Careers for Quantitative PhDs in Investment Banking

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					Careers for
Quantitative PhDs in
Investment Banking
Goldman Sachs Group, Inc
2 October 2009
Introduction to Investment Banking
    An Investment Bank acts as an intermediary between
    potential investors and those who seek capital
    High street banks look after your money, Investment Banks look after large companies
    and governments

                          Mergers and               Strategic and
                          Acquisitions            Financial Advisory

        Initial Public                                                 Principal
          Offerings                      Investment                    Investing

                Trading                                           Corporate
                                    Institutional Sales

    Who are Goldman Sachs?

    We are a leading global investment banking, securities and investment management firm

    We provide a wide range of services to the world’s leading corporations, financial
    institutions, governments and high net worth individuals

    We are headquartered in New York, with over 40 offices in over 20 countries

    We are characterized by a unique culture which emphasizes teamwork, innovation, client
    service, diversity and community awareness

    European Businesses
              London                    Stockholm                      Moscow
     n Office opened in 1970    n Investment banking          n Working with clients
                                  representative office             since 1998
     n Full-service office                                    n New office opened
                                  opened in 1998
     n Headquarters of                                           in January 2007
       European operations

              Frankfurt                                       n GSI representative
                                                                office opened in 2003
     n Office opened in 1990
                                                              n Investment Banking
     n Investment banking,                                      office opened in 1974
       fixed income, equities
                                                              n Swiss Private Bank
     n German bank                                              opened in 1993
     n Institutional Asset
       Management                                                      Geneva
     n Private Wealth                                         n Branch office of Swiss
       Management                                               Private Bank opened in
     n Office opened in 1987                                            Milan
     n Investment Banking,                                    n Office opened in 1992
       MATIF member
                                                              n Investment banking
                                                              n Institutional Asset
                                          Johannesburg          Management
                                    n Investment banking
     n Investment banking             representative office
       office opened in 1989          opened in 1988

           Overview of Goldman Sachs

     “PUBLIC”              MERCHANT         INVESTMENT MANAGEMENT                  INSTITUTIONAL
    COMPANIES               BANKING      (Private Wealth / Asset Management)         INVESTORS
                                                                               n   Capital Research
n   Wal-Mart                                                                   n   Fidelity
n   General Electric
                           INVESTMENT BANKING             SECURITIES           n   AXA
n   TDC                    INDUSTRY     FINANCING          DIVISION            n   ATP
                            GROUPS        GROUP
n   Vodafone                                              Sales & Trading      n   PFA
n   Etc                               n ECM                  (Equities &
                       n   FIG                                                 n   Och-Ziff
                                      n DCM                Fixed Income,
                       n   TMT
                                      n Corporate             Currency
                       n   CRG                                                        RETAIL
                                        Derivatives       & Commodities)
     PRIVATE           n   HC
                                      n Leveraged                                   INVESTORS
    COMPANIES          n   INR          Finance         GSS/Prime Brokerage
                       n   Sponsors                                            n   High Net Worth
                                      n New Products                               Individuals
                           Coverage                       Credit Research
                                      n Risk Markets
 & AGENCIES                      GLOBAL INVESTMENT RESEARCH                        GOVERNMENTS
                                                                                    & AGENCIES
                                                               L&M             n Central Banks
n Kingdom of
                             OTFS               HCM                            n Mortgage Agencies
  Denmark                                                    Compliance
n FNMA/FHLMC                                                                   n State & Govt
n China                               EXECUTIVE OFFICE                           Pension Funds
n Etc                                                                          n State & Local Govts

                                                 Chinese Wall
    Why work at Goldman Sachs?

    •   Solve Client’s Most Important Strategic and   We stress creativity and imagination
                                                      in everything we do. While
        Financial Issues                              recognizing that the old way may still
                                                      be the best way, we constantly strive
    •   Exposure to Top-Level Decision Making /       to find a better solution to a client's
        Senior Client Exposure                        problems...

    •   Fast-Paced Environment Where Work Has            - from Business Principle #5
        Immediate Tangible Results
    •   Juggle Multiple Projects
    •   Ability to Make an Impact Early in One’s
    •   Inspiring / Diverse Colleagues
    •   Solid Business Foundation for Future

    Roles for Quantitative PhDs

    •   What is a strategist?
    •   Where do strategists work?
    •   What do strategists do?
    •   Who are we looking for?
    •   Why come to Goldman Sachs?

The Strategy Group
      Types of Strategists

      Core Strategists

              Develop all systems used for Pricing and Risk Management
              Develop shared quantitative and numerical techniques
              Serve as the technology “heart” of the quantitative organization

     Sales Strategists
              Analyze clients’ market risk profiles and market opportunities
              Structure products tailored to meet client objectives
              Present analyses and product ideas to clients

     Desk / Trading Strategists

              Measure Risk
              Identify market opportunities and exploit them with new pricing algorithms
              Develop electronic trading strategies and technical models

     Where do Strategists work?


               Trading of stocks in markets around the world and trading of derivatives across multiple
                product lines

     Fixed Income, Currencies & Commodities (FICC)

               Trading of products and customized derivatives based on a wide range of risks and state
                variables, including currency exchange rates, commodity prices, credit spreads and interest

     Investment Management

               Managing hedge funds and other portfolios and developing proprietary investment strategies
                and cutting-edge solutions for clients

     Current mix of Roles
                By Division                             By Degree

                             19%                          PhD
                                                          26%             Undergrad
              FICC                                                           36%
                               31%                             Masters

                                          By Major
                     IMD                                 Securities

                  10%                                   Other             CS
                                                       Sciences          21%
              Finance        Maths,                      25%
            & Economics    Engineering,
                23%          Science
                              67%                                          Finance

     Typical Strategist Tasks

     Create and model new products for the use and sale by the firm

     Develop advanced numerical and analytic techniques for analyzing derivative markets and
     pricing derivatives

     Interact directly with clients to help them understand, structure and use our financial

     Use financial theory to build and implement quantitative models that forecast risk and
     returns of securities

     Apply sophisticated econometric techniques to real portfolio management problems

     Skills Required

                        • Perform time series analysis
                        • Utilize numerical techniques
                        • Solve stochastic PDEs
                        • Use statistics and probability theory

                Technology                                        Finance
      • Build large-scale distributed               • Understand market dynamics
        systems                                       and conventions
      • Understand and implement                    • Understand the behavior and
        fundamental algorithms                        specification of many products
      • Use many languages

     Examples of Day to day Activities

     Equities Algorithmic Trading

     • News and Market Microstructure
     • Microstructure Dynamics
     • Comparing Non Displayed Venues
     • The Effect of Sigma on Performance
     • Execution Count and Child Size
     • Sonar Aggressive Algorithm

     Interest Rate Exotics

     • Pension Buy-out Asset Swap
     • Relative Value Index Strategies
     • Risk Management and Hedging

Who are we recruiting?
     Goldman Sachs wants to hire bright individuals who
     possess the following skills:

     The ability to thrive in a team environment

     A strong background in a quantitative discipline

     Interest in and enthusiasm for the financial markets

     Outstanding creativity and problem-solving skills

     Strong programming skills

     Effective communication skills

     What we Offer Employees

     •   Training and continuing development              Integrity and honesty are at the
                                                          heart of our business. We expect
     •   Mentoring programmes and senior support          our people to maintain high ethical
                                                          standards in everything they do,
         network                                          both in their work for the firm and in
                                                          their personal lives.
     •   Diverse representation of nationalities,
         cultures and heritages                             - Business Principle #14

     •   Great people and unique culture
     •   Meritocracy
     •   An opportunity to have an impact on the
     •   A great reputation and strong brand
     •   Strong commitment to quantitative roles by
         senior management
     •   Extensive global network of strategists in all
         aspects of our business

     Application Deadlines
     All applications must be made online at

     • Full Time – 18 October 2009
     • Summer Internships – 6 December 2009

     PhD candidates should apply for a New Associate or Summer Associate role, stating clearly that
     you are studying for a PhD


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