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If you’re looking for a quant job at a hedge fund, Giuseppe Paleologo, America’s most sarcastic and humorous quant, is the person for you.
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Paleologo is currently on gardening leave after retiring from high-frequency trading firm Hudson River, where he was head of risk. He has also worked on The Citadel (twice) and Millennium (once). When his gardening leave ends, he will become head of Baryasny’s quantitative research department. During his time off from the market, Paleologo lectures at New York University. This inspired him to create a document for students who want to become buy-side quants.
Paleologo says if you’re applying for a quant job at a top non-bank employer*, you need to realize that there are very few such openings. He estimates that there are probably 7,000 existing buy-side quants worldwide and perhaps 700 new quant hires each year. “This includes everything from alpha research to portfolio construction, data analysis, execution and risk management,” he observes.
It is not easy to land these jobs considering the number of students and experienced personnel chasing them. This means that even if your resume is a vague document that Paleologo has seen (“If you play the piano in a brothel, please know that the chances are unreasonably low.”) This is true even if it is also excellent. He puts the passing rate at 0.2%. Success requires strategy. Applied stochastic modeling and statistics are required. You might also want to read some books**. You can read some academic papers. You can develop what Paleologo calls four desirable personality traits. Creativity. Humility; Integrity.
You can also apply for less competitive jobs.
According to Paleologo, these jobs revolve around data, execution cost measurement, optimization, and risk. “You can have a long and successful career in any field,” he says, noting that these fields can be “very intellectually satisfying.” By comparison, alpha researchers who develop their own trading signals live or die by the success of those signals, he says. “The road to hell is paved by mediocre Alpha researchers who fail to achieve their goals and burn out by their early 30s.”
Alpha researchers are paid better. Paleologo says you can expect a top-end package of $450,000 to $500,000, including salary and sign-on bonus. Data, risk, execution costs, and optimization revenue range from $250,000 to $500,000. Still, if you play the long game, it might be worth choosing that option. “Compensation is very important. You’re not applying for a job as a future Mother Teresa,” Paleologo says. “But when thinking about compensation, consider that growth rate and the expected length of your career.”
*Bariyasny, Citadel, Citadel Security, CTC, DEShaw, DRW, Element, ExodusPoint, FlowTraders, Headlands, HudsonRiver Trading, JaneStreet, JumpTrading, Millennium/WorldQuant, Optiver, PDT, Point72/Cubist, Renaissance Technologies, Susquehanna(SIG), Schonfeld, Squarepoint, Tower, XTX, TwoSigma, Virtu, Voleon, Verition
**“All About Statistics” (volumes 1 and 2) by L. Wassermanb. “Applied Stochastic Models” by S. Rossc; “Convex Optimization” by S. Boyd and L. Vandenberghed. “Numerical Linear Algebra” by Trefethen and Baugh. “Linear Algebra and Learning from Data” by G. Strangf. “How to Solve It” by G. Polia
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