Any PhDs out there?

[finance_machine]

"At this point, I'm finding it extremely difficult to be admitted into a 'true' PhD Finance program at a business school where they take a very small amount of students annually. We're talking 3-5% acceptance rates at even state universities. So, I'm thinking that a PhD Financial Economics would be a good proxy, no?"

No.

You should know enough about supply and demand already to be able to do the math on this one. Look at the market median pay for finance vs. econ PhDs, it is an easy 2x (much more in many instances). One of the reasons why the PhD in finance is because it is well known that there are only a 2-4 slots at each school, and all of these schools receive about 1000 apps for these slots.

On the other hand, many of the econ programs will admit 15+ students per year. But, you need to be cautious here as well. You will notice that there are only 4 to 5 students in each class after the first year. This should make you wonder what happened to the other 10....

And, at the risk of being flamed, here is my true take: I have met several people in the PhD econ program that did a "financical economics" paper thinking that it would get them a job. Well, it didn't. Moreover, these people could hardly explain their own damn dissertation. The big problem with these programs is that there is so much emphasis on mathematical masturbat!0n that you rarely get time to think about the issues you are trying to shed light on. However, if you are interested in being able to figure out a way to put the words "Upper Hemi-Continuity in the Space of Rational Investing in Segragated Markets" in the title of your paper (even if it doesn't explain anything), then an Econ PhD is for you.

Bottom line: if you want a finance PhD, go to the finance department. If you want an econ PhD, go to the econ department.

And just in case the rebuttle is "well, many of the best finance professors have a PhD in economics...and finance is really a sub-field of economics." I agree with this 100%. But, these professors are typically found on the payroll in the finance department (they did the math too, and all rational agents prefer moe pay to less, right?).

 

[zoomz00m]

> And, at the risk of being flamed, here is my true
> take: I have met several people in the PhD econ
> program that did a "financical economics" paper
> thinking that it would get them a job. Well, it
> didn't. Moreover, these people could hardly
> explain their own damn dissertation.
So is it worthless to do a PhD in economics if one is interested to get into IB?
I was thinking long the lines of doing something that you referred as "financical economics" paper. But it seems that won't help either.

Any advice on what might be done to increase the chances of getting in. ( For myself I am taking all the courses that are related to "stat" &"econometrics" that is being offfered ).

I do understand that the correlation betwwen getting into IB and taking the " world wide courses of econometrics out there" is insignificant. However I can't figure out what else might be there, that I could do to increase the probablitiy of getting in. Therefore, feel free to shed some light on what else I should be doing...( besides doing the CFA ofcourse).

 

[DTD2003]

finance_machine, your insights are both useful and depressing.. Would you then advise me in taking a 2nd tier PhD Finance than a 1st tier PhD Economics?

 

[mathical]

Hmmm...a PhD from a top school is a fantastic door-opener for interviews (I have an ivy-league PhD in a field where Oklahama State has a fantastic faculty, but there's no way an OSU degree would have done has much for me)...

If you can get into a truly top name school, I'd go there. Stay away from second-tier, especially if you end up changing what you want to do after school. But above all, do what you love. Econ and finance are two different beasts. You're gonna think about this stuff day and night for 5 years if you want to be successful and you're gonna be surrounded by people who think about it day and night. Do what you want to think about...

 

[DTD2003]

mathical, I am very much focused on the practical applications of financial economics. I guess that's why it's no surprise that I was originally an engineering major and have enjoyed applied math courses the most.

Naturally, I would love to be in the position to be choosing among schools but at this point, I am applying to both finance programs and those economic programs that show some signs of a strong financial background.

Edit: What does everyone think of this list of top finance programs?? http://wpcarey.asu.edu/finance/rankings/results.cfm



Edited 1 time(s). Last edit at Monday, October 9, 2006 at 11:10PM by DTD2003.

 

[torontosimpleguy]

OK, here are some fundamentals IMHO.

Academia � it�s about knowledge.

Industry � it�s about making money, nothing to do with knowledge (analysis is mostly limited to common sense).

Economics � it�s about formalizing and arguing the laws of market economy.

Quant Finance � it�s mostly about applied theory of probabilities and stochastic calculus and building empiric models (that are in some sense commercial product and not purely theoretical formulation).

 

[mathical]

I don't know that I buy into the above list...for example, in both my job now (buy side) and my old career (tenured academic) it was really all about "what do you know that no one else in the world has figured out yet?"

But I'm not at a small shop or managing separate accounts. I'm a small, highly specialized cog, on a floor of around 100 people managing a half-trillion dollars.

There are huge differences, but they are more about:

1) team vs. individual
2) time-frame of the project
3) what finished/"good enough to publish/trade with" means
4) communications skills

These are the real differentiating skills - if you value them, you'll do fine here, whether you value academic knowledge (we've got those folks) or trading strategies that work (we've got those folks, too).

 

[DTD2003]

mathical, if you don't mind me asking, how many years were you in academia before you decided to enter industry? I ask this as I would like to do the opposite, so to speak. Given some years in the financial services industry, I would like to transition to academia yet I fear that my work experience would not necessarily be viewed in a positive light as opposed to those that went straight into research.

I suppose I should focus first on actually getting accepted into a program before I decide what to do AFTER it... I really do hope for an admit so I�m applying to almost 20 schools (at little cost due to my minority status ).

 

[mathical]

I was in academia for 8 years before I moved to a startup, and then to finance.

One year postdoc, a few years as an asst prof, then a tenured associate prof. As a general rule, it would be very hard hired to get hired at a research university coming from industry. It would be fairly easy to get hired at a less prestigious place.

When you apply for a research job they are going to want to see some lip service to teaching, but they really don't care (as long as you aren't awful). They will want to see amazing publications and a grant record (after all, that's how the school makes its money) and research statements, letters of rec from famous researchers, etc. It's hard to assemble that stuff while you're in industry.

There are very few people who I think would do well in both places. I mean, one is a very self-directed "you teach 100 hours a year, the rest of your time is your own" kind of job (and yeah, you work your own hours, all of them!). Maybe a very small hedge fund is somewhat similar to academia in some ways, but very different in others...

Most likely, as you journey through academic, you're likely to find that you love it more than anything, or can't wait to get out. That will guide you(!).

As for finance/econ/math/stat whatever, do what you love - enjoy the ride. As a general rule, the places hiring quants will care about the prestige of your institution (more than they should) and what tools you used (less than they should). They will also have their own perception of your program difficulty. I was a very successful mathematician, so they all presume I'm smart (as opposed to presuming I was lucky, or obsessive, or whatever) - more than someone who has, say, a finance PhD. That's just the market color on it - rightly or wrongly.

 

[DTD2003]

To be honest, I would likely work for an NGO or an international philanthropic organization before going to a university. I simply enjoy the fast paced nature of finance and want to be a part of the emerging quantitative finance phenomenon.

However, getting back to the issue of a PhD Finance vs. Financial Economics, suppose that your dissertation isn't completely theoretical and has practical applications. Suppose further that the university was somewhat reputable (due to higher admittance rates in Econ programs). How would that reflect on future employment opportunities? Looking at many PhD programs, the finance and economics departments share many classes in common and some even have the same professors. I fail to see how an employer could cast judgment on someone that simply decided that they preferred the better rounded background that an economics degree bestows. As someone with both a finance and econ undergrad degree, I find that they complement each other nicely and as an employer, I would view this positively. Maybe my logic is a bit na�ve here but in all honesty, I struggle to see how the difference is that great given one�s inclinations toward practical applications from the onset.

 

[mathical]

I think you're kinda missing the point about what an employer is looking for.

There are three things that make you successful as a quant - and the weightings depends on the firm/job/investment process/etc. Those are math-related skills and intution, finance-related skills and intuition, and people skills.

You really don't learn any of those when you're getting a PhD. You learn how to think and how to work, and perhaps you get the mathematical or finance maturity that helps you acquire those other skills or intuition.

When we hire, all we care about is that the person has enough math skills, maturity and overall intelligence. We can teach the finance, that's easy. Why do you think all those phsics PhDs are snapped up by Goldman Sachs? It's not because they are well rounded, or because they know anything about finance.

I'll go further - I think Goldman Sachs would rather hire a phsics PhD from Princeton than, say, an Econ PhD from (just to pick a very very good, but less pretigious place) from Penn...this doesn't apply to any two particular individual candidates, but to the pools overall. They can do more, long term, with someone who has the skills/inclination to get the physics PhD.