Why UBS Is Hiring So Many Quants | Hacker News Reader

Why UBS Is Hiring So Many Quants

bloomberg.com

86 pointsjeo123441 comments

Some one is bound to mention PG's submarine article, http://www.paulgraham.com/submarine.html so it might as well be me.

I mean yesterday we had an article about how Goldman was making its SecDB available to high networth individuals and today we've got another article about how UBS is targeting the same group.

UBS hasn't traditionally been held in the same tier as Goldamn Sachs etc as far as trading and quant jobs go, but one area they do excel in is a more traditional banking are, Wealth management for high worth individuals.

This is the area of the bank the article is talking about.

They are trying to be for high worth people, what Wealthfront or Betterment is for middle class people in that they are trying to bring money strategies that previously were the area of hedge funds to high net worth individuals.

Asset management has been a decent growth segment for Goldman since '09, as money started shifted out of trading.

See p. 59 - http://www.goldmansachs.com/investor-relations/financials/cu...

p. 51 - http://www.goldmansachs.com/s/2012annual/assets/downloads/GS...

~10% YoY growth since 2010; Investment Banking has actually grown a bit quicker than that.

As much as the Volcker Rule has been watered down, it's still having a big impact on banks' ability to take on risk via their trading desks, so you're seeing them shift back into the classic businesses of making deals (investment banking), making rich people richer (private wealth), and making rich institutions richer (investment management in general).

Something really bugs me about the extent and influence of PR firms. It reminds me of how lobbiests often end up writing the bills submitted by legislature. Or sponsored articles masquerading as unbiased informative reporting.

It all seems very corrupt to me.

Does UBS really oversee $2 trillion or is it a mistake? Further in the article it says that $1.5b is managed by quants. That is a very low proportion.

Not a mistake: http://www.bloomberg.com/news/articles/2015-07-07/ubs-morgan...

I think they mean that of the $2 trillion they oversee, just $1.5 billion is managed by quants.

This includes their wealth management division. The relationship between customer and their wealth manager can range from very stringent "Buy AAA bonds and index funds for my account, rotate quarterly to harvest tax losses, always keep 5% in cash" to "Maximize my gains by taking various bets that might or might not be associated with UBS".

On the trading side they would have a variety of instruments (hedge fund is probably the most convenient and easily understood wrapper for various "miscellaneous" financial activity, but there are also private REITs, MLPs, CEFs, etc.) which would then try to attract funds. The funds would bring money from various sources, such as firm's own money, partners' personal capital, as well as wealth managers, some of which could be associated with UBS. This is the actual money available to quants.

Oversee..

$2 trillion must include assets under custody, though I did think UBS had 3-4 trillion under custody, which is smaller than some of the biggest names, BNY Mellon, State Street, JP Morgan, Citi, Euroclear.

Under custody absolutely does not mean under management. Oversee is true: Their corporate governance is trusted to ensure these assets are held in safe keeping and administered for example for tax. It does not mean actively invested.

$1.5bn (managed by quants) is still a small number. My second job, at 24, was on a team of 5 people (total) that actively managed $6bn; the team was remarkably lean.

Is "quant" finance industry jargon? I picked up the meaning from reading the article but I'm not familiar with the term.

Quant-itative analyst. Yes, industry jargon.

Even worse, some banks use the initials "QA" for the function, completely ignoring the idea that those initials already have a meaning in software development.

Finance has existed longer than software development; I think you might be mixing up the chicken and the egg here.

Surely quality assurance (QA) has been a concern in physical products since the Industrial Revolution started. It's not a software industry term.

Finance precedes the Industrial Revolution as well. But I think the real question is when each of those terms came into being.

The problem is that physicists and mathematicians write the worst code I have ever seen in my entire life, and I've been programming for 30+ years. To those people, everything is a single threaded, algorithmic problem, even when it is crystal clear to a formally trained programmer that using a well thought out data structure is the correct thing to do[1][2].

For example, they managed to break my Vertica database from delivering instant results (something it is explicitly designed for in "big data" scenarios) to running 18+ hours for a single SQL query.

[1] Rule of Representation: Fold knowledge into data, so program logic can be stupid and robust.

http://catb.org/~esr/writings/taoup/html/ch01s06.html#id2878...

[2] Rule of Robustness: Robustness is the child of transparency and simplicity.

http://catb.org/~esr/writings/taoup/html/ch01s06.html#id2878...

More and more dollars pumped into smaller and smaller returns.

I have a phone interview for a quant position in Goldman's Strats. Tips?

what is your academic background? do you know which strats group?

To design/develop more trading algorithms :)

We are hiring quants. They make pictures we give to some of our clients. We have even been able to hire women.

9■2¥ee₩223

I clicked on the link just to find out what a "Quant" was. Answer: quantitative analysts

Me too. Looks like it's been used for a while but I never saw until this week and this was the second time I saw it. Sounds derogatory.

Not new and not derogatory: https://www.amazon.com/My-Life-Quant-Reflections-Physics/dp/...

And it's not a term new to HN:

https://hn.algolia.com/?query=quant%20&sort=byPopularity&pre...

Why do people play TIL on HN?

In the book he notes that it started out as a derogatory term. Can't find the quote in the book but I found this

http://www.nytimes.com/2010/05/16/magazine/16FOB-OnLanguage-...

"When I asked Derman recently about his early years in finance, he said that at first he felt that quant, like rocket scientist before it, was largely a derogatory put-down for the brainy newcomers, many of them foreign-born: 'two-thirds pejorative, one-third grudging praise,' by his calculation."

Here is a quite amusing clip "Jenga" from the movie The Big Short on this topic. https://www.youtube.com/watch?v=QpsI_Gvn7C8

BTW, most quants that I know don't find the term derogatory, quite the opposite.

I wasn't trying to suggest that it's actually used in a derogatory way, just that, as someone hearing it for the first time, it's feels like harsh word.

It is not derogatory.

It is an abbreviation commonly used among finincial experts to denote a particular discipline of expertise.

Jargon, parlance, slang.

I should have consulted with the authority on derogatory terms before posting such a thoughtless comment. Thank you for the correction, lord derogator :) But, again, I wasn't saying it actually is a derogatory word, it just has the harsh sound of one. Maybe it's just because it sort of rhymes with the derogatoriest word of all.

Quants are the guys who run the math so that the bat-wielding psychopaths that are traders don't accidentaly shoot their feet off. They usually have PHDs.

They have some prestige on the trading floor.

Edit: They don't literally have bats, you guys. But when the guy who's paying you ~250K a year looks over your shoulder and asks for a risk report, the effect is more or less the same.

> so that the bat-wielding psychopaths that are traders don't accidentaly shoot their feet off.

How do you accidentally shoot your feet of with a bat?

By bringing a knife to the fight, of course.

I've noticed that on trading floors. Why do traders keep bats at their desks? Are they actually intimating threats of violence to support staff who are stuck on the floor dealing with them?

I think the bats are mostly intended to be humorous, but at least occasionally they are actually used as weapons.

http://www.bloomberg.com/news/articles/2016-05-12/ex-barclay...

Hitting someone with a 12-inch bat is probably better than stabbing a cab driver with a penknife.[1]

[1] http://dealbreaker.com/2012/12/in-wake-of-exec-accidentally-...

The only time I've actually seen a bat on the trading floor was as a branded piece of swag from the BATS exchange: https://www.batstrading.com/

Yes. It's a passive-aggressive tactic of a veiled threat.

However, the logical among you will realize, over time, that those people are insecure weaklings and that they are bluffing. They are basically child bullies dressed in suits and wearing ties.

Once confronted, they will attempt to outwit their opponent until faced with undeniable facts. When this happens, they break down. It also seems to be a rite of passage for anyone dealing with them, otherwise they show no respect.

Actually some of them do have bats. And most, if not all of them are sociopaths in addition to being pathological psychopaths, which tends to manifest itself in the deep financial crisis we have been experiencing for a decade and a half now. A lot of people with those disorders end up in management, especially upper and middle management. This appears to be due to the sociopathic pathology and high social intelligence.

Apparently it is not yet widely accepted that sociopaths or psychopaths, or persons with both disorders should not be the decision makers, let alone leaders; not only is that not the state of affairs yet, but these people usually cower everyone else and thus come into leadership positions. Why this is tolerated and accepted, I cannot comprehend. I for one fight and oppose them at every turn and opportunity, because I will not accept fallacies, will not accept subjugation, and will not be cowered into obedience; only logic works with me.

30,000 years ago groups of prehistoric humans had communities no larger than 30 because that was about the maximum that the hunting-gathering methodology could support while maintaining coherence. It is noteworthy that sociopaths would usually be expelled from such groups, and that they would not have more than one or two psychopaths in the group, whose function was primarily to hunt and fend off enemies, not lead the group.

Where I read that, I don't remember, but considering the sociopathic psychopaths I have to deal with on a daily basis, it makes perfect sense to me why prehistoric groups of humans did that. Once I read that, the proverbial light bulb went off, as they say.

Somehow, we have gone from that working model to a model where a psychopath, a sociopath, or a combination of both becoming a leader is actually promoted as a role model, something to aspire to, and appreciated by the society at large.