re: Goldman fires 600 traders; replaces them with 2 traders/200 computer programmers

Yeah, but things aren't great at the hedge funds either.

This article ( LINK) just came out from EFinancialCareers this morning:

quote:

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In a brutal new world for hedge funds, only the largest firms or those with a small, nimble start-up mentality will survive. Hedge funds need to change, and central to this is attracting technology professionals who would rather be somewhere else.

This is according to a new report from Boston Consulting Group, which predicts that hedge fund assets could continue to slide by up to 30% by 2020 and margins could fall by 20% thanks to smaller fees and more capital expenditure.

Hedge funds need to embrace technology to survive, to develop new IT that can “provide access to new sources of data and the most advanced analytical and decision-making techniques.” But tech talent is looking towards technology companies, fintech start-ups and other digital firms. “Ambitious and inspired graduates have shifted their gaze from Wall Street to Silicon Valley,” says the report.

Hedge funds are very poor at attracting and retaining technology talent, it says. They need a “new breed of manager, a tech-style working environment and even tech-heavy location such as the West Coast”.

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It used to be, pre-Volcker, that a lot of the great prop traders used to get their start at places like GS or MS, and stay for several years, before branching out and forming their own hedge funds like AQR or PDT Partners.

But now investment banks are getting hollowed out everywhere you look. Even at places like GS, compliance roles are up in recent years, but everywhere else morale is low. There are aging workforces with big backlogs for promotions, lower overall standards, and all the biggest new stars want to leave immediately in their 2nd or 3rd year to go straight into private equity (which has its own problems).

In the hedge fund world, everything is so crowded right now it's ridiculous. I imagine that a big shakeout has got to be coming soon once the overall market breaks for the worse. Institutional investors and endowment managers everywhere are souring on hedge funds.

The only thing that seems to be hot right now is algo trading, and so you see that the creme de la creme in quant hedge funds (Two Sigma, Renaissance, Tower, Point72, etc.) are mostly hiring STEM grads in their early 20s with advanced programming skills out of the following schools: Harvard, MIT, Princeton, CalTech, Stanford, & Carnegie Mellon. Good luck getting hired at the blue chip quant HFs coming from anywhere else.

For the best job listings, you constantly see things like "expert in Python", "familiar with KDB and Linux environment", "low latency", "multithreading", "full stack Java developer", etc.

(EDIT: How could I forget the AI / machine learning / deep learning / predictive intelligence buzzword craze!)

Then there's Dodd-Frank. Everybody's still throwing money at regulatory compliance for Dodd-Frank, but it probably won't last much longer.

Welcome to the hollowed-out landscape of investment banking and hedge funds after the worst 16 years of economic performance in U.S. history.