I know people who work there. That comp data excludes bonuses -- and most importantly -- that employees are able to invest in the proprietary funds themselves, which generate insane returns.

Another thing the HN orthodoxy rejects is that professional investing and trading can make money above monkey-dart levels, despite the abundance of evidence that it does.

What evidence? I thought that was standard orthodoxy, not just on HN. No one doubts that people can and have beat basic index funds; I just thought that was a poor predictor of what would beat the market again going forward (perhaps after accounting for fees?).

I used to work in sell side equity research before leaving to do software development, because at least from my vantage point, no one was that great at predicting the market.

This assertion is about funds that are open to the general public. No one doubts e.g. Renaissance’s Medallion fund.

I'm sure that some hedge funds know what they're doing, but it's impossible to tell which are the good ones. Investing in a hedge fund still is functionally equivalent to asking a monkey to throw darts at stocks.

Also, in general if there's a consistent and significantly market-beating (after fees) hedge fund that's available to the public, it's a scam. Most real strategies can't scale infinitely (see Medallion), and so have a maximum amount of useful capital. If the owners can't fill this amount of capital on private markets after a few years, then it probably failed a few sniff tests.

The super investors of graham doddsville is also instructive reading on this point.

I would agree that many professionals beat the index. Some beat it year after year. The trick seems to be guessing who will maintain the outperformance. There seem to be many who have a great run and then underperform.

It's not just HN. It's generally accepted that over 20 year spans almost no actively managed fund beats index funds.

Example PDF showing this: https://us.spindices.com/documents/spiva/spiva-us-year-end-2...

Totally right. Huge blind spot here.

Anecdata, but I totally believe this. FWIW, I get inbound recruiting from FAANG as well as some prestige finance companies. I'm a generalist with no degree but ~8 years of experience. I make ~$300k/year in NY. Given grapevine comp chatter, I'm sure that pre-Covid I was leaving money on the table versus what I'd earn if I prepped and left for FB or Google. I'm super happy with my employment situation though, so I've just been enjoying life.

Partially to leave the door open and partially just to see how folks reacted, rather than giving a blanket "no thanks" to recruiters I got into the habit of replying to fancy recruiters with "I absolutely love my job and am not looking to leave. <all the things I love about it>, I wouldn't consider leaving for less than $600k/year unless a new role offered <one of several non-monetary things I really care about>." It may seem silly, but with luck, good timing and not using current comp as an anchor I've doubled up previously. My philosophy is that it never hurts to ask for more than you think you deserve, especially if you don't act like you're entitled to it.

This was mostly met with "glad it's going so well there" and I can only assume snorts of derision. Meanwhile, the dude from fancy "headhunting" firm comes back with: "Excellent! With your profile, I can get you at least $700k with one of my buy-side client firms."

Feel free to decide for yourself how much weight to give the anecdote. Maybe that # has a real basis for someone with (at the time) 5-6 years of experience. Maybe he assumed I must be making something near it already. Maybe he was saying anything to get his foot in the door. Or, maybe he decided I was jerking his chain and decided to have some fun of his own. He certainly made an impression.

I am impressed. Would you perhaps consider a chat/call? Would really love to hear what you are working on, and what skills you developed.

My contact details are in my profile.

Cheers!

As a generalist, why don’t you get into software consulting and just set/bill your own rates. You can bill at 400/hr and earn north of 700k.

Wall Street jobs are very very performance bonus driven.

Not unusual for bonuses to be 5x or more salary in a good year.

"Wall Street" is such a broad term.

Places like Jane Street and their like obviously pay technology employees very well. But they represent an absolutely tiny, tiny, tiny slice of the pie.

The vast majority of SWEs employed in Wall Street work for various firms big and small that you'd be fairly lucky to break 200k-250k TC decades into your career. No, 200k isn't a small income, but odds are you could match that number at any number of middle tier tech companies, earlier in your career, while enjoying a much better work environment and various other perks.

And of course upper-middle to top tier tech companies (culminating in FAANG) can offer multiples of that amount - and again, probably with much better working environments and other perks. Your odds of making it into FAANG or similar caliber tech company are probably much higher than your odds of making it into a Jane Street caliber financial firm.

It's rarely the case that Technology sees those kinds of bonuses; that's most common on the Investment side.

And yes, even places like Jane Street separate between Investement and Tech.

In HFT (and often stat arb) the front and back office dichotomy doesn't apply as much. Basically anyone doing nontrivial engineering work has an opportunity to share in the profits of the firm at Jane Street. They don't need to be a quantitative researcher or trader.

Are you stating this from specific knowledge of Jane Street?

The division in trading firms, IMLE, is between front office (making and executing trading decisions) and back office (book-keeping, accounting, risk control, compliance, administration, etc). Both sides have technical and financial people. But only front office - both technical and financial - is likely to get wild bonuses from doing good trades. Back office bonuses are more about doing the job well.

If Jane Street is sharing some of the trading profit with back office staff, good on them.

I am, yes. I'm more familiar with their researchers, but I know (or have spoken to) people across different functions there. They have security engineers who earn over $1M/year (for one example of something which isn't usually "front office"). For Jane Street it's about impact: if you substantially improve something at the firm, you share in the spoils.

That doesn't mean literally everyone who works there is rich, and the quants will do better relatively speaking. But in the sense of engineers being second class citizens: no, I wouldn't say that's the case at all.

Most buyside joints don't have anything resembling a security engineer. If they actually need one, it's closer to a front office role than not. You also don't want some random jabroni in charge of something mission critical like that.

In HFT firms algorithm developers are front office as much as traders. (And in some firms, traders don’t even exist as a role.)

which firms don't have traders?

That isn't the case at the few London HFT companies I've applied to. They had a clear division between quants and everyone else.

The investment side is engineering.

If you're talking about IT that makes the printer work, sure.

I cannot speak for Jane Street, in particular, but I have spent many years working at a very similar firm, and Investment is not Technology.

There are engineers working in Investment, yes, but the risk profiles, the payout profiles and the focus of their work is very different. Investment deals with getting and analysing data, understanding the market and their algos, coming up with trading ideas, handling their PB relationships, doing the actual trading (e.g. portfolio optim, factor hedging, worrying about financing and borrow costs) etc. Technology deals with all things infra and (in most places) ingesting data and making it easily available internally.

In particular, I would be surprised if the interns in this article were on the Investment side - a fund would rarley publish anything remotely resembling research. In fact:

"Yulan ended up working with both the trading desk that was running this process, as well as the research group, which pointed her at some cleaner cost functions to optimize, as well as encouraging her to try out simulated annealing in addition to the greedy algorithm she started with."

The "research group" and the "trading desk" are Investment.

It's too hard to fully explain how wrong this is, so just leaving the comment in case someone else reads it and thinks it might be right.

The investors are engineers. Full stop. They write code. The code makes trades. Everything else is noise to support the engineers writing code to make trades.

You can tell someone worked on the old wallstreet when they jump to explain that engineers are not a part of the core finance business. I've seen this trope a million times, and it used to be true. In 2020, the hedge funds making the most money are the ones treating their technology people like they treat their investment people. They interact, receive similar (though not 2M+) pay, and the programmer often has a part in analyzing the data and building the libraries to push the research forwards.

You're basing your assumptions on very little information. In particular, my position was with a buy-side fund set up in the last 5-10 years. It was definitely not "old wallstreet".

I worked at a well known hft prop trading firm, and then at an asset manager. The asset manager was staffed by mostly ex two sigma software engineers, a few from tower research. You basically cant even get an interview there unless you already worked with someone working there. A regular engineer there, a few years of experience made around 650k. I know the industry extremely well, and I know your type. I've watched so many buy side firms fall to the wayside because "good tech doesnt help investing, I will hire the humanities degree from princeton instead". Meanwhile, run through the top returning firms in the last decade, they all also happen to be the firms that pay their engineers the most.

When I worked on Wall Street even the IT guys and the doorman had their personal accounts invested at the firm which was a significant perk given that the firm was closed to new customers.

In finance the money is in the bonuses, which on a good year can easily exceed the base.

I think it’s the base salary that is being reported.