's not for me, but, either way, it's some extra knowledge and that's a bit of what I'm after at the end of the day anyway.

 

[sbjnyc]

I have to respectfully disagree with you there. Once you start in IB or in wealth management,you’re stuck there. Trading has other career paths, namely risk, portfolio management and structuring — but the survival rate for traders is quite low — so for me that’s the most flexible area. But, if you (in the royal sense) do decide to go into trading, your math and stats abilities need to be rock solid. Fundamental analysis is the past; Citadel, Renaissance, Two Sigma, AQR and, really, the buy-side leaders nowadays are driven primarily by quantitative methodologies. It seems people have finally realized that there is no “skill” in picking stocks (their returns are modeled as random processes for a reason) — only in managing exposures and designing structures.

I don't agree with this, at least wrt to portfolio management (I'm talking bond portfolios for buy side - mutual funds, pensions plans, insurance companies, etc.). I work for a life insurance company. The investment team manages public investment grade bonds in a variety of platforms. Each sector team includes credit analysts. We also have separate teams managing private placements, commercial mortgages and leveraged loan portfolios, which go through intensive credit analysis. The strategy and trading side may be quantitative and the job of a credit analyst may be somewhat more quantitative than in the past but it is still based on fundamentals.

 

[CasusBelli]

I don't agree with this, at least wrt to portfolio management (I'm talking bond portfolios for buy side - mutual funds, pensions plans, insurance companies, etc.). I work for a life insurance company. The investment team manages public investment grade bonds in a variety of platforms. Each sector team includes credit analysts. We also have separate teams managing private placements, commercial mortgages and leveraged loan portfolios, which go through intensive credit analysis. The strategy and trading side may be quantitative and the job of a credit analyst may be somewhat more quantitative than in the past but it is still based on fundamentals.

In my experience, having worked a a rates desk in a BB and as a credit risk quantitative analyst at an international bank, I can confidently say that credit risk analysis is primarily derived from CDS spreads or some sort of survival analysis driven PD model (often a Poisson process). Unless you're extending credit facilities, in which case you do care about liquidity ratios, solvency ratios, cash conversion cycles, etc., usually market (quantitative) factors are the primary parameters that inform a decision regarding creditworthiness.

 

[sbjnyc]

In my experience, having worked a a rates desk in a BB and as a credit risk quantitative analyst at an international bank, I can confidently say that credit risk analysis is primarily derived from CDS spreads or some sort of survival analysis driven PD model (often a Poisson process). Unless you're extending credit facilities, in which case you do care about liquidity ratios, solvency ratios, cash conversion cycles, etc., usually market (quantitative) factors are the primary parameters that inform a decision regarding creditworthiness.

That may be true on the sell side where you don't hold bonds and don't need to worry about defaults. No one is buying a private bond issue to hold for 5-10 years based on CDS spreads. These bonds have a large number of covenants tied to the financials and other fundamentals which are negotiated. Many (most?) leveraged loans issued today are covenant-lite and CLOs consisting primarily of these have taken a severe valuation hit. They are making a comeback today but still trade at a discount to other CLOs. And when you manage an investment grade portfolio you are managing to a benchmark with over 10k bonds. Analysts give an outlook on their sectors and research specific names to give recommendations on over/underweight. I mean if everything was based on CDS spreads why bother with audited financials at all?

 

[CasusBelli]

That may be true on the sell side where you don't hold bonds and don't need to worry about defaults. No one is buying a private bond issue to hold for 5-10 years based on CDS spreads. These bonds have a large number of covenants tied to the financials and other fundamentals which are negotiated. Many (most?) leveraged loans issued today are covenant-lite and CLOs consisting primarily of these have taken a severe valuation hit. They are making a comeback today but still trade at a discount to other CLOs. And when you manage an investment grade portfolio you are managing to a benchmark with over 10k bonds. Analysts give an outlook on their sectors and research specific names to give recommendations on over/underweight. I mean if everything was based on CDS spreads why bother with audited financials at all?

I’m telling you my experience having worked at the IG, EM and HY rates desks, and in conjunction with the delta-one product research team and market risk team, at a bulge bracket for five years. The only holdings I saw in a rates / FI portfolio longer than a year were off the run 3Y / 7Y CDX and Vene / PDVSA bonds — ie illiquid or high-risk crap no one wants.

Moreover, per the company’s (somewhat cumbersome) risk policy, traders were required to disclose rationale for substantial positions and weekly risk meetings. Not once did I hear someone mention fundamentals — but I did hear them talk plenty about disparities between implied PD and theoretical PD via KMV.

Edit: Apologies — missed your remark on “sell side” at the beginning. Agree with you after taking that into account.

 

[SnowblindNYR]

Nerd fight!

 

[CasusBelli]

Nerd fight!

Hey, what do I know? I’m just a lowly quant in the business for a decade who has lectured on derivatives and on power markets at Pace, Columbia and Georgetown.

 

[SnowblindNYR]

Hey, what do I know? I’m just a lowly quant in the business for a decade who has lectured on derivatives and on power markets at Pace, Columbia and Georgetown.

I'm not questioning you but I do think that sometimes people get a little "stuck" in the world they work and might lose some perspective. So consider it may be positive that you might have a bias from living in that world.

 

[CasusBelli]

I'm not questioning you but I do think that sometimes people get a little "stuck" in the world they work and might lose some perspective. So consider it may be positive that you might have a bias from living in that world.

Actually I reread his post. I missed the “sell side” part at the beginning — which makes a huge difference. He’s absolutely right from a buy side perspective. Apologies for any unpleasantness.

 

[SnowblindNYR]

So one thing I don't do for my FP&A role that's usually a function of this type of role is variance analysis. I provide the forecast portion. That means that I built a model that breaks apart each line item on the P&L budget into its core components. Others use that and compare it to actuals and THEY do the variance analysis. For the most part I understand that part of it too, just compare the cost drivers of the budget and actuals, for example. Should I just stretch the truth and say I do it? I'm not 100% comfortable with that. Or should I say it's a joint effort and I provide the info on the budget side of things. I'm worried I'll lose job opportunities if I don't say I do variance analysis beginning to end.

 

[CasusBelli]

So one thing I don't do for my FP&A role that's usually a function of this type of role is variance analysis. I provide the forecast portion. That means that I built a model that breaks apart each line item on the P&L budget into its core components. Others use that and compare it to actuals and THEY do the variance analysis. For the most part I understand that part of it too, just compare the cost drivers of the budget and actuals, for example. Should I just stretch the truth and say I do it? I'm not 100% comfortable with that. Or should I say it's a joint effort and I provide the info on the budget side of things. I'm worried I'll lose job opportunities if I don't say I do variance analysis beginning to end.

You can dress it up without fibbing.

• Analyze and decompose financial statements in the context of historical performance
• Initiate and support variance analysis for key stakeholders

I'm sure the above could be phrased better; I'm just spitballing to give you an idea.

 

[SnowblindNYR]

You can dress it up without fibbing.

• Analyze and decompose financial statements in the context of historical performance
• Initiate and support variance analysis for key stakeholders

I'm sure the above could be phrased better; I'm just spitballing to give you an idea.

I already have it on my resume as:

· Built variance analysis model to facilitate monthly budget vs. actual P&L comparisons.


For interviews, this is my new answer that I've been thinking about:

Snowblind, do you perform variance analysis?

It's a join effort with accounting, I'm responsible for the budget side of things. I built a model that breaks apart the P&L budget line items into its core assumptions. Accounting is responsible for the actuals data.

 

[CasusBelli]

I already have it on my resume as:

· Built variance analysis model to facilitate monthly budget vs. actual P&L comparisons.


For interviews, this is my new answer that I've been thinking about:

Snowblind, do you perform variance analysis?

It's a join effort with accounting, I'm responsible for the budget side of things. I built a model that breaks apart the P&L budget line items into its core assumptions. Accounting is responsible for the actuals data.

I don't see a problem with that. Maybe eliminating "facilitate" from the resume, though, as it tends to weaken the point. You could say "... to compare monthly budgets to actual P&L." You're not lying: that is the purpose of the model, and you're not claiming that it handles the entire process, so I don't see issues. It just strengthens the point.

 

[East Coast Bias]

I already have it on my resume as:

· Built variance analysis model to facilitate monthly budget vs. actual P&L comparisons.


For interviews, this is my new answer that I've been thinking about:

Snowblind, do you perform variance analysis?

It's a join effort with accounting, I'm responsible for the budget side of things. I built a model that breaks apart the P&L budget line items into its core assumptions. Accounting is responsible for the actuals data.

As long as you know truly know how to do something, I wouldn't worry about the phrasing as much. Just stress your experience and knowledge in it.

I'm interviewing for an open position on my team now. The amount of bullshitting everyone does with their terming is widespread.

Everyone is the Lead or Head of something.

I'm not condoning lying. Just saying don't freak yourself out over the phrasing too much.

 

[SnowblindNYR]

I don't see a problem with that. Maybe eliminating "facilitate" from the resume, though, as it tends to weaken the point. You could say "... to compare monthly budgets to actual P&L." You're not lying: that is the purpose of the model, and you're not claiming that it handles the entire process, so I don't see issues. It just strengthens the point.

Actually, you may be right. What do you think about my interview answer?

Edit: I just made the change in my resume, thanks!

 

[SnowblindNYR]

As long as you know truly know how to do something, I wouldn't worry about the phrasing as much. Just stress your experience and knowledge in it.

I'm interviewing for an open position on my team now. The amount of bullshitting everyone does with their terming is widespread.

Everyone is the Lead or Head of something.

I'm not condoning lying. Just saying don't freak yourself out over the phrasing too much.

Well, the idea is how do I stay honest while mitigating my lack of experience as much as possible? This new answer that I have I think is good because it emphasizes what I did and what accounting does, without talking about what I don't do. So it's a positive spin without actively admitting I don't do something.

 

[CasusBelli]

Well, the idea is how do I stay honest while mitigating my lack of experience as much as possible? This new answer that I have I think is good because it emphasizes what I did and what accounting does, without talking about what I don't do. So it's a positive spin without actively admitting I don't do something.

My other advice: add dollars to the amount. What was the magnitude of your project? Are we talking millions or billions? To whom did you report? A VP? A D? MD? Who were your stakeholders? You want to show that you know your stuff, obviously, but also that you're capable of interacting with colleagues from all sorts of backgrounds and departments. Compare: "Developed proprietary algorithmic technology for equities derivatives desk" to "Produced and implemented a proprietary algorithm, with the support of Market Risk and Research, for the Managing Director of the $20BN equities derivatives portfolio."

 

[SnowblindNYR]

My other advice: add dollars to the amount. What was the magnitude of your project? Are we talking millions or billions? To whom did you report? A VP? A D? MD? Who were your stakeholders? You want to show that you know your stuff, obviously, but also that you're capable of interacting with colleagues from all sorts of backgrounds and departments.

Thanks, I added the revenue for another bullet point for the company model.

 

[CasusBelli]

Thanks, I added the revenue for another bullet point for the company model.

Glad to help. Added a bit more color to my post, in case that helps. I have a bad habit of editing almost all of my posts within seconds after hitting "Post Reply".

 

[SnowblindNYR]

Glad to help. Added a bit more color to my post, in case that helps. I have a bad habit of editing almost all of my posts within seconds after hitting "Post Reply".

I don't love having overly long bullet points but then again I'm not exactly the super successful in looking for jobs so who knows? I'm getting decent albeit not great hits on my resume. I have it at around 5% of applications. I don't customize my resume so it's probably decent.

 

[CasusBelli]

I don't love having overly long bullet points but then again I'm not exactly the super successful in looking for jobs so who knows? I'm getting decent albeit not great hits on my resume. I have it at around 5% of applications. I don't customize my resume so it's probably decent.

My rule of thumb is one bullet, one line.

 

[SnowblindNYR]

My rule of thumb is one bullet, one line.

I see people with like 4 lines per bullet point and 2 pages of resume and I think it's too much.

 

[CasusBelli]

I see people with like 4 lines per bullet point and 2 pages of resume and I think it's too much.

That's a cover letter, not a resume, and I bet they get looked over.

 

[SnowblindNYR]

That's a cover letter, not a resume, and I bet they get looked over.

4 might be a bit of an exaggeration, but yeah, just too much.

 

[SnowblindNYR]

What do you guys think of big assessments for job applications? Fair or too much work for free? I find it that some of them are confusing but if they're not they can give me a leg up. I actually have fun with them sometimes. Also, they don't correlate with how much the job pays.