As many risk takers are likely to be concerned with locking down positions and profits into month and quarter end, Macro Man thought he would address an issue that's near and dear to his heart, the state of the labour market for market professionals.
He spent a few minutes sifting through efinancialcareers, an online job portal that pretty much does what it says on the tin. First, he looked at openings for portfolio managers:
As you can see, the query generated 290 results, globally. OK, what about looking for traders?
Hmmm...507 results, but as you can see, a lot of the results are for quant traders because hey, HFT front-running is perfectly legal and what could ever go wrong? If you sometimes feel like trading these days is like living in The Matrix, you just might be on to something. A search for C++ yields a whopping 1434 results.
If you apply for one of these roles and are contacted by an "Agent Smith", watch out! On a slightly more serious note, perhaps the best piece of advice that Macro Man can give young readers interested in a financial career can be summed up in 3 words. Learn. To. Code.
Even more than coding, however, there is one area of finance that is in a roaring, runaway bull market with no end in sight. Some may call it a bubble, but as you know the authorities always feel uncomfortable identifying bubbles in real time. Indeed, listen to Yellen's Congressional testimony and you can see certain members cheering lustily for the trend to continue, nay accelerate.
Step forward Compliance officers, for whom there are a stunning 3093 vacancies!
There you have it folks, financial markets in 2015- where demand for compliance folk outnumbers that for portfolio managers by more than 10-to-1. The irony, of course, is that in their zeal against too-big-to-fail on the banking side, the authorities have significantly raised the AUM bar for what constitutes a viable business proposition on the fund side. As a result, in some sectors at least assets have concentrated in huge funds with the built-in compliance infrastructure to satisfy the rampant bull market.
One can only hope that come the next market crisis, they do not prove to be too big to fail.
He spent a few minutes sifting through efinancialcareers, an online job portal that pretty much does what it says on the tin. First, he looked at openings for portfolio managers:
As you can see, the query generated 290 results, globally. OK, what about looking for traders?
Hmmm...507 results, but as you can see, a lot of the results are for quant traders because hey, HFT front-running is perfectly legal and what could ever go wrong? If you sometimes feel like trading these days is like living in The Matrix, you just might be on to something. A search for C++ yields a whopping 1434 results.
Even more than coding, however, there is one area of finance that is in a roaring, runaway bull market with no end in sight. Some may call it a bubble, but as you know the authorities always feel uncomfortable identifying bubbles in real time. Indeed, listen to Yellen's Congressional testimony and you can see certain members cheering lustily for the trend to continue, nay accelerate.
Step forward Compliance officers, for whom there are a stunning 3093 vacancies!
One can only hope that come the next market crisis, they do not prove to be too big to fail.
41 comments
Click here for commentsOh man MM, and here I thought you couldn't get much better at this!
ReplyI wholeheartedly agree. Let me second the point on coding. Even as an economist you are very unlikely to get a seat at a desk anywhere unless you can put Python, C++, etc on your skills sheet. I doubt you ever use it in the end, but it is a bit like math skills in the old days (of course these are the same in some sense). You needed to show that you have solved that 5th degree Taylor expansion, under duress at an exam somewhere, but you never really had to use it. I don't like where the business is going here, but I have learned to accept it. If you are infected with the financial markets/global macro bug, you need to be creative in finding a way to use that and make a living I suppose.
There is nothing funnier, even for an economist, to sit on a diverse trading desk with a mixture of old-school traders/PMs (that would be you MM, LB, Pol etc) and young PMs in spe. But I have learned to accept that these places don't really exist anymore, or they are few and far between! Now, it just a bunch of quants being watched over by compliance outnumbering them 3-to-1. The silver lining for macro guys, though, is that the demand for them will not go away, but this then brings me to your ultimate key point IMHO. The size of AUM needed to run a viable business. I have sat on a desk in a small entrepreneurial fund, and raising money was like head butting an oncoming freight train.
"Oh, we really like your strategy and your PMs, but we can't really give you money until you get above $xxxM ... etc etc. I am not sure how this is resolved. If, for example, a bunch of a mega funds buckle in the next crisis, I assume that there will be a push/demand for divergence (smaller fund types) again. Or maybe just a push for even more compliance!
From personal experience, there's a fairly large overlap between the demand for "C++" and the demand for "compliance". A large slice of the former openings are for creation of tools to facilitate more of the latter. As for your best advice for young readers, I'd just like to append "...properly, or you'll just make it worse for everybody" to it. The proven capacity of a large number of people to shoot both of their feet off with Excel alone does not portend anything good for when they believe they can "code".
ReplyOh MM. A subject sooo close to my heart. Well done rais8ng again the issue of adjusted cost base making tipping the playing field. A quant uses historic data do is wrapped in the past. The best they can do is is get closer and closer to the present with their inputs but as for the future? That's why they will never pick up a 'Russia', or a Saudi oil decision or a catalogue of other political behavioural decisions however much C++ they know.
ReplyAnd that compression to quant and compliance leaves swathes of the market uncovered. Or does it? It actually means that unregulated unquanted brains can make a buck and this category includes individuals and even day traders and everyone else who the regulator thinks too small. So we COULD see performance swing from the big boys who are being dummed and cost based into behomth s whose oil tankers of positions take weeks to turn, to the nimble small individual.
never try to constrain a market. It will evolve to beat you.
SNB moves wipes a few guys out. Risk no swiss positions now it's too dangerous. ...
ReplyCompliance; your national driving license has an address that does not match the one you provided. "But I rent and moved". Please provide passport ID. "but that has no address & I feel uncomfortable with identity theft". Compliance " please provide passport".
There are different types of HFT, market making when done properly does function in any kind of market, adding liquidity and making money. In a sense there is no difference to an old model of prop guys executing through flow guys. The issue is that not every HFT market maker is good at what it does, and some do get carried out. But the market is big and there is place for everybody.
ReplyLearning to code should mandatory for any field, whether biology, business or arts. Software is eating the world and you should know the basics.
ReplyIn the markets, the coders are not just for HFT or compliance, but think about trading systems, risk management, research etc. Every big fund has some sort of IT system to perform these functions.
CV as for raising money, it is such a chicken and egg problem. I see lots of ppl moving to 'platforms' like DB, Jefferies & Citi. especially macro/futures guys. But pressure on fees across the board is a big issue and only going to worse meaning scale is a big issue for emerging managers.
http://www.cumber.com/content/special/blanchflower-levin-labor-slack-32415.pdf
AMAZING paper on the labour markets, a MUST read for all
Good to see that many of you noticed that. .. Pm vacancies are really a few... but better be that than doing a boring compliance job... real problem is that it's hard to change.
Replycan't understand why people need to code and what to code c++ or phyton. and i've worked in cat
At 36 years I feel me so old... no down year since 2006 are unimportant now... better a 3 years 20%run yearly on black boxes...
Worked in Cta sorry...
Reply@abee: software developers need to code... Pm need to manage money... then if your way to manage money is to develop a trading system ok..you need to write some code
H/t to Buttonwood:
ReplyExchange-Rate Pass-Through and US Prices
C# is what you want to teach yourself!
Replyhttp://www.microsoftvirtualacademy.com
Or you just outsource the coding to someone on £22k a year as you would with a secretary .. "take come code for me Mr. Moneypenny... " And have them come into work with you, much as you carry a laptop
ReplyNice divergence from the usual discussion - I think the odds that HFTs survive beyond the next 3-4 years are quite low - I mean someone would have to be blamed for the next meltdown.
ReplyAs for coding, there is a lot more to it than learning if/then loops - sure young traders can go read a python book, but they won't be 'learning' it in a setting that develops project management and modular development skills, and anything less than that is basically elementary school level stuff.
Learning to code doesnt mean you have to spend your days writing it. I feel very strongly that workers today need to understand software and the best way to do that is by learning to code, just like we learn algebra or chemistry in high school.
ReplyIts about understanding IT systems, databases (or lack thereof nowadays), the cloud, hardware etc.
To simply outsource all this knowledge to the "IT guy" is unacceptable, IMO, nowadays. Information is power and you have to know how to harness it.
Yes you can outsource the actual dirty work coding to some guy in India or a fresh student, but if you dont know how to design the system, good luck.
Steve jobs was apparently an average coder but he understood what can be done with computers. I think we all need to have that type of knowledge, especially pertaining to your working field.
Lastly, finance is the only field using C#, Java is the preferred way to go for most of tech land and what most beginner classes teach. There are lots of free resources these days online.
Isn't it the whole idea of trading or investing to have a strategy first: value investing or macro investing, or hedging or trading events. Even front running is a strategy. Profits come from ideas, capitals, and information, and coding is just the last piece of puzzle.
Replyfarmer
Takeout mania in biotech today with 3 good sized deals. Lots of estimate bumps based on expected takeouts - BMRN @ $33Bil cap estimates based on 5x 2026 sales - (including $1B for 111, a drug targeting dwarfism that affects approx 200 people/year in the US). Apparently the market was not thinking correctly last year when it valued the same pipeline at 1/5th of what its worth today. Since when are big pharma companies doing real R&D? The industry is not setup like that - its more like big oil where you have the wildcatters with high-risk high-reward plays who get bought by the majors when they have proven their fields, who then manage the property through its lifetime to generate reliable cashflows. My position-blinders may be preventing objectivity here, but the numbers just don't add up. Assuming conventional targets (ROE,ROI,EPS etc) only under the most optimistic scenarios is money better spent buying pipeline at these prices versus using that money to buy your own stock. I don't think a lot of these deals will happen. I added a bit to the IBB short today.
ReplyI'm finding it very difficult to be constructive on much of anything. Aside from my jihad on biotech, I'm not outright bearish and see a muddling along as likely. I tried to raise conviction in getting long some higher-yielding areas but just cant get there. Fixed income pretty much everywhere feels like sucking up nickels before the steamroller. Emerging equities seem rich against the daily vols. CMDS are a mess. In a lot of ways this is the end-game - I have this pile of cash that I need to put somewhere, and simply nothing looks right. I can't be alone in this.
Imagine if you were interested in compliance and could code, that'd be epic!
Reply(contact us Fundapps.co Automating compliance.)
Regulators complicit in illegal HFT?:
Replyhttp://www.nanex.net/aqck2/4022.html
Maybe under this over-compliance world, we should long accounting and consulting firms. Their businesses must be booming.
Replyfarmer
I disagree with most here. Unless you're a C++/Java guru, or able to architect Big Data Analytics in your sleep, your IT skills are largely meaningless. Harsh, but true.
ReplyFor all the institutional post-GFC changes, finance is still where it's at IMO. Today's bid in USD/stocks (courtesy of the BOJ) is our weekly reminder that the cup of unending funny-money doth runneth over. Thus I assume that those running risk are currently snorting coke off the bodies of naked strippers, whilst sipping Cristal & reading Dr Bernanke's (new) blog on their gold-plated iPad airs. Oh, and please do thank compliance for okaying the BYOD (bring your own device) policy on tablet computers.
FM - you back into equity length? looks like more of the same so far - buy the 3-4% dip from the all time high, rinse and repeat..
Reply@abee: i'm a tech passionate, like hardware and know something about IT, database etc...
Replyit's also useful to understand how a software is programmed, well ok...
but BEFORE it's fundamental to have a GOOD Knowledge of Excel and maybe some basic VBA programming..
C++?????? Please tell me why do i have to know this and to make which use? what do you have to code that's not available with most popular software????
Today's workers have to understand how a software works (it's not a wizard) theorically and to use most part of its functions (Excel for example is very powerful... add Access also)..maybe to create some macro. Stop! then you have programmers and nerds.
All these quant traders & co what do have to code?? When i worked on trading systems i programmed with Tradestation...
@washedup - Yep. However as the pullbacks (and thus my positions) have been relatively small I have yet to join the Cristal sipping, gold-plated iPad crowd ;-)
ReplyTalking about mkts everyday is the same...
Replybad economic data or low inflation... CBs cut rates or promise easing or people bet on that... financial assets rise... commodities fall..
if data are positive... QE works and you have to continue it... if data are negative you need more...
if there's is a 3% dip: buy a lot...
M&A usually is 40% up for target and 10& up for buyer: win-win
about biotech: i opened a website names www.lalabiotech.com; two hours later i received 3 offer starting from 3 millions USD! (it' a joke!) but we're near to that
Take a closer look at the jobs for "Portfolio Managers" in the same way that a multitude of dreary back office type jobs appended the word "risk" to the title to make it sound more interesting, now one can be a Portfolio Manager running a diverse and complex group of photocopiers
ReplyOK. I'm convinced. Started my 18 month old on Lightbot.
Replyhttp://lightbot.com/
https://youtu.be/BEUi8f34aNE
BTW, IBB is now in full distribution mode
@ Mr T
ReplyFT:
The problem with bubbles is that they are.....bubbles
Remember 1999 to 03/2000...some have paid (me included) to learn that when rationality is not part of the analyticalframework, anything can happen (NDX PER >150)
The only way to play it, in my opinion, is to wait to get bearish on equities in general and then short the crazy valuations as they will suffer the most;
on biotech, me thinks we are closer to Nasdaq 1995 rather than 1999.
ReplyThe science part is real, and a lot more generalist/retail flows can come into the space. Forward earnings are reasonable for large cap firms. PEG ratios better than S&P and margins are crazy high. whats not to love (except that fact that all those should eventually mean revert)
It it a bubble now, for sure, but that doesnt mean it will pop just yet
If your portfolio manager in 2000 and 2008 had been an algorithm programmed to JBTFD, then you would have been cleaning out your desk within a month or so of the bear market beginning.
ReplyWe seem to be at peak compliance, peak coding, peak algo, peak HFT. Nothing lasts for ever, although it does sometimes seem that way.
Three small observations:
Reply1) Nobody (not even LB) seems to think that the Feb high was THE TOP. As a sentiment measure, that, in and of itself, is interesting.
2) Second derivative of margin debt is strongly -ve at the moment. That has been a useful leading indicator in the past.
3) The number of punters who have bothered to develop even half a decent game plan for a sharp reversal of the long [USD, SPY, UST] trade is very very small indeed.
It was hard to stay short QQQ yesterday but we did. AAPL has been weak and if this market has had a leader on the way up, then surely AAPL is it. For now we are short QQQ and long VGK, as we still think the baton is handed off to Europe soon.
FX correlations have been all over the place the last two weeks or so, and when correlations start to break down there is usually a big sea change in the weather not far behind. When you see some really smart people like Dalio accumulating cash it makes you wonder what's coming.
re coding .. How can anyone every doubt its value when today Google invalid the PACMAN layer on google maps.
ReplyHere's canary wharf but you can play on most places.
https://www.google.co.uk/maps/@51.5050096,-0.0212717,18z/data=!1e3
awesome
Yawn, Soros is apparently long Ukrainian assets and short Greek assets, and wants Europe to ditch the poor Greeks in order to save the brave (if somewhat neo-Nazi) Ukies from the Russian bear:
ReplySoros Hearts Ukraine, Hates on Greece
Look, George, if you are reading this, just piss off. Nobody in the US elected you, and nobody elected Nuland, and nobody gives a toss about supporting a dodgy puppet government in Kiev, or Yemen for that matter. Just go back to Hungary, retire or die.
You are a nasty old lizard and we want you to just fuck off. Everyone is tired of your attempts to buy off politicians and break currencies, and everyone knows that you don't do much good in this world and that you have done plenty of evil.
Apologies for the language, MM, but he is an odious old toad, and sometimes you have to tell it like it is..
ReplyThe point is we are all tired of living under proxy rule of the Koch Brothers, Soros, and all the unelected oligarchs and organized crime figures sometimes described as "hedge fund titans", who exert undue influence in this country and a lot of others. Enough.
Reply@LB
ReplyFT:
I hear u, but keep cool; I very much doubt those "evil" trolls have found any true form of happiness;
So many commentators on fire lately! You are very much appreciated. But surprised not more mentions about the Bernanke-blogger, or PCBI, Peak Central Banking Indicator.
ReplyIs this it? some derivative peak?
@LB, you know things are bad when the proletarians are screaming at each other about how "your evil billionaire is worse than mine"...
Reply- Whammer
Three articles about number of trading accounts in China:
ReplyMay-2007: China's masses rise up and buy stocks "Indeed, as the Shanghai and Shenzhen stock markets keep rising, more and more Chinese citizens join the army of speculators. On April 26, some 325,000 new investor accounts were opened on the single day, pushing the total number to 92.5 million.
August-2012:China’s Bear Market Lures Foreign Bids as Locals Pull Funds "While overseas firms were granted $6.9 billion of quotas to purchase mainland securities since December, more than in any full year since the government program began, the number of Chinese stock accounts containing funds dropped by 788,000 to 56.3 million in the year to Aug. 3, the most for a 12-month period. A record 110 million are empty or frozen, according to regulatory data compiled by Bloomberg."
China’s Investors Open Record Trading Accounts Amid Stock Rally "Mainland traders opened 1.67 million accounts in the week ended Mar. 27, rising from 1.14 million a week earlier, which was also an all-time high, according to data from China Securities Depository and Clearing Co.’s website."
Soros' wife is as scary as Murdoch's
Replywhat's the deal with them Asian social climbers marrying crotchety billionaires twice their age
Apparently Soros' former girlfriend, a 28 year old soap opera actress in Brazil, is suing him for $50 million.
ReplyLove is blind ;-)
-- Whammer
http://www.bloomberg.com/news/articles/2015-03-31/sell-your-equities-and-take-six-months-off-says-saxo-economist
ReplySteen Jakobsen, Saxo Bank A/S’s chief economist:
Investors should sell any equities bought over the past year, hold the proceeds as cash and take a holiday from the market for six months.
“If nothing else, reduce your stock portfolio to where it was on the first of January last year, put the money into cash and take a nice long summer holiday,” said Jakobsen, 50, also chief investment officer at the Danish lender. “You won’t make any money, but you lose all the downside risk.”
A likely increase in U.S. interest rates will intensify market volatility and threatens to wipe out any gains investors may have made in the past two years, Jakobsen said in a March 29 interview in Dubai. Slower expansion in the economies of the U.S. and China will also hurt investors holding stocks, said Jakobsen.