Proper motivation for Physics -> Wall St?

[DukeofDuke]

Hi PF,
I'm actually still an undergrad, so this is a long ways off, but I've been thinking about what possible route I want to take if/when I complete a Physics PhD program. I've come up with a couple reasons why the quant/finance path (or its analogue in 5-10 years) seems interesting to me, and I'd like to know whether they are practical or applicable (the reality of the situation vs. what I think I could get out of it).

1) I want to save up some money for future family needs. I was raised as the son of doctors, so money has been plenty in my life so far, but for a lot of reasons I intend to live a life that is not materially focused. I don't really *want* the coveted six figure salary. Nonetheless, I realize that I'm saying this from a position of extreme financial comfort, that where I am is only possible because of my parent's money. So while I don't want to live a very material life, I DO want to make sure my future kids/family are not affected by my weird vow of poverty. I don't want money to be a limiting factor for them, because it never was for me and I'd feel like a hypocrite if I didn't pass that on.

2) I want to understand wtf the system is that plays with the big $. I think the average American is just as clueless about economics as they are about QFT. I don't want that to be the case for me, so I want to observe the financial system from a foot soldier's point of view and see what I can learn. Ultimately, the question of poverty in the modern world is the one that bothers me the most, and I want to learn about its counterpart, the question of wealth in the modern world.

Are these two things reasonable goals? Is the physics -> finance path appropriate, with these goals in mind? Or, for example, is the pay vastly exaggerated and the job more monkey work than thought provoking? Or, would there be better ways to accomplish these goals?

Thanks PF.

 

[snowjoke]

Going into Wall St is a fine objective to have as a physics undergrad, and I wish I had known more about this when I was an undergrad. You could do a PhD in physics, but I can't see why you would do this rather than a masters then PhD in financial maths, if you know your objective already. This would make you a lot more employable and obviously would be a lot more relevant.

As for your reasons, to be blunt, I think they're stupid. Your kids will be fine - let them look after themselves. People are successful from poor, rich, and middle class backgrounds. Live your own life, and do what you want with it, rather than worrying about people who do not exist yet, and may not ever exist. In what way might money be a limiting factor? So long as you can feed, clothe and educate them, they don't need a ton of money.

Your second point is particularly daft reason for choosing a career path. If you want to find out about the financial system, read a book on it. If the question of poverty really interests you, set up a charity, or work for an NGO.

I don't want to discourage you, but I think you should be a bit more honest about why you want to take this path. If you are being honest and making a lot of money for yourself doesn't interest you, there are many more interesting and less arduous paths you can take.

 

[DukeofDuke]

Going into Wall St is a fine objective to have as a physics undergrad, and I wish I had known more about this when I was an undergrad. You could do a PhD in physics, but I can't see why you would do this rather than a masters then PhD in financial maths, if you know your objective already. This would make you a lot more employable and obviously would be a lot more relevant.

As for your reasons, to be blunt, I think they're stupid. Your kids will be fine - let them look after themselves. People are successful from poor, rich, and middle class backgrounds. Live your own life, and do what you want with it, rather than worrying about people who do not exist yet, and may not ever exist. In what way might money be a limiting factor? So long as you can feed, clothe and educate them, they don't need a ton of money.

Your second point is particularly daft reason for choosing a career path. If you want to find out about the financial system, read a book on it. If the question of poverty really interests you, set up a charity, or work for an NGO.

I don't want to discourage you, but I think you should be a bit more honest about why you want to take this path. If you are being honest and making a lot of money for yourself doesn't interest you, there are many more interesting and less arduous paths you can take.

This is probably a good time to mention that I don't intend to make a career out of this =D
I only want to do it for a few years, enough time to make enough money for financial independence in my crazy future schemes, and gain the knowledge I mentioned.

After that there are a lot of things I want to do that are pretty far off the beaten trail. If I wanted an actual career in finance, all your points make sense (not getting the PhD, and not deluding myself into thinking I'm doing it for a reason like future security or abstract knowledge). But I don't intend to stay much longer than the amount of time it takes to get that security and knowledge. It's possible I'll be extremely poor after that for a few years.

 

[fasterthanjoao]

This is probably a good time to mention that I don't intend to make a career out of this =D
I only want to do it for a few years, enough time to make enough money for financial independence in my crazy future schemes, and gain the knowledge I mentioned.

After that there are a lot of things I want to do that are pretty far off the beaten trail. If I wanted an actual career in finance, all your points make sense (not getting the PhD, and not deluding myself into thinking I'm doing it for a reason like future security or abstract knowledge). But I don't intend to stay much longer than the amount of time it takes to get that security and knowledge. It's possible I'll be extremely poor after that for a few years.

I doubt you'll make as much money in finance as you expect - not enough to live on for a significant amount of time anyway, barring extreme luck. Also, there is no reason why you should be poor in a job researching physics. From your original post about 'extreme poverty' - that is ludicrous. A six-figure salary isn't the minimum needed for someone to consider themselves well off, in fact half of that is a very decent living wage in most places. Have a look at the average national salary.

I hear things like this a lot from students, that seem to think it's noble (I don't mean to sound negative about your ambitions - it's a great thing that you're in a pursuit of knowledge) when you're aiming away from money for knowledge. I don't see anything wrong with making money. There are plenty of ways you can do both.

Also, what you want to do now and what you'll want to do after an undergraduate degree are extremely likely to differ. It's a good thing to have goals, and set yourself targets but don't worry about sticking too it too much - it's also easy to get caught up in pursuing something you once set for yourself even though in heart-of-hearts you've changed your mind.

 

[DukeofDuke]

I doubt you'll make as much money in finance as you expect - not enough to live on for a significant amount of time anyway, barring extreme luck. Also, there is no reason why you should be poor in a job researching physics. From your original post about 'extreme poverty' - that is ludicrous. A six-figure salary isn't the minimum needed for someone to consider themselves well off, in fact half of that is a very decent living wage in most places. Have a look at the average national salary.

I hear things like this a lot from students, that seem to think it's noble (I don't mean to sound negative about your ambitions - it's a great thing that you're in a pursuit of knowledge) when you're aiming away from money for knowledge. I don't see anything wrong with making money. There are plenty of ways you can do both.

Also, what you want to do now and what you'll want to do after an undergraduate degree are extremely likely to differ. It's a good thing to have goals, and set yourself targets but don't worry about sticking too it too much - it's also easy to get caught up in pursuing something you once set for yourself even though in heart-of-hearts you've changed your mind.

I actually don't want to go into physics research. And I'm not really into nobility- I don't see anything wrong with wanting to make tons and tons of money, that's the background that birthed and raised me anyways. Just, I've been in the big house so long I don't really care about the size anymore...
Nor do I think something less than a 6 figure salary is extremely poor. I was talking about living off something closer to a 3 figure salary.
I also realize life is not a straight shot from ideals formed in youth --> executing said ideals. That's part of the reason I want to do a physics PhD in the first place instead of just quitting at masters (which I will definitely do, because I really really really want to learn the physics regardless of career and I don't trust self-study). I need to see if, after being immersed in academics for a while, the person I then become wants to stay. This entire conversation is based on the premise that I decide, at that point, not to.

 

[twofish-quant]

I'm actually still an undergrad, so this is a long ways off, but I've been thinking about what possible route I want to take if/when I complete a Physics PhD program.

My very strong advice is not to think too much about this...

I don't have much of a clue what the financial markets will look like in a decade, and honestly neither does anyone else. I am pretty certain that they will be very different in ways that are impossible to forecast. The hot jobs today may be gone in ten years, and the hot job in 2020 will likely be something that no one has imagined yet.

I should point out that I didn't go into finance until almost a decade after I got my Ph.D., and I got into it more or less by accident.

Are these two things reasonable goals? Is the physics -> finance path appropriate, with these goals in mind?

Yes, but there are other paths.

Or, for example, is the pay vastly exaggerated and the job more monkey work than thought provoking?

Yes and yes.

The pay is good, and the work is thought provoking, but what you see in the movies is extremely exaggerated. It makes a difference, because if people really were routinely making $2M/year then it makes sense to drop everything, do finance, and not even to consider a job at say Google. But people aren't. The salaries and work conditions are good, but they aren't "drop everything and consider no other options" good.

Or, would there be better ways to accomplish these goals?

Maybe. Maybe not. Just look at your options and see what works for you.

 

[twofish-quant]

Going into Wall St is a fine objective to have as a physics undergrad, and I wish I had known more about this when I was an undergrad.

To be honest, if your main goal is to work on Wall Street, then a physics Ph.D. is a rather bad way of doing it. If your main goal is to get into finance, you are *much* better off with an MBA or Masters in finance (avoid MFE's though).

Working on Wall Street isn't my main goal, however.

Your second point is particularly daft reason for choosing a career path. If you want to find out about the financial system, read a book on it.

Books can be wrong, and authors can be totally clueless. One thing that I found extremely shocking is how clueless academic economists can be about how markets really work. One nice thing about working in finance is that I can go up to a professor of economics, and credibly say "you really have no idea what you are talking about here."

If the question of poverty really interests you, set up a charity, or work for an NGO.

I don't think so. If you really want to lift hundreds of millions of people out of poverty, you need functioning financial systems. NGO's and charities are only band-aid solutions. You aren't going to lift a billion people out of poverty through NGO's and charities. The wealth isn't there.

To get something useful done, you have to build working financial systems, and you can't learn about that by reading books.

I don't want to discourage you, but I think you should be a bit more honest about why you want to take this path. If you are being honest and making a lot of money for yourself doesn't interest you, there are many more interesting and less arduous paths you can take.

One curious thing is that "making lots of money" and "feeling rich" is a particularly *bad* reason for going into Wall Street.

The salary that you can reasonably expect to make in a technical position in finance is about 30% higher than what you could expect to make in Microsoft. It's good, but you are just aren't going to be driving sport cars and dating supermodels. What's worse, because you have tons of money flowing around you, you feel very, very poor.

If you live in Peoria, you aren't going to run into billionaires. If you live in finance, you are going to see people that make totally insane amounts of money around you. Just walk through midtown and you'll see ads for stuff that you can't possibly afford. And a lot of these people are nasty people that will do what they can to make you feel poor.

If you make $200K, and the people around you make $150K, you feel rich. If you make $200K, and the people around you make $10M, you feel like a peasant.

 

[twofish-quant]

Also, there is no reason why you should be poor in a job researching physics. From your original post about 'extreme poverty' - that is ludicrous.

Research positions in physics do pay pretty decent amounts of money ($70K-$80K). Personally, I'd be glad to take a research position, but the jobs weren't there. One thing that you'll find about physics geeks on Wall Street is that finance was invariably not their first choice of career. I would have never thought of going into Wall Street if "standard academic positions" were available, but they aren't.

A six-figure salary isn't the minimum needed for someone to consider themselves well off, in fact half of that is a very decent living wage in most places. Have a look at the average national salary.

This is very region dependent. One thing that you have to factor in with finance is that you will be working in NYC, which is a high-tax (45% marginal rate), high-expense place ($2000/month rent for a typical apartment in New Jersey). $100K in NYC will let you barely break-even, and then you have to deal with multi-millionaire jerks that laugh at your $100K salary.

Now, if you love NYC, it's worth it.

I don't see anything wrong with making money. There are plenty of ways you can do both.

Making money causes a lot of problems if it causes you to stop thinking. One curious question that people need to answer is "why do you want to make money?"

 

[snowjoke]

Twofish - your advice is very good. Out of interest, and I'm sure you've explained before, briefly what's your experience? From your posts I'd guess you work on IT systems in an investment bank?