Man I am a sad excuse for a blogger. 4 months since the last blog. I hang my head in shame. But in my defense I must say that I have no desire to blog about anything but that in this case I am because I would like to share some insider info about this program, info that I would have liked to have when I was researching MFE programs.
Progress meter shows: 1 semester down, 2 to go. Last semester was thoroughly enjoyable. Why wouldn’t it be? Living the low-stress life of a student insulated from the ongoing madness in the outside world, investing in self, gauging things from a safe distance.
Evaluation of 1st semester courses (will use “Core” to denote core courses; all other courses are electives):
1. [Core] Stochastic analysis for finance: solid course (uses Shreve I and II). An inevitable course in an MFE program.
2. [Core] Statistical analysis of financial data: the most demanding course of the semester according to most including myself, very dense, covered a lot of topics, but my favorite course of the semester, and essential stuff to know.
3. Fixed income securities and markets: a non-technical business school class. I get a sense that many technical types new to finance just want to see a lot of math all the time. Soak in some practical knowledge, financial markets are deep, and they don’t run on math. Though I knew much of this material having gone through the CFA program and otherwise, I still learnt a lot from this class, it was interesting and the Professor was great.
(The other 2 courses I took were extra math ones that [almost] no one else took and that don’t count toward the degree: a Probability Theory course and a PDE course. I took them solely to bolster my math ability).
This semester’s line-up (classes just started Jan 7 so I won’t give any kind of evaluation):
1. [Core] Financial Engineering I
2. [Core] You will see the course listed as Discrete-State Stochastic Processes. This is a misnomer by the instructor’s own admission as this course mostly covers continuous time processes. Is inexplicable to me why they haven’t changed the name.
3. [Core] Optimization Methods in Finance
4. Financial Trading (half-semester, 1.5 credit course): a very nice practical course, trading simulations every class, good content so far
5. Applied Financial Analysis and Portfolio Management: the class manages an equity fund
6. Advanced Derivatives and Risk Management Techniques (half-semester, 2.25 credit course): uses Hull’s Options, Futures, and Other Derivs book
SUMMER INTERNSHIP INFO SO FAR:
There is a 4 month summer break and one must find an internship; there is almost no coursework over summer that counts toward the degree (there is one real world project-based financial engineering course possible but I don’t think it is available every summer).
Given how royally screwed up things are in our beloved financial industry, I was honestly surprised to see how many recruiters came to campus. There is a ton of i-banking (I include here private equity, venture capital) and consulting recruiting at both the analyst and associate level.
Now I just want to give some general info to foreign students and others who may not be familiar with the internship programs at banks. All the major banks have the same position hierarchy. The entry-level position is the “Analyst” position. The next higher up is the “Associate” [then typically Assistant VP, VP, Senior VP, MD]. It so happens that many of the banks look to take MFEs (along with other non-MBA Masters degree students) into their Analyst program along with undergraduate students, and to take MBA students into their Associate programs. But if you have a Masters degree then why shouldn’t you get an Associate position? Their answer is relevant work experience. MBAs typically have several years of relevant work ex, and MFEs typically do not.
Now look, if you have some years of relevant, financial industry work ex, then of course you belong in an Associate position and they will consider you in this category (and they will usually disqualify you for Analyst positions because you are overqualified), so it is fair.
Getting back to on-campus internship recruiting. So there is a ton of i-banking/private equity and consulting recruiting at both levels. But as an MFE you would most likely be looking at Sales and Trading and Investment Management (S&T and IM from here on out). There was also a lot of S&T and IM recruiting for Analysts positions (just about every big-name bank showed up), but very poor recruiting for S&T Associate positions. If they hired anywhere for Associate positions in S&T in this miserable economy it would be at Wharton, Columbia, a few of the other Ivies, and Stern. So as good and as high in the rankings as Michigan is (Ross 12th best B-School in nation by US News and ranked 5th best B-School in nation by Businessweek for 2008), you will see more S&T and IM recruitment at these schools, and relevantly more during recessions like this.
But as you know banks aren’t the only places to go. Besides i-banks several market-making/prop-trading firms are recruiting interns on campus (there are many based out of near-by Chicago), and here you don’t have competition from MBAs since they want quantitative people. They don’t really have the same hierarchical designations as the banks either. We also have several hedge funds but many are looking for either undergrad interns or US citizens.
Which brings me to one more important point. Independent of which school you go to, if you are a foreign national, you will be PO’ed at how many internship and full-time job postings you see that are for US citizens only. How many companies have this stipulation? Hard to say. Major banks do not have this stipulation (1 or 2 exceptions), they are very diverse organizations. Nor do most independent trading firms to my knowledge. Many regional banks do. Many hedge funds do. Many other small financial companies do. What can you do about this? Nothing so don’t worry about it, just wanted you to be prepared.
This being a very long post I will stop it soon. In closing, I want to summarize my assessment of internship opportunities at U-M to avoid any confusion. I am disappointed in the amount of Associate-level S&T and IM on-campus internship recruiting by the banks. I am genuinely pleasantly surprised at the amount of Analyst-level S&T on-campus internship recruiting by the big i-banks and at the amount of all other recruiting. Know that my assessment is based on a sample of size of one: internship recruiting at U-M for summer 2009, which is not a typical recruiting season. I will write more about on-campus internship recruiting later as the internship recruiting season progresses and as I gather more information.
