Moving to ,,finance world" | mech eng ,,world"

[Stahlmann]

I see that the only thing I care is my ,,profit" and how to optimize time invested/returns.

At the moment I am finishing my mech eng degree.

As an ERE appretiance in long term I will need to create yields so knowledge of investing is very important to me.

What about working in finance world?

I am willing to take good IQ test just to see if I am ,,capable" of working there. Do you know any?

_

I broaded the topic of discussion. How about fellow mech eng here?
Share your experiences.

[BRUTE]

from hearsay, brute has heard that what professional investors do does not necessarily relate to personal investing.

casting jacob signal.

[jacob]

You rang?

First, like the "medical world", the "finance world" is huge and covers a vast number of job functions, many of which aren't generally known to the public because they aren't that sexy (Basel II compliance software, anyone?). And yes, similar to how working in the medical field doesn't necessarily translate into DIY surgery, neither do many finance jobs translate very well in personal investments. Actually, the only finance jobs that translate somewhat are stock analyst jobs and even then you'll not get as much phonetime with IR as when you're calling in from [major bank/fund].

I'd expect that an ME would be better off doing well-paid engineering work than transitioning into a semi-compatible finance job (software sales, CFA, ... ) that pays about as much but requires more training. Unless, that is, finance looks a lot more interesting than engineering now?!

[Gilberto de Piento]

As far as I know, in the US a company cannot give a candidate for employment an IQ test.

[daylen]

I am willing to take good IQ test just to see if I am ,,capable" of working there. Do you know any?

The actual IQ barrier is a maximum. You have to be foolish enough to confidently impliment a model without even knowing model error exist.

[jacob]

@daylen - This is depressingly true. Especially in trading.

[Stahlmann]

You rang?

First, like the "medical world", the "finance world" is huge and covers a vast number of job functions, many of which aren't generally known to the public because they aren't that sexy (Basel II compliance software, anyone?). And yes, similar to how working in the medical field doesn't necessarily translate into DIY surgery, neither do many finance jobs translate very well in personal investments. Actually, the only finance jobs that translate somewhat are stock analyst jobs and even then you'll not get as much phonetime with IR as when you're calling in from [major bank/fund].

I'd expect that an ME would be better off doing well-paid engineering work than transitioning into a semi-compatible finance job (software sales, CFA, ... ) that pays about as much but requires more training. Unless, that is, finance looks a lot more interesting than engineering now?!

A little derail.

I will probably live in ,,cash society". I won't be enough hardcore to live in forest and live without ,,money".

I will trade my time and resources for pure numbers in my bank account.
I hope ERE will give me opportunity to make this time shorter and less painful.
I hope to be able to save some good amount of money (the most difficult part!).

I won't inherit any big sum of money, nor any buisness. I don't have any comparative advantage in any field now (no hobby, no talent, ,,no luck").

Would you still recommmend picking up stock investing as a hobby to take care of ,,stash" and generating yield? (and making it my hobby during accumulation phase)

It is not about how will market exchange yield, but about how to generate yield and be the closest to ,,the numbers" (for example I could landlord, but after living 20 years Middle Class dream I see that houses tend to be a hassle, also I am no wine connoisseur to be alternative investor etc.).

Let's say I am average intelligent (as every will say or I hope so to be )

And at the moment I do not get it. As a stock exchange is pinnacle of capitalism (companies sell shares to fund future investments and people there are to pick the best companies to support them and then abandon them to move money to one more time not so valued ones), so it is ,,the nearest" place to the ,,yield" (or generating it) (I mean I buy share -> I see its price -> It goes up -> I am richer ! -> It goes down -> I am lost! etc).

And in that situation do professional investors work in totally different way as individual ones? In both cases ,,leverage" (how much money do you have) is the most important thing.

PS. I will post some info in ,,journals" (if we talk about main question) and then we will continue the main discussion

edit:
How about that?
viewtopic.php?p=106846#p106846

edit2:
back office for Big Name Bank in my country offer such career paths

Fund Accountant
Pricing Administrator
Derivatives Specialist
Financial Reporting Accountant
Financial Analyst

any comments on them?
how about responsibility/fulfillment ratio?
are these positions prospective?
could I move to West Europe after gaining experience there (with such job)?

[Tyler9000]

At the moment I am finishing my mech eng degree.

What about working in finance world? I am willing to take good IQ test just to see if I am ,,capable" of working there.

In my experience you have it backward -- an engineering degree is a much stronger indicator of real-world intelligence than an IQ test.

Back when I graduated with a ME degree, finance companies and business consultants heavily recruited the engineering school even moreso than the business school. They apparently strongly desired the extensive experience with applied advanced math that engineering grads brought to the table, and it was relatively easy for them to hire trained problem solvers with a strong working knowledge of calculus and point them in the right direction.

So IMHO, if you want to work in finance then go for it. Sell your math knowledge and how you enjoy applying it to solve problems, and I suspect you won't have an issue getting someone's attention.

[Stahlmann]

At the moment I am finishing my mech eng degree.

What about working in finance world? I am willing to take good IQ test just to see if I am ,,capable" of working there.

In my experience you have it backward -- an engineering degree is a much stronger indicator of real-world intelligence than an IQ test.

Back when I graduated with a ME degree, finance companies and business consultants heavily recruited the engineering school even moreso than the business school. They apparently strongly desired the extensive experience with applied advanced math that engineering grads brought to the table, and it was relatively easy for them to hire trained problem solvers with a strong working knowledge of calculus and point them in the right direction.

So IMHO, if you want to work in finance then go for it. Sell your math knowledge and how you enjoy applying it to solve problems, and I suspect you won't have an issue getting someone's attention.

Could you give background of your education?
I just want to have some kind of comparison how hard it was in your settings (and what you have learnt during your college time )
I don't think I own any superior math skills now, but I can work on them!

[jacob]

back office for Big Name Bank in my country offer such career paths

Fund Accountant
Pricing Administrator
Derivatives Specialist
Financial Reporting Accountant
Financial Analyst

These are all very different positions requiring very different talents.

Derivatives specialists would be PhD STEM people (mostly math and physics) or MQFs. Probably the smartest and nerdiest guys in the company. It's easier to teach a physicist finance than it is to teach a business graduate how to solve Boltzmann transport equations.

Analyst would be the second-hardest. You'd need a CFA or similar. This would be the job of writing report after report about some company, most of which will be filed and never used.

These two jobs are also the ones with the largest international prospects. Also the most stress because they require more attitude/drive than "I'm just here for the paycheck". And probably the only ones where a ME background gives you a possible edge over someone who went to business school. In particular, with ME, you'd need at least a masters-equivalent to make the first cut for the derivatives position. However, a ME degree would give you a significant edge in terms of analyzing e.g. industrial companies. You can self-study for the CFA. I'd suggest reading http://earlyretirementextreme.com/start ... sting.html all those books first to see if you like it enough before you burn $1000 to sign up for the CFA course/exam.

The accountant jobs deal with the nitty-gritty of keeping track of trades and positions in the backoffice. It's nice, easy, and routine. As far as I can tell. Do you like forms and spreadsheets?

The pricing administrator is different. If you like being on the phone and organizing things ... This position is probably the one that offers the best flexibility. You could probably use these skills to transfer into any other corporation.

I'm still not sure why you want to go into finance as opposed to working in engineering. Most jobs in engineering pay better than most finance jobs.

[Tyler9000]

Could you give background of your education?

BSME, good but not prestigious private school. Virtually every ME in my school also had a math minor simply due to the engineering math requirements. We also had a very strong co-op/internship program so most engineers had proven work experience before graduation.

I'd consider my math aptitude poor by math or physics department standards, decent by engineering standards, and excellent by business standards. It's all relative. What's most important is where you see yourself fitting in a professional sense and honing your skills appropriately.

I personally was more creative than analytical and leaned towards design positions, so I never interviewed with the business/finance recruiters as that didn't interest me. But several classmates got big offers if I remember correctly.

[jacob]

For the CFA/analyst work, the required quantitative skill level is about on par with someone who would consistently ace high school level statistics with no errors and little perceived effort. Being confident in calculating averages and standard deviations (w/o just pressing a button on a calculator) and make conclusions about probabilities based on that; knowing how to calculate a binomial coefficient; and knowing enough algebra to isolate r in P=(1+r)^nt or log(r+s)=kt or somesuch.

It's a closed book examination so it needs to be memorized.

[Stahlmann]

Analyst would be the second-hardest. You'd need a CFA or similar. (*) This would be the job of writing report after report about some company, most of which will be filed and never used.

These two jobs are also the ones with the largest international prospects. (**) Also the most stress because they require more attitude/drive than "I'm just here for the paycheck".

(*) - Why?
(**) - Why? Do you know any jobs that require no drive? In terms of being slacker?
In your blog you wrote that you like being engaged but some people do not consider that.

[jacob]

* It's pretty much the standard certification to get your foot in the door as an analyst. With a non-business background, I'd go so far as to say it would be the only way.

** There are lots of jobs where you show up at 9 and leave at 5 not needing to think about work "after work". Analyst isn't one of them. Or more precisely, if you approach it that way, you're probably not going to last long. You can tell the types of jobs apart by looking at the difference between the best performer and the worst performer. For analysis, it's pretty high, more than an order of magnitude if not two. For number entry, it's pretty low, maybe a factor 2 at most.

[Tyler9000]

You can tell the types of jobs apart by looking at the difference between the best performer and the worst performer.

Interesting theorem. I think that applies to lots of jobs.

[Stahlmann]

* It's pretty much the standard certification to get your foot in the door as an analyst. With a non-business background, I'd go so far as to say it would be the only way.

** There are lots of jobs where you show up at 9 and leave at 5 not needing to think about work "after work". Analyst isn't one of them. Or more precisely, if you approach it that way, you're probably not going to last long. You can tell the types of jobs apart by looking at the difference between the best performer and the worst performer. For analysis, it's pretty high, more than an order of magnitude if not two. For number entry, it's pretty low, maybe a factor 2 at most.

* I wanted to know answer to ,,most of which will be filed and never used. "
Maybe not too much job experience so stories about doing something for nothing still bugs me a lot.

** ,,You can tell the types of jobs apart by looking at the difference between the best performer and the worst performer."

Interesting theorem for me as well. Could you elaborate?

[jacob]

Lots of analysis work requires building and maintaining profiles/investment-theses on a number of companies. Fund managers may or may not use those reports when making investment decisions. Have a look at S&P500 or ValueLine ... pick 10-20 companies. Your job would be to revise your reports everytime some significant event happened. Maybe rewrite. Maybe just re-run your spreadsheets. Now imagine doing this for three years while the fund managers choose to hold cash during that time due to macroeconomic concerns. The only reason you're working is so that they have binders full of reports ready to read should the interest rate environment change.

I would think the theorem would be obvious? If it's hard to tell performers apart, you can hire anyone and it doesn't matter that much. If it's easy, you'd want to hire the best and kick out the worst. People tend to get better by practice. How much better is field-dependent. No matter how much you practice as a typist you're not going to get better than 150wpm. Compare someone like me who types with about 6-7 fingers at 75wpm. The world champion is only twice as good. So I could practice all day, but at the end it wouldn't significantly improve my performance. On the other hand, an analyst who spends every waking hour reading news articles and books is going be much more insightful and be able to draw many more connections than someone who just reads the front page of the newspaper.