Morning Coffee: How to earn £500k at a hedge fund without finance experience. Paris for traders
If you want to make really big money in finance now, don't go into finance. Or, at least, don't go into finance first of all. Finish your bachelor's degree. Take a PhD in a mathematical subject. Join a Microsoft or a Google (or maybe even a General Electric) and hone the craft of writing mathematical algorithms. Then, stick your head above the parapet and wait for the top hedge funds to bite. It worked for Alexey Poyarkov.
This time last year, the Wall Street Journal reports that Poyarkov was a financial neophyte. He'd never worked for a bank, let alone a hedge fund. Today, he's earning around £536k ($740k) working for TGS Partners in Irvine, a low profile quant fund with a reputation for extraordinary profitability.
Poyarkov's secret is simple: mathematical genius. As a teenager, he won the International Maths Olympiad. During his early career, he worked for Yandex, the Russian search engine and for Bing (where he developed an algorithm to identify pornography). By the time he expressed an interested in finance, Poyarkov's expertise in constructing algorithms was already known. Three top hedge funds - Renaissance Technologies, Citadel and TGS - wanted to hire him. Poyarkov chose TGS.
Not everyone can be a mathematical genius of Poyarkov's stature, but his story is a salutatory reminder of the direction trading jobs are headed. The WSJ points out that Balyasny Asset Management's chief data scientist, hired last August, came via General Electric and Schlumberger (an oil services company), rather than via Goldman Sachs or J.P. Morgan. As quantitative hedge funds win a higher share of investors' assets, banks' traders risk losing one of their exit options: the most successful funds don't want traders finance experience, they want amazing algo-writers irrespective of their provenance.
Separately, what if Frankfurt doesn't win the battle for trading jobs after Brexit? What if it's Paris?
The Financial Times points out that the French city has several things going for it. First, there's the new president - and ex-Rothschild banker - Emmanuel Macron. Secondly, there's the imminent construction of seven new skyscrapers to house the expected influx of finance talent. Then there's the policy of reducing taxes for expats and a promise to replicate English court procedures. Most important, though, might well be France's amazing supply of mathematical talent. French mathematicians have long been the engine for quantitative finance in the City of London and as finance becomes even more mathematical, French financiers hold the whip hand. "There are hundreds of thousands of French people in the City of London who could move back. We have teams of mathematicians who are able to discuss financial modelling," one 'French official' tells the FT. He might well be right.
In the future, humans won’t be doing trading by themselves. There will be two kinds of trading. One would be [where] the human asks the computer, ‘here’s a very interesting scenario, score it for me and if it’s above a certain score we’ll buy it’. And one where humans aren't involved at all. (Financial Times)
Germany's still planning a law that will make it easier to fire people earning over €250k. (Irish Times)
The UK wants to cap immigration at 100,000. Last year, 60,000 people arrived on intra-company transfer visas alone. (Flipchart Fairy Tales)
The problem with Luxembourg as a post-Brexit finance centre: "There’s no atmosphere in the city in the evening.” (Bloomberg)
Citi traders' messages while Lehman went down: "YOU MAKING $$$." (Bloomberg)
You missed your chance to start a fintech start-up. These days, the money's all going to established firms. (Business Insider)
It's a great time to work in infrastructure investing. (Bloomberg)
You should be making eye contract 60%-70% of the time. (WSJ)